MGMT 365 - Chapters 3-4, 6-8, 10, 12 PDF

MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr 1. - Important due to the unique, time-perishable charac- The Role of Adver- teristics of many entertainment areas. tising - Affects pricing (elasticity/inelasticity) - Effective in br...

MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr 1. - Important due to the unique, time-perishable charac- The Role of Adver- teristics of many entertainment areas. tising - Affects pricing (elasticity/inelasticity) - Effective in branding - Acts as a barrier to entry (changing int the age of the internet) 2. - Financing: raising and budgeting of money for film Film Is Really Four production Businesses - Producing: the physical creation of the movie, in- cluding scriptwriting, casting, filming, and editing - Distributing: getting the film to movie theaters and other outlets - Marketing: promotes the film to potential audiences 3. Input - Transformation (through-put) -> Output The business of entertainment IP+$ - Production, Manufacturing (film, broadcast, mu- Creating value sic), Developing (games), Manufacturing (media: DVD, through transfor- CD, etc.) -> Entertainment mation 4. - sets forth how much money will be spent on the Production budget entire film project.It involves the identification and estimation of cost items for each phase of filmmaking: Development, Pre-production, Production, Post-pro- duction, Distribution - The budget structure is normally split into "above-the-line" (creative) and"below-the-line" (tech- nical) costs. 5. - Concept Negative Costs - Books Components - Sto- - Screenplay ry Rights Acquisi- - Life Rights tion 6. - Script development Negative Costs - Set design Components - - Casting Pre-Production - Crew selection 1 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr - Costume design - Location scouting - budgeting 7. Above-the-line Negative Costs - Actors Components - - Directors Principal Photog- - Producers raphy - Writers 8. Below-the-line Negative Costs - Soundstage Components - - Wardrobe Principal Photog- - Labor raphy - Set Construction - Location fees - Makeup and hair - Transportation - Craft services - insurance 9. - Film editing Negative Costs - Scoring Components - - Titles and Credits Post Production - Dubbing - Special Effects - Soundtrack 10. Four major methods of raising funds: Funding the pro- 1. Equity finance ject: financing un- 2. Debt finance certainty pre-sales or territory distribution rights based on script and cast pre-sales of down channel rights (home entertain- ment, cable, TV) negative pick-up - loan against the deal gap financing (mezzanine debt) 3. tax schemes (rebates and incentives) 4. government grants (national, state/province/local) 2 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr The Goal: Return on Investment (ROI) 11. S Ï creen Actors Guild American Federation ofTelevi- Labor Unions & sion and Radio Artists (SAG-AFTRA) Guilds Ï Directors Guild of America (DGA) Ï Producers Guild of America (PGA) Ï International Alliance of Theatrical StageEmployees (IATSE) Ï Writers Guild of America (WGA) Ï Art Directors Guild (ADG) Ï Costume Designers Guild (CDG) Ï Motion Picture Editors Guild (MPEG) Ï Cinematographers Guild (ICG) Ï International Brotherhood of Teamsters (IBT) 12. ÏWorldwide revenues on filmed entertainment in all Revenue & re- distribution channels is almost $ 100 billion/year; the lease window distributors' share is less than $45 billion. planning Ï Total revenues are currently split on average 28%/72% between the U. S. domestic market and the Rest of the World (RoW). Ï Including both domestic and international revenue contributions, current averages are: Ë Theatrical revenues about 39% Ë Home entertainment about 32% Ë Cable/pay/DBS for about 4%, Ë Free television about 16% Ë Merchandising about 3% Ë Other (airlines, etc.) about 5% => In reality, this is happening during the whole process 13. ÏU.S. Home entertainment is mainly a digital business Home Entertain- o 75% - Digital home entertainment sales ment - A Digital o 25% - Physical home entertainment sales World Ï 3 Digital sales models o Subscription (the largest model) - Netflix, Amazon o Rental - Vudu, Hulu+, Netflix, iTunes Store 3 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr o Purchase - iTunes Store, Amazon, Google Play/YouTube Ï 2 primary physical sales models o Purchase - Walmart, Amazon, Target o Rental - Redbox 14. ÏFree Ad-Supported Streaming Television (FAST) OTT Revenue Ï Advertising-Based Video on Demand (AVOD) Methods Ï Subscription Video on Demand (SVOD) Ï Transactional Video on Demand (TVOD) Ï Pay-Per-View (PPV) 15. From acquisitions of literary properties to final theater Trust and Integrity bookings, every phase of the operations is negotiated, and this, contrary to widespread opinion, suggests that the personal with high standards of professional integrity largely prevail. 