The Business of Media Distribution, 2nd Edition

Table of contents

1. Cover
2. Title Page
3. Copyright Page
4. Dedication
5. Table of Contents
6. Foreword
7. Acknowledgments
8. 1 Market Opportunity and Segmentation: The Diverse Role of Studios and Networks
   1. Introduction
   2. Market Opportunity and Segmenting the Market
   3. Defining Studios by Their Distribution Infrastructure
      1. What Does Distribution Really Mean?
      2. Range of Activities—Distribution Encompasses Many Markets
      3. Relative Size of Distribution Revenue Streams
      4. Overhead
      5. Pipeline
      6. Need for Control
   4. Joint Ventures
      1. Demise of Historic Joint Ventures
      2. Branding and Scale Needs: Online Giving Rise to a New Era of Joint Ventures?
   5. Studios as Defined by Range of Product
      1. Quantity
      2. Range of Labels and Relationships
      3. Pipeline and Portfolio
      4. Brand Creation versus Brand Extension
   6. Windows and Film Ultimates: Life-Cycle Management of Intellectual Property Assets
      1. Film: Primary Distribution Windows
      2. Film Revenue Cycle
      3. Shifting Windows
   7. Television: Channels Defined by Range and Quantity of Product Plus Reach and Specialization
      1. Defining Networks by Product, Reach, and Range of Budgets
      2. Product Portfolio Strategy: Brand Extension versus Brand Creation
      3. Television Windows and Life-Cycle Revenues
   8. Internet and Other Digital Access Points
9. 2 Intellectual Property Assets Enabling Distribution: The Business of Creating, Marketing, and Protecting an Idea
