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Do you see the opportunity?

Do you see the opportunity?. Nicholas Diji Tony Godfrey Jeremie Gougeon MBA8820 – Pamela Barr. The film industry: 5 forces analysis. Leading movie industry in the world. Slowing growth – In 2007 Box office grew 5.4% domestically and 4.9% worldwide. Low barriers of entry Powerful suppliers

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Do you see the opportunity?

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  1. Do you see the opportunity? Nicholas Diji Tony Godfrey Jeremie Gougeon MBA8820 – Pamela Barr

  2. The film industry: 5 forces analysis • Leading movie industry in the world. • Slowing growth – In 2007 Box office grew 5.4% domestically and 4.9% worldwide. • Low barriers of entry • Powerful suppliers • Buyer power is high • There is availability of substitutes • High rivalry due to low brand equity, a periodic overabundance of products in the market and high exit barriers

  3. Industry current trends • Control of expenses, fewer releases per year • Decline in DVD sales, Blu-Ray not catching yet • Home Entertainment revenues account for up to 60% • Increasing competition from substitutes • websites such as Facebook, video games • Piracy: illegal download threatens profitability • Power conflicts between labor and studios • 2008: Writers Guild of America strike

  4. Industry Trends & Impact • Losing Control • Cost • Star status no longer conferred by studios • Collective bargaining • Pricing • Declining video sales during format transition • Distribution • Who has time for movies? • Why buy when you can…

  5. Competitor profile: Warner Bros. • The industry leader • Reputation for innovation • Benefits a huge video library • Capitalizing on well-known characters • Batman: from DC Comics to “The Dark Knight”, #4 best-selling movie • Acquired all licensing rights for Harry Potter, #1 highest grossing series • Building a strong international network • Present in 30 countries, distribution in 120 • Already involved in the (co)production of 230 local-language movies

  6. Competitor profile: Paramount • One of the “Big Six” – 15.5% of box office spending in 2007 • Distributed the two most successful movies of 2007 “transformers” and “Shrek the third” • One of the company’s strengths lay in its huge library • Expansion through acquisition • Joint ventures with other industry leaders • Content distribution through digital means

  7. Competitor profile: Walt Disney • Distributed decision-making for responsiveness • Alliance & Acquisition Agreements • DreamWorks, iTunes • Resources • Parks & Resorts • Studios • Consumer Products • Media Networks

  8. Universal resources & capabilities • Originally not one of the “Big Five” studios • MCA acquisition (1952): talents + TV • Matsushita (1991) and Seagram (1995) takeovers: no synergies • Vivendi Universal (2000): the ambition of a global 21st century media group • Low synergies but a focus on international operations and new media • NBC Universal (2002): a winning duo • Estimated $450 million a year in synergies (extra revenues + joint operations)

  9. Universal Strategy

  10. Main Issues • Conglomeration • Globalization • Digitization

  11. Our recommendations • Conglomeration • Globalization • Digitization

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