16. ÏDestroy - Drive the new entrant into bankruptcy (or How to Compete buy them) Against Disruption Ï Enhance - Deepen your current strengths to increase WTP and emphasize competitor shortcomings Ï Spin Out - Launch separate business that competes against competitors on its terms Ï Manage for Cash - Extract as much value as possible while the S-curve flattens Ï The Chess Master Strategy - Think about the next curve 17. Beyoncé receives an advance from the label/distribu- Advance tor, which is a pre-payment (more like a loan), which Ex: Sony Music they'll recoup against future record sales. The label secures copyright for the album's songs to protect intellectual property. 18. Beyoncé collaborates with songwriters who receive Songwriting and mechanical royalties for each physical copy sold. Publishing The publishers also ensure proper registration and 4 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr collection of performance royalties and mechanical royalties. 19. Licensing deals might be made to feature tracks in Licensing movies or commercials, creating additional income streams. Ï Synchronization Fees: (One-time payment) Ë A one-time fee paid for licensing a song for use in film, television, commercials, video games, etc. Ë Goes to the songwriter(s) and music publisher (nego- tiated fee). 20. A Ï merican Federation of Musicians (AFM): Represents Music Unions and instrumental musicians across the United States and Guilds Canada. Ï American Guild of Musical Artists (AGMA): Repre- sents singers, dancers, and staging staff in opera, ballet, and concert dance. Ï American Federation of Television and Radio Artists (AFTRA): Represents actors, singers, dancers, and other performers in television, radio, film, and record- ed media. Ï New York Dramatists Guild (NYDG): A membership or- ganization supporting playwrights and theatrical pro- fessionals in New York City and beyond. 21. 1. Universal Music Group (34.6%) Worldwide Music 2. Sony Music Entertainment (27.5%) Distributors & Pub- 3. Warner Music Group (17.4%) lishers 4. Independents (20.4%) => The three majors control nearly 80% of the global music market. 22. ÏFocus on recorded music Talent Deals in the Ï Label finances recording, manufacturing, and distri- Music Industry - bution of albums Traditional Deals Ï Artist earns royalties on album sales Ï Artist may have more creative control over music Ï Examples: Album deals, EP deals 5 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr 23. ÏHolistic approach encompassing the artist's entire Talent Deals in the career Music Industry - Ï Label may invest in touring, merchandise, branding, 360 Deals and publishing Ï Artist shares revenue from various income streams Ï Label offers greater financial support and resources Ï Artist may have less creative control 24. ÏRecord Advances: A common element in both tradi- The Financial Side tional and 360 deals is an advance, which is an upfront of Talent Deals payment from the label to the artist. Ï Not Free Money: It is important to understand that ad- vances are not gifts. Artists must repay the advance, typically through a percentage of their royalties from record sales and streams. Ï Recoupable Funds: The advance is essentially a loan to cover recording costs, marketing, and other ex- penses. Ï The label recoups its investment before the artist sees any additional profits. Ï Royalty Rates: The percentage of royalties paid to the artist varies depending on the deal and the artist's negotiation power. Ï Break-Even Point: Once the artist's royalties have covered the advance and other production costs, they begin to earn actual profit from their music sales and streams. 25. ÏMechanical Royalties: (Percentage of sales) Music Industry Ë Paid every time a physical or digital copy of a song isRoyalties sold (download, CD, etc.) Ë Goes to the songwriter(s) and music publisher. The music in- dustry revolves 6 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr Ï Performance Royalties: (Fee per performance) around creating Ë Paid whenever a copyrighted musical work is per- and using mu- formed publicly (live concerts, radio airplay, stream- sic, and with that ing services, etc.). comes a complex Ë Collected by Performing Rights Organizations (PROs)system of pay- and then distributed to the songwriter(s) and publish- ments called roy- er based on complex formulas. alties. These pay- ments compen- sate those in- volved in the song- writing and record- ing process. 26. S Ï ynchronization Fees: (One-time payment) Music Industry Ë A one-time fee paid for licensing a song for use in Royalties film, television, commercials, video games, etc. Ë Goes to the songwriter(s) and music publisher (nego-The music in- tiated fee). dustry revolves around creating Ï Copyright Fees: (One-time or ongoing) and using mu- Ë This term can be used broadly to encompass fees sic, and with that for using specific protected elements of a copyrighted comes a complex work (melody, lyrics, etc.). system of pay- Ë The specific fee structure depends on the usage andments called roy- negotiation (may be one-time or ongoing). alties. These pay- Ë Goes to the copyright holder(s), which could be the ments compen- songwriter, publisher, or someone else depending on sate those in- the specific rights granted volved in the song- writing and record- ing process. 27. See Screenshots Primary Royalty Streams Generat- ed Music 28. These firms aim to protect their members' (songwrit- Performance ers, composers, and music publishers)musical copy- Rights rights by monitoring public performances of their mu- Organizations sic (broadcast or live) and compensating them ac- 7 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr cordingly. Ex. ASCAP, BMI They collect licensing fees from users of music cre- ated by members and distribute them back to the members as royalties. 29. 1. Performance Model The Business 2. Product Model: Records, tapes and CDs Models Ë Physical inventory and supply chain management Ë Overt marketing Ë Retail chains and mail order 3. Service Model: Wireless internet, mobile phones, personal storage devices Ë Portable music Ë Available anywhere and anytime Ë Ubiquitous provider 30. Broadcast refers to distributing audio or video con- Broadcast tent to a wide audience through a one-to-many trans- mission model. Traditional broadcast mediums in- clude radio and television,where signals are transmit- ted over airwaves (radio frequencies) or cable to reach numerous people at once. 31. Broadcasters: Sells Time & Attention of Audience Broadcast Busi- ness Advertisers: Buys Time & Attention of Audiences 32. ÏAM (amplitude modulation) The Basic Broad- Ï FM (frequency modulation) cast Media Ï VHF (very high frequency) Ï UHF (ultra-high frequency) As of 30 September 2018, the FCC reports there were 4,626 authorized AM radio stations,6,737 commercial FM stations, and 1,349 commercial VHF and UHF tele- vision stations in the United States. 33. ÏBroadcasting is one of the few entertainment sectors Regulation heavily regulated by the government 8 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr oFrequency spectrum space o Socially acceptable content Ï The Entities: o FCC - Federal Communications Commission is the U.S. government agency charged with regulating all non-Federal Government use of the radio spectrum (including radio and television broadcasting) and all interstate telecommunications (wire, satellite, and ca- ble) as well as all international communications that originate or terminate in theUnited States. 34. ÏLate 2015 - UHD Alliance set standard - Ultra HD Television - 2024 Premium o 3,840 pixels wide/2,160 pixels high - 8.29 million pixels o hd - 1,920 pixels wide/1,081 pixels high - 2.07 million pixels Ï UHD Premium standards have been widely adopted by the TV and content production industries since their establishment. Ï Even higher resolutions like 8K are now emerging in the market, but UHD (4K) remains the dominant standard for most consumers. 35. A Ï dvertisers ( e.g., Nike): Pay stations and networks Television Industry to air commercials during shows to reachviewers and Organization promote their products (e.g., Nike airing commercials during the NBA Finals onABC). Ï Program producers (e.g., Shondaland): Create the original television shows and content we see on tele- vision, either independently or in partnership with net- works or studios (e.g., Shondaland producing "Grey's Anatomy" for ABC). Ï Networks (e.g., ABC):you might think of these as channels. Develop and produce original shows(e.g., ABC's "The Bachelor"), distribute them to their affil- iated stations nationwide, and sell advertising time within their programs. Ï Syndicators (e.g., Debmar-Mercury): Acquire rights 9 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr to existing shows (e.g., "Judge Judy") and license them to individual stations for broadcast in their local markets for a fee. Ï Stations (e.g., your local FOX affiliate): Broadcast tele- vision programs to local viewers within designated areas, acquiring content from network syndicators, and sometimes producing their own local news (e.g., your local FOX affiliate airing reruns of "Family Guy" from a syndicator, live sports from the network, and local news). 36. ÏProgramming and audience-delivery wholesalers Networks Ï Established in 1920s (radio) and late 1940/50s (TV) Ï Some Categories: o English-language commercial (e.g., ABC, CBS, Fox, NBC, CW) o Spanish-language commercial (e.g., Univision, Tele- mundo, TeleFutura) o Specialty (e.g., Bloomberg, Food) o Shopping (e.g., HSN) o Religious (e.g., TBN, 3ABN) Ï Operate through direct station ownership and affili- ates 37. ÏSyndicator: a firm that acquires the rights to pro- Syndicators grams for purposes of marketing them to additional customers. Ï Syndication: o provides the majority of programming seen by the public. o is the source of the network "reruns" and much of the material seen on cable networks. o It is the source of most American television pro- grams sold internationally. Ï Major types of syndication: o first-run syndication - programming broadcast for the first time as a syndicated show o off-network syndication - programs that were origi- 10 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr nally run on network television: a rerun o public-broadcasting syndication 38. ÏProgramming - How money is made in Broadcast The Value Propo- Ï Broadcast Properties (Stations) - licenses and net- sition work affiliation 39. ÏBroadcasters generate revenue by selling: The Programming o advertising Model o sales to other networks o international sales o syndication o packaged media (DVDs) Ï Advertising pricing is directly related to ratings Ï Rating are shares are measures in February/March, May, July, and November (sweep months) 40. Ratings are statistically calculated by A.C. Nielsen The Rating Sys- Co. using defined areas known as designated market tem areas (DMAs). These essentially coincide with the U.S. Census Bureau's standard metropolitan statistical ar- eas (SMSAs). Nationwide data is also calculated. Ï An audience measurement system Ï Set Meters: Devices in selected homes that measure real-time viewing (~2,300individuals/800 households) Ï Digital video recording monitoring Ï Digital Measurement: Nielsen has also expanded its measurement to include digital platforms, encom- passing streaming services, websites, and mobile apps, to provide a more comprehensive picture of viewership across different channels. 41. ÏIncreased viewing options: Streaming services and New Ratings other digital platforms have changed how people consume content, impacting viewership patterns and advertising strategies. Networks are now factoring in streaming viewership alongside traditional ratings when negotiating ad deals. 11 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr Ï Alternative Measurement Systems: Companies like Comscore also provide audience measurement ser- vices. Additionally, alternative data sources, such as social media engagement and streaming platform data, are increasingly being used to understand view- ership and inform ad-buying decisions. 42. ÏOriginal idea - a program based on a new idea (rare) Concept Develop- Ï Copycat - a program like one from another network or ment another country Ï Research-based - a program based on market re- search and patterns Ï Resurrection - a program from another time or an old idea with different twist Ï Modification - a program adapted to television from another medium, i.e., book, movie, etc. 43. ÏPackage - a collection of key assets that differentiate Packaging one property fromanother and makes the property appealing to a network. o Concept o Talent o Producer o Execution o Story line o Writers Ï Virtually every TV project is packaged 44. ÏThe dominant form of ownership in cable television Multiple System is the Multiple System Operator(MSO) Operators o Range from companies that own only a handful of systems to those that own hundreds. o Top five MSOs service about 80% of cable sub- scribers in the U.S. Ï These firms operate in a natural monopoly o a market in which there is room for only one firm of efficient size 45. ÏThe past: have what they offer at their time. Scheduled The PRESENT programming in the past meant listeners and viewers (Xfuture) 12 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr were at the mercy of the programmers and schedulers Ï The (Xpresent) past: have what they offer at my time. With the advent of recording devices(tape [cas- sette, VCR] and digital [TiVo, TVR]), the concept of time-shifting arose Ï The (Xfuture) present: have what I want, when I want it, where I want the promise of the internet and broadband open the door to receiving programming from various sources whenever one wishes. Stream- ing video from network sites and social networks like YouTube portends a new business model that is only now beginning to take shape. The "box" is being re- placed by various viewing platforms. Ï The New Future: I have which part of what I want, and the algorithm knows it before I do. 46. Staple products are the essential and consistent per- Staple Products in formers in your product portfolio. Toys Ï High demand: Staple products are consistently pur- chased by customers and generate reliable sales. Ï Wide customer base: They appeal to a broad segment of your target audience, not just specific niches. Ï Low price sensitivity: Customers are less likely to switch brands based solely on price, recognizing their value and familiarity. Ï Stable profit margins: They offer consistent profitabil- ity due to their reliable demand and potentially estab- lished pricing strategy. 47. ÏIn 2023, U.S. toy retail sales were estimated $28 billion The Business of Ï ~70% of toy Manufacturing is concentrated in China Toys and HongKong Ï Highly seasonal business; 2/3s of sales happen in the last 12 weeks of the year Ï Collectability and a Storyline create strong consumer demand Ï Evolving consumer preferences* 48. The Toy Firms 13 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr The Manufacturers 1. MATTEL 2. Bandai Namco* 3. LEGO 4. Hasbro The Retailers 1. Walmart 2. Toys 'R' Us* 3. Target 4. amazon.com *Very large internationally 49. 2016 - AR Gaming comes onto the scene with software The History of likeNintendo'sPokémon Go Video Games (cont'd) 2020 - Xbox Series X and Series was released by Microsoft. The PlayStation 5 was developed and re- leased by Sony 2022 - Valve released the Steam Deck, a handheld gaming PC that runsSteamOS 3.0, a Linux distribution developed byValve. 2023 - PlayStation VR 2, Meta Quest, Apple's an- nouncement of entry into the market with the release of the Apple Vision Pro. 50. H Ï ardware (platforms) A Multi-product In- o PC dustry o Personal Consoles o Handheld o Arcade Ï Software o Physical Media o Online Media 51. 14 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr Sony - PlayStation Dominate Video Microsoft - XBox Game Consols Nintendo - Switch 52. ÏDevelopers -a computer software developer (a busi- The Organization- ness or an individual) that creates video games. A al Structure developer may specialize in a certain video game sys- tem, i.e., PlayStation 3, Xbox 360, Wii, or may develop for various systems, including personal computers. There are approximately 1,000 developers, and they are primarily privately held firms. Ï Publishers - video game publishers are responsi- ble for their product's manufacturing and marketing, including market research and all aspects of adver- tising. Major publishers also maintain development studios. In addition, they also: o paying for any license that the game may utilize o paying for localization (adapting software for non-native environments, especially other nations, and cultures.) o Layout o Printing o Writing user manuals o creation of graphic design elements such as the box design. Ï Distributors - Large publishers distribute the games they publish to retail or online. Smaller publishers usually hire distribution companies (or larger publish- ers) to distribute the games they publish. 53. "Sports is the only business where the owners want Competitive Bal- regulation, and labor - the players - want the free ance market." 54. Input - Transformation (through-put) -> Output The business of entertainment: The Talent, Coaches, etc. + $ (stadium, etc.) - The Creating value 15 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr Match, The Game, The Contest -> The Ticket, the TV through transfor- Show mation 55. The first of four major components that make up the The Business sports business model is competition : Model - Competi- Ï "The Game" tion o Leagues o Teams players o Agents o Management firms 56. The second of four major components that make up The Business the sports business model is Incremental Revenue Model -Incre- Sources : mental Revenue Ï Broadcast rights Sources Ï Sponsorships Ï Venue/in-stadium 57. The third of four major components that make up the The Business sports business model is Ancillary Elements: Model - Ancillary Ï Athletic equipment Elements Ï Fantasy leagues Ï Sports camps Ï More 58. The fourth of the four major components of the sports The Business business model is the Fans. Model - Fans 59. ÏBroadcast revenue is one of the single largest rev- Broadcasting and enue generators for a sports franchise the Sports Model Ï The TV rights to the National Football League (NFL) are the most lucrative and expensive rights of any American sport and any American entertainment property. Ï In its latest deal, the NFL will receive from CBS, Fox, NBC, Amazon, and ESPN a combined $111 billion to televise NFL football from the 2023 season through the 2033 season. Ë Before, the NFL received from CBS, Fox, and NBC a 16 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr combined $39.6 billion to televise NFL football from the 2014 season through the 2022 season. 60. In the U.S., Direct TV, Fox, and ESPN are the most U.S. Sports Indus- pervasive providers of tier 1 professional sports. try Revenue - 2017 These numbers do NOT include the National Colle- giate Athletic Association (NCAA) and several other amateur sports. They also do NOT include the inter- national sports market with its thousands of localized soccer, rugby, cricket, and other broadcast events. They do not include playoffs. 61. ÏMost industries operate under the Darwinian princi- Supporting the ple of survival of the strongest. Weakest Ï With many sports leagues, especially in North Amer- ica, the industry is set up to supportand help the survival of the weakest teams. Ï Example of such support mechanisms: Ë Player draft Ë Revenue-sharing rules Ï The main rationale for this is to promote the league- wide benefit of a competitive league. 62. ÏIn most industries focus on competitive advantage Handicapping the and winning in the marketplace. Strongest Ï In the sports industry, competitive balance is a key model on which some sporting leagues are built. Ï Example of such balancing mechanisms: Ë Salary caps Ë Reverse order of finish draft 63. ÏIn sports, "pools and rules" are administrative mech- Revenue Pools anisms whose aim is either: and Allocation Ë to achieve set objectives, e.g., competitive balance orRules Ë to enable clubs in low-revenue situations to be able to meet minimum payrolls. Ï Pools and rules are the result of negotiations be- tween multiple parties, including league administra- 17 / 18  MGMT 365 - Chapters 3-4, 6-8, 10, 12 Study online at https://quizlet.com/_fwr6vr tion, clubs, and player associations (unions). Ï Examples of rules and pools are: Ë Salary caps Ë Television contract revenue sharing 64. ÏSports teams largely divided into the PLAYING side Clubs of the team and the BUSINESS side Ï Club operations and organization Ï (marketing, sponsorship, ticketing, stadium opera- tions, accounting, finance, human resources, legal, media/PR) 65. Sports Franchises are considered local monopolies Soaring Franchise Ï Television Revenue Drives Value Valuations Ï Tax Advantages Ï Municipal Subsidies Ï Long-Term Appreciation Stan Kroenke owns the Los Angeles Rams, Colorado Avalanche, Denver Nuggets, Arsenal, and several oth- er sports franchises 18 / 18