   1. The Development Process
      1. Development in Stages
      2. Development in the Context of Distribution
      3. Is Online Different?
      4. Development Guidelines
      5. Development Costs
   2. Optioning Properties
      1. Efficiency of Options
   3. Marketing Ideas (aka Pitching)
      1. Rhythm of the Story, Walk Me Through the Story
      2. Toy Story as an Example
   4. Protecting Content: Copyright, Piracy, and Related Issues
      1. Copyright
      2. Streaming Live TV—the Threat of Enabling Cord-Cutting
      3. Trademarks
      4. Piracy and Fighting Illegal Copying and Downloads
10. 3 Financing Production: Studios and Networks as Venture Capitalists
    1. Overview
       1. Principal Methods of Financing Films
       2. Principal Methods of Financing Online Production
    2. Variety of Financing Methods as a Response to Difficulty and Risks in Predicting Success of Experience Goods
       1. Challenge Exacerbated in Selecting which Product to Produce
    3. Studio Financing
       1. Classic Production–Financing–Distribution Deal
    4. Studio Financing of Production Slate; Studio Coproductions
    5. Independent Financing
       1. Foreign Pre-Sales
       2. Ancillary Advances
       3. Negative Pickups
       4. Third-Party Credit—Banks, Angels, and a Mix of Private Equity
       5. Crowdsourcing
       6. Leveraging Production with International Coproduction Financing—the Wachowskis’ Experiment with Cloud Atlas
    6. Rent-a-Distributor: When a Producer Rises to Studio-Like Clout
       1. Reduced Distribution Fees are Key to the Deal
       2. Funding Ensures Tapping into 100 Percent of Revenue Streams
    7. Television: How and Why Does it Differ?
       1. Network, Cable, and Pay TV Financing
       2. Deficit and Risk Continuum
       3. TV and Online’s Relatively Lower-Risk Profile
    8. The Wrinkles of Coproduction
       1. Case A: A Party Invests in Production in Return for an Equity Stake
       2. Case B: A Party Invests in a Production in Return for Distribution Rights
       3. Case C: When There is Creative and/or Production Collaboration Between Parties with Respect to a Production
       4. Online’s Relatively Low Coproduction Quotient
11. 4 Theatrical Distribution
    1. Theatrical Release as a Loss-Leader
       1. Basic Definitions and the Uneasy Tension between Distribution and Production
       2. The Theatrical Release Challenge—Locomotive for Awareness While Profits Remain Downstream
       3. Hedging Bets and Profiling Release Patterns
    2. History and Market Evolution
       1. Consent Decrees, Block Booking, and Blind Bidding
       2. Multiplexes and Bankruptcies of Major Chains
       3. The Digital Divide and Digital Cinema
    3. Distributor–Exhibitor Splits/Deals
       1. Components of Film Rental
       2. 90/10 Minimum Guarantee Deals
       3. Aggregates: Alternative to 90/10 Deals with House Nut
       4. Firm Terms versus Settlement
       5. Four-Wall Structure
    4. Release Strategy and Timing
       1. Factors in When to Release
       2. The Online and Digital Speed Factor
       3. Records Are Not What They Used to Be—Dissecting Opening Weekends
    5. Theatrical Booking
       1. Locations, Types of Runs, Length of Runs, Frenzy of Booking
       2. Prints and Screen Counts
       3. Per-Screen Averages
       4. Decay Curves and Drop-Offs—Managing the Release
       5. International Booking
       6. Boom International Markets Driving Increase in International B.O.
    6. Concessions
12. 5 The Home Video Business
    1. Compelling Value Proposition
    2. History and Growth of the Video Business
       1. Early Roots: Format Wars and Seminal Legal Wrangling
       2. The Betamax Decision: Universal v. Sony
       3. The Early Retail Environment: The Rental Video Store
       4. Transition from Rental to Videos for Purchase: Retail Expands to Accommodate Two Distinct Markets for Video/DVD Consumption
       5. The Emergence of and Transition to DVDs
       6. Beyond an Ancillary Market: Emergence of the Made-for-Video Market
       7. Next-Generation DVDs: Blu-Ray versus HD-DVD—Format War Redux
       8. Blu-Ray to the Rescue?
       9. Product Diversification
    3. Maturation of the DVD Market and Growing Complexity of Retail Marketing
       1. Peaking of the DVD Curve and Compressed Sales Cycle
       2. Expansion of Retail Mass-Market Chains: Walmart, Best Buy, Target, etc.
       3. E-Tailers and Next-Generation Retail
       4. Netflix and the Growth of Subscription Rental
       5. Netflix’s Qwikster Debacle
       6. The Slow, Steady Decline of Netflix’s Physical Disc Rental Business, and its Belief in Streaming Focus Vindicated
       7. Netflix’s Next Big Challenge: The Cost of Content
    4. Physical Disc Inventory Management and Impact on Pricing and Profits
       1. Returns and Stock Management
       2. Pricing, Price Reductions, and Price Protection
    5. International Variations
       1. Release Timing and Development of Market
    6. Video Economics and Why Video Revenues are Uniquely Profitable to Studios
       1. Video Revenues
       2. Video Royalty Theory and Influence on Cash Flow
       3. Setting Royalty Rates
       4. Video Costs
    7. The Future of Video
13. 6 Television Distribution
    1. Free Television (United States)
       1. Free Television Market Segmentation
       2. Free Video-on-Demand and Internet Access—What Does Free TV Mean?
       3. Metrics and Monetization Challenges
       4. Distribution Patterns and Windows: The Decline of Ratings for Theatrical Feature Films on TV and Evolution of the Market
