1. Chapter 10 The Entertainment Market

2. Objectives Define entertainment marketing. Identify different types of entertainment media. Explain the economics of entertainment marketing. Discuss the global impact of entertainment marketing. Explain types of businesses in the entertainment industry. Identify forms of entertainment marketed to consumers.

3. Case Study - Hollywood Landmarks such as the Hollywood Sign are world famous symbols. Built in the 1920’s to advertise Hollywoodland real estate, the sign is often associated with the entertainment industry. In the early 20 th century, the industry was expanding, thanks in part to film exhibitors who operated “movie palaces,” or theaters, that have also become landmarks. One such theater is Grauman’s Chinese Theatre in Hollywood, California. Created by Sid Grauman, the Chinese Theatre opened in 1927. Resembling a red Chinese pagoda, gold dragons and stone lion dogs guard the main entrance. The foot and hand print tiles that pave the theater’s forecourt became a legendary marketing device. This theater has hosted movie premieres that promote films and Hollywood as the entertainment capital of the world. Over the years movie theaters have changed, due to new technology and multiplex designs. Many movie palaces have closed. How has the Chinese Theatre remained a successful landmark? (100 Total Points/25 Points Each) 1) What business helped the entertainment industry expand in the 20 th century. 2) Why have some theaters closed? 3) What has allow the Chinese Theatre to stay in business with competition from new theaters? 4) What modern technology would you place in a theater that you owned?

4. Section 10.1 Entertainment and Marketing

5. That’s Entertainment Entertainment has existed for centuries. Roman spectators watched gladiators battle at the Coliseum

6. Entertainment Today Today on average, people spend almost 3 hours a day watching TV.

7. Entertainment Marketing “Entertainment Marketing” – the process of developing, promoting, and distributing products, or goods and services, to satisfy customers’ needs and wants through entertainment.

8. Time Spent Rankings – Entertainment 1) Television 2) Radio 3) Recorded Music 4) Newspapers and Magazines 5) Video Games 6) Films (Movies)

9. Media and Entertainment “Media” are methods used for communicating or transmitting messages, which can be pure entertainment or marketing related messages.

10. Entertainment Marketing Jobs The companies that control the media are large businesses such as Disney, Sony, Universal, NBC, and others.

11. The Influence of Entertainment Many products and services influences by entertainment are fads. “Fads” are a short-term popular trend, style, product, or service. Some examples are: ________________.

12. Entertainment and the Marketing Concept Movie and TV studios are constantly striving to anticipate customer wants and needs – which is the function of the marketing concept – and provide what the public wants.

13. The Economics of Entertainment Entertainment is in the top ten of the highest grossing segments of the economy.

14. Entertainment and Consumer Spending Entertainment marketing relies on meeting customer demand for diversion and excitement at a price the consumer is willing to pay. Ex.: One hour of TV might cost 6 cents, whereas, one hour at Disney World might cost $35. Other examples are _______________.

15. Shopping For Entertainment The entertainment and sports businesses thrive on getting people to spend a portion of their “discretionary” income. Unlike “disposable” income (income that goes to necessities such as food, rent…), discretionary income is spent as the consumer chooses a movie ticket, CD, or DVD.

16. Merchandising and Entertainment Stars sell products, and products sell stars. “Cross-selling” is the method of selling additional related products tied to one name. Ex.: McDonald’s often ties restaurant promotions to new movies.

17. International Entertainment Entertainment marketing is international in scope and generates revenue globally as well as nationally. “Leisure Time” – time free from work or duties.

18. Section 10.2 Types of Entertainment Businesses

19. Business Structures Sole Proprietorships Partnerships Corporations Conglomerates

20. Sole Proprietorships Sole proprietorships are businesses owned by one person.

21. Partnerships Partnerships are businesses owned by 2 or more people.

22. Corporations Corporations are businesses owned by stockholders.

23. Conglomerates Conglomerates are companies that have merged with or bought other companies, and have merged them into larger, more competitive businesses. Ex.: Clear Channel Communications owns 1200 radio stations (60% of the rock music radio station market).

24. The Major Companies There are only a few major companies that produce film, tv, radio, music, and print media, as well as Internet-based entertainment and marketing. These companies include, Disney, Time Warner, and Sony.

25. Movies Movie production is a multi-billion dollar operation. The cost of producing films and tv programs is so high that most projects are produced by large studios. Today it costs about $90 million to produce a major movie, and $40 million to market it. 4 of 10 films may not “break – even.” “Break-even” - the income/revenue equals costs/expenses

26. Major Studios and Indies Studios such as Universal, Disney, Paramount, and MGM are the core of the film business which is considered an oligopoly. “Oligopoly” – a few affect/control an industry.

27. Theatrical Distribution The primary market for film is theatrical distribution.

28. Film Revenue Breakdown Year 2000 Revenues: 26 % theatrical receipts 28 % tv sales 46% video/DVD sales and rentals

29. Theme Parks By 1910 over 2000 amusements parks in the U.S.. (Yet many closed). Disneyland was created in the 1950’s.

30. The Price of Rides The cost of creating new rides in theme parks is very high. A new roller coaster can cost $50 million. Today there are over 600 amusement parks in the U.S..

