The 21st century will be characterised by the continued fragmentation of traditional media, as outlets for information and entertainment rapidly expand and decentralise the current TV hegemony. As these distribution channels grow and people become more comfortable with their use, the media often neglects a source of much of our entertainment, the film industry.
The decline of movie-appeal is only part of a much larger problem for the structurally declining industry. Consolidation to combat the excess capacity and reduce succession risk has already began in both the production and licensing film segments, with Walt Disney purchasing Marvel Entertainment (~US$4b), and the imminent sale of Metro-Goldwyn-Mayer Inc (MGM)for an expected ~US$1.5b.
Matthew Garrahan from The Times reported an interesting argument to light this week following Carl Icahn’s offer to increase his holding in Lions Gate to 30%, seeking to derail the management’s pursuit of the MGM film library, stating:
“I believe Library values are declining… Lions Gate already has a major investment in a library – its own”
This argument can be seen to present some truth, considering MGM was purchased by a Sony consortium for US$5b in 2005, as well as the lack of creditor belief in CEO Stephen Cooper’s continuing the business, being rejected by the creditors that now control the defunct business, instead pursuing a quick fire sale to recoup their investment.
Can it be true that these libraries of famous movies, which include the James Bond franchise, are declining in value? These massive archives of intellectual property that will continue to be viewed by audiences for generations? In this question opens up the plethora of thematic issues now driving the decline of the industry.
The growth of alternative entertainment, catering to a largely diverse and expanding population, have allowed former niche players to export their entertainment around the world at little cost. The most lucrative market is now Bollywood, where ticket sale numbers have dwarfed Hollywood receipts from as early as 2002, but now with rapidly expanding disposable incomes and population of India, the Bollywood industry is quickly catching up to Hollywood in film revenues.
Furthermore, the internet now exposes audiences to a variety of interests with a couple of clicks. Where as 15 years ago, Western audiences would have known little of the Manga revolution, these Japanese comics and cartoons now enjoy a rapidly expanding share of Western markets.
This increasing accessibility and ubiquity of the internet has likewise accelerated the decline of DVDs, as consumers can now download, whether legally or illegally, their entertainment. Likewise, with the expansion of Web 2.0, where users can actively participate and supply content, has enormously broadened the spectrum of entertainment offerings to users.
Finally, the recent credit crunch hasn’t don’t any favours for the industry, considering that ~90% of all films produced actually lose money, funding the production and distribution is highly risky, with financiers still licking their wounds from the 2008-2009 period. The economics of the industry rely on the ~10% of films that make stellar returns to keep the industry as a whole viable. Similarly, where problems occur in monetizing television, radio and newspaper news- these are all constant flows of operations, not the two year investment and one big splash we receive from the movies.
Although most of the media’s attention focuses on the decline of television and newspaper, the film industry is a quiet casualty. With convergence growing exponentially, it wont be surprising when soon there is no distinction between several mediums– a box in front of the couch that provides internet, television, blogs, shopping – the possibilities are limitless. Although we may hear about Rupert Murdoch and his struggle to monetize readership of online news, spare a thought for the movie-makers as they struggle to keep an audience.
The decline of movie-appeal is only part of a much larger problem for the structurally declining industry. Consolidation to combat the excess capacity and reduce succession risk has already began in both the production and licensing film segments, with Walt Disney purchasing Marvel Entertainment (~US$4b), and the imminent sale of Metro-Goldwyn-Mayer Inc (MGM)for an expected ~US$1.5b.
Matthew Garrahan from The Times reported an interesting argument to light this week following Carl Icahn’s offer to increase his holding in Lions Gate to 30%, seeking to derail the management’s pursuit of the MGM film library, stating:
“I believe Library values are declining… Lions Gate already has a major investment in a library – its own”
This argument can be seen to present some truth, considering MGM was purchased by a Sony consortium for US$5b in 2005, as well as the lack of creditor belief in CEO Stephen Cooper’s continuing the business, being rejected by the creditors that now control the defunct business, instead pursuing a quick fire sale to recoup their investment.
Can it be true that these libraries of famous movies, which include the James Bond franchise, are declining in value? These massive archives of intellectual property that will continue to be viewed by audiences for generations? In this question opens up the plethora of thematic issues now driving the decline of the industry.
The growth of alternative entertainment, catering to a largely diverse and expanding population, have allowed former niche players to export their entertainment around the world at little cost. The most lucrative market is now Bollywood, where ticket sale numbers have dwarfed Hollywood receipts from as early as 2002, but now with rapidly expanding disposable incomes and population of India, the Bollywood industry is quickly catching up to Hollywood in film revenues.
Furthermore, the internet now exposes audiences to a variety of interests with a couple of clicks. Where as 15 years ago, Western audiences would have known little of the Manga revolution, these Japanese comics and cartoons now enjoy a rapidly expanding share of Western markets.
This increasing accessibility and ubiquity of the internet has likewise accelerated the decline of DVDs, as consumers can now download, whether legally or illegally, their entertainment. Likewise, with the expansion of Web 2.0, where users can actively participate and supply content, has enormously broadened the spectrum of entertainment offerings to users.
Finally, the recent credit crunch hasn’t don’t any favours for the industry, considering that ~90% of all films produced actually lose money, funding the production and distribution is highly risky, with financiers still licking their wounds from the 2008-2009 period. The economics of the industry rely on the ~10% of films that make stellar returns to keep the industry as a whole viable. Similarly, where problems occur in monetizing television, radio and newspaper news- these are all constant flows of operations, not the two year investment and one big splash we receive from the movies.
Although most of the media’s attention focuses on the decline of television and newspaper, the film industry is a quiet casualty. With convergence growing exponentially, it wont be surprising when soon there is no distinction between several mediums– a box in front of the couch that provides internet, television, blogs, shopping – the possibilities are limitless. Although we may hear about Rupert Murdoch and his struggle to monetize readership of online news, spare a thought for the movie-makers as they struggle to keep an audience.
Again, a very professional blog. But I need to see that you have read more than one source and can comment and compare the objectivity as discussed in class. 6.5/10
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