       5. Economics and Pattern of Licensing Feature Films for TV Broadcast
       6. First-Run TV Series
       7. Syndication Window and Barter
       8. Online Services Now Changing the Dynamics
       9. Impact of Elimination of Fin/Syn Rules and Growth of Cable
       10. Basic Economics of TV Series
       11. Upfront Markets, Mechanics of Advertising Sales, and Ratings
       12. Digital Upfronts
       13. Internet Intersection—Live + What?
       14. Social Media Driving New Changes
    2. Pay Television
       1. Film Licenses and Windows
       2. Basis for License Fees: Calculation of Runs
       3. Beyond Multiplexing—Apps and Pay TV On the Go
       4. Output Deals
       5. Original Programming Now the Cornerstone of Pay TV
       6. Aggregators Positioned for the Future
       7. Flexible Pay TV: Subscription Video-on-Demand
       8. SVOD Window
       9. Deal Term Overview (Pay and Free TV)
    3. International Market
       1. History of Growth
       2. International Free Television
       3. Crowdsourcing as Mechanism to Reduce Costs
       4. International Pay Television and Need for Scale
       5. Coproductions
       6. Case Study: The Kirch Group
    4. A New Landscape—Impact of DVRs, VOD, and Hardware
       1. TiVo and DVRs
       2. The New TV Paradigm/VOD
14. 7 Internet Distribution and a New Paradigm: On-Demand and Multi-Screen Access, Cord-Cutting, Online Originals, Cloud Applications, Social Media, and More
    1. Not Very Old History—The New Millennium’s Wave of Changes in Consuming Video Content
       1. User Experience Becomes King
       2. Rationalizing the Burst of Convergence
       3. Fear Factor I: Panic to Avoid the Fate of the Music Industry
       4. Fear Factor II: Would On-Demand and Download Markets be Less than Substitutional for Traditional Markets (Pessimistically Discounting the Potential of the Markets Being Addictive)?
    2. Online Services Becoming “Networks”—the Move for Online Leaders to Compete with their Own Original Content
       1. Netflix, YouTube, Hulu, and Amazon Shift Gears
       2. Traditional Search Engines and Everyone Else Creating Online Originals
    3. Cord-Cutting: Over-the-Top, Apps, and Other Modes of Access
       1. Dedicated Hardware Boxes
       2. Multipurpose Boxes—Living Room Convergence and Home Network Hubs
       3. Integrated Televisions: Internet Access Embedded within Your TV
       4. Growth of the App Economy—Access via Tablets and Smartphones
       5. Overall Impact (Cord-Cutting)
    4. Internet-Enabled Streaming Services: Amazon, Netflix, Hulu, and Beyond
       1. Amazon: Digital Lockers, Remote Streaming Access, Downloads, and Bundled Subscription Streaming
       2. Netflix
       3. Hulu and Hulu+
       4. International Services
       5. Channel Streaming Apps (as Opposed to Accessing a Single Piece of Content) and Murky Legal Ground
    5. Cloud Services and Networks Enabling Everything, Everywhere
       1. UltraViolet and TV Everywhere
       2. International Leaders Leveraging Apps and Providing Content Anytime
       3. Short-Term Renaissance for TV Programming Sales
       4. Bypassing Everyone: Direct from the Creator
       5. Personalization and Socialization of TV—Playlists, Recommendation Engines, Social Watching, and Tools for Content Interaction
    6. Old Guard Tries to Adapt—Studios’ Failed Bids to Offer an Online Service; Brick-and-Mortar Retailers Try to Offer Complementary Online Solutions
       1. Limited Studio Attempts to Make the Download Market
       2. Physical Retailers Offering Competitive Online Solutions
    7. Revenue Models and Economics: Multiple Systems Coexist, Just Like the Offline World
       1. Streaming: Fundamentals of Monetizing Internet Advertising
       2. Transactional VOD
       3. Differentiating between Tiers of Content: Cable Bundle Pricing Goes Online
       4. Dearth of Bold Experiments
    8. Resistance to Disruptive Change: Studios Suing Rather than Embracing; Talent Guilds Fearful of Being Cut of Pie
       1. Internet Viewing and Immediacy of Content—the YouTube Generation and the Studios Conundrum
       2. How Online and Download Revenues Became the Focus of Hollywood Guild Negotiations and Strikes
15. 8 Ancillary Revenues: Merchandising, Video Games, Hotels, Pay-Per-View and Transactional VOD Roots, Airlines, and Other Markets
    1. Merchandising
    2. Transmedia
    3. As Risky and Lucrative as the Film Business
       1. What Properties Can Spawn Successful Merchandising Programs?
       2. Licensing Programs
          1. What is a Licensing Program?
       3. Quality Control and Timing
       4. Licensing Deals
       5. Economics: Minimum Guarantees/Advances
       6. Role of Agents
    4. Toys as a Driver
       1. Mega Deals: Star Wars and Spider-Man
       2. Coming Full Circle: Toys Spawn Films Spawn Toys
       3. Toys and the Internet—Growing Crossover with Avatars and Virtual Worlds
    5. Extending the Franchise: Video Games, Books, etc.
       1. Growth of Social Games and Importance of Data Analytics
       2. Additional Ancillary Revenue Streams: Books, Film Clips, Music, Live Stage, etc.
    6. Hotel and Motel
       1. Size of Market and Window
       2. Economics
       3. International
    7. PPV (Cable) and Transactional VOD Roots
       1. PPV and VOD Roots
       2. Residential VOD: The Virtual Video Store
    8. Airlines
       1. Market
       2. Window
       3. Economics
    9. Non-Theatrical
       1. Window
       2. Economics
16. 9 Marketing
    1. Back to Experience Goods
    2. Strategy (Film)
       1. Budget Tied to Type and Breadth of Release: Limited Openings, Niche Marketing, and the Web’s Viral Power
       2. Timing, Seasonality, and Influencing External and Internal Factors
       3. Day-and-Date Release
    3. Third-Party Help: Talent and Promotional Partners’ Role in Creating Demand
       1. Talent Involved
       2. Promotional Partners
    4. Theatrical Marketing Budget
       1. Direct Costs
       2. Allocation of Media Costs
       3. Trailers
       4. Posters
       5. Commercials (Creating) and Creative Execution
       6. Press and PR
       7. Websites
       8. Social Networking—Sites and Microblogs
       9. Market Research
       10. Indirect/Third-Party Costs
       11. Net Sum and Rise in Historical Marketing Costs
    5. Video Marketing
       1. Macro-Level Spending/Media Plan and Allocation
       2. Press, PR, and Third-Party Promotions
       3. Net Sum
    6. Television
       1. Direct Costs
       2. Commercials and Opportunity Costs
       3. Press and PR
       4. Use of Programming Schedules/Lead-Ins
    7. Online Marketing: Expanding the Toolset
       1. Social Networking
    8. Case Study: Marketing a Mega-Film
       1. Pre-Release Window: Period Leading Up to Time Approximately 30 Days Pre-Release
       2. Release Window: Approximately 30 Days Pre-Release Through First Two Weeks Post-Release
       3. Post-Release Window: Approximately 30 Days Post-Release Through DVD and More
17. 10 Making Money: Net Profits, Hollywood Accounting, and the Relative Simplicity of Online Revenue Sharing
    1. Profit Participation Accounting
    2. History of Net Profits
       1. Celebrity Lawsuits Spotlight Accounting Practices
       2. Why So Complicated—Endemic to the Talent System?
    3. Gross and Net Profits: How are They Defined and Calculated?
       1. Included and Excluded Revenues
       2. Certain Costs Always Deducted
       3. Distribution Fees
       4. At-the-Source Recognition
       5. Distribution Costs and Expenses
       6. Gross Participations, Deferments, and Advances as Cost Items
       7. Imputed Costs: Production and Advertising Overhead, Interest
       8. Phantom Revenues: Allocating Taxes and Other Non-Picture-Specific Items
       9. Net Profits: An Artificial Break-Even Point and Moving Target
       10. Gross Participations/Profits
       11. Impact of Categorizing Costs as Production versus Distribution Costs
    4. Online Accounting: Simple Revenue Sharing and the Net Profits Divide
       1. Gross is Gross and Net is Net—Sort of
       2. Revenue Sharing
    5. Variations of Profit Participation
       1. Types of Break-Even
18. References
19. Index