31. Water Parks In the late 1980’s, the water park idea developed with flumes, pools, wave- making machines, and waterfalls as prime attractions.

32. Television Television is the number one entertainment medium for many Americans. Adults spend an average of 3 hours per day watching. Teenagers spend 4-6 hours per day. Children spend 25 hours per week.

33. TV Production Networks such as NBC, CBS, and ABC produces their own shows. Producers of shows are not necessarily the distributors. An independent station may decide to become an affiliate. An “affiliate” is an independent broadcaster that contracts with larger national networks for programming. Ex.: NBC dropped the popular show “Baywatch.” The show was then independently produced and sold to independent stations (this was successful). “Ratings” – rankings of a tv or radio show over a certain period. What is the purpose of ratings? ________________

34. TV Ratings Ratings are a type of market research that determines if a program stays on the tv schedule or is dropped. Nielsen is the most famous rating company.

35. TV Commercials A typical TV show runs 30 minutes. 22 minutes include the show, 8 minutes for commercials.

36. Selling Airtime The size of the market also influences the price of the advertising. Ex.: “Friends” advertising in the New York area cost more than a low rated show in a small market. Super Bowl ads during the 2004 Super Bowl cost $2.25 million per 30 second ad.

37. Niche Marketing Niche Marketing is a type of marketing that focuses on a small target market of consumers who have very similar interests. Ex.: WB Channel focuses on teens and young adults.

38. Radio Radio stations, like tv, function as either independent station, or part of national networks. Radio also does local, and national advertising depending or affiliation with national networks.

39. Prime Time Radio Prime Time radio is usually between 6:00 A.M. – 9:00 A.M. Why?__________ Radio stations charge the most for ad spots at this time.

40. Music Industry The music industry is dependent on record companies to sign artists and produce and release albums. A record company is also called a “label.” Big labels include Asylum and Sony. Other major labels are ________.

41. Music and TV In the early 80’s MTV appeared and revolutionized the music business with music videos. Before videos, labels relied on airplay on the radio to promote record sales. After videos became popular, artists had to promote their music by getting airtime on both radio and tv.

42. Music and the Internet The music industry has lost money as a result of illegal file sharing and downloading of music for free off the Internet. This practice bypasses the royalties and copyrights of musicians and record labels. Class Discussion/Debate: Should people be able to download music for free, with to legal repurcussions?

43. Live Performance In addition to radio and CD sales, musicians and performers often perform live and go on tour. This activity generates revenue from ticket sales, supports album sales, and provides public exposure.

44. Performing Arts From major productions on Broadway – the theater district in New York City – to plays in local venues, theater is a popular entertainment provider. Shows such at “Cats” earn millions of dollars each year.

45. The Show Goes On Popular theater productions may be adapted for film. Ex.: Grease

46. The Internet and Computers Research shows that teens spend more time on the internet than watching tv. Advertisers are constantly looking for ways to reach web users through ads, banner ads, pop- ups, and spam (emails sent to internet subscribers). Shopping on the internet has increased since the early 90’s, yet it has not replaced brick and mortar stores. “Brick and mortar” stores are retail businesses with a physical location or store site.

47. Computer Games The growth of the video and computer game industry has been steady and expansive. Ralph Baer, a young TV engineer began inventing video games in 1951. The computer game industry continues to expand with online gaming earning 1/3 of the total revenue for the industry.

48. Non-Profit Organization A “non-profit” organization is a non governmental organization that focuses on providing a service rather than a profit. Many operas and ballets are publicly funded.

49. Assignment – Entertainment Spending (100 Total Points/20 Points Each) Research/record entertainment spending on the following: 1) Theme Parks 2) Internet/Computer Games 3) Movies 4) Magazines 5) Recorded Music

50. Assignment - TV (100 Total Points/20 Points Each) 1) How much time do you watch TV in one day? How much time do you watch TV per week? 2) What is your favorite TV program and why? 3) Name three products advertised and describe the advertisements used to sell those products. 4) Do you think these ads are effective? Why? 5) Do you or does anyone in your family buy any of the products you see advertised on TV? Which ones?

51. Checking Concepts/Critical Thinking/Cross-Curriculum Skills (100 Total Points/10 Points Each) 1) Define entertainment marketing. 2) Identify types of media. 3) Name two consumer products that are influenced by entertainment. 4) Describe an oligopoly. 5) Identify types of entertainment businesses. 6) Explain why films produced do not break even. 7) Define ratings. 8) Describe how cable tv uses niche marketing. 9) If Environco has an annual tv advertising budget of $8,000,000 and revenue of $138,000,000, what percentage of revenue is spent on advertising? 10) Your company makes home improvement products, such as carpet and wallpaper. Someone suggested advertