Sunday, April 16, 2006

Industry brief: Movies 2 (Version 2) Part 1 3 4 5 6 The studio oligopoly Basically, the top six Hollywood studios that control around 90% of the US film business. All the real independents together have an inconsiderable share of the market, and most of them have to work with or through a major studio to get national release. Of course, oligopoly in the movie industry is nothing new. Up until the 1950s, most of the current motion picture companies were parts of then current eight-company "studio system" oligopoly, though relative power has changed and some of the names have changed. In fact you can argue in some sense that the current oligopoly is less powerful, because in the 1948 Supreme Court "Paramount Decision": which ruled against film industry vertical integration and forced studios to divest themselves of their theaters. The terms have changed somewhat (owning theaters is not all that tempting a risk for most studios, in any case), but the oligopoly is still pervasive. Most of the major studios are now divisions of gigantic international media empires. Some of them, like Universal studios, have been bought and sold several times. DreamWorks and MGM/UA were exceptions until recently, when DreamWorks was sold off to Paramount (once part of Viacom) and MGM was bought by Sony. Former independents like Miramax and New Line keep getting to look more like the conglomerates that own them. Should any new studio have some real success, it will be more than likely swallowed up as well. Animator Pixar, which threatened to end its run as a production studio for Disney, was recently snapped up by that company. The biggest independent movie of 2005 was Lion's Gate "Saw II," a slasher film that was #21 in sales at 78 million. Only one other film from an independent made the top fifty. The one company likely to give the big studios any kind of a contest is Weinstein Company, founded by the former creators of Miramax. Below are players by rank year 2005 as reported by industry watcher Box Office Mojo. In the year 2005, total US box office has amounted to $8.6 billion in sales, a 6% decline ciomapred to 2004. 2005 results by studio Company Studios % share of market # of releases Time-Warner Warner Brothers, New Line, Warner Independent 20.4 29 News Corp. 20th Century Fox, Fox Searchlight 15.3 18 Paramount (was Viacom) Paramount, DreamWorks, Paramount Classics 15.1 25 Sony Sony, Columbia, Screen Gems, MGM, Sony Classics 12.5 32 Disney Buena Vista, Miramax, Touchstone, Hollywood Pictures, Pixar 12.5 11.4 Universal (General Electric) Universal, Focus 11.4 19 Less than! 3%: Lions Gate, Dimension/Weinstein, IMAX The relative rank of the top companies varies from year to year, often depending on one or two blockbusters. Note that these percentages aren't absolute, in that a number of releases are now joint ventures between two studios or more. For example, while Fox was the studio with release credit for Titanic, in fact, it was a joint venture with Viacom. Basically, all the major studies offer a new theatrical release every two to three weeks. The films that they deem major get the royal treatment in terms of marketing and distribution. The others get the leavings. Disney and Time Warner issue more films because of their "independent" subsidiaries, which specialize in smaller, prestige films. While the movie-making industry has a looser oligopoly concentration than many other businesses at present, it is remarkable how similar the studios all are. Executives, stars, writers, and directors jump from one studio to another. By and large, the movies are pretty similar within a few well-tried genres. As we've noted above, the studios sometimes join in backing movies. They all face exactly the same task -- getting their films on the shelves and then pulling in the audiences. It's no surprise that the people who run the studios share exactly the same culture and the same view of the world. Religious conservatives have been howling about this for years. But it's not a Jewish or gay conspiracy. It's just what happens in any oligopoly over time. It is true that you could reshuffle the management and the scheduled releases of virtually all the major studios and no one would ever notice. Once unique entities like New Line and Miramax are looking more and more like studios that have absorbed them. And all studios answer to distant CFOs and stockholders, who don't care about any ideology except profit. (2006 update) 3:44:52 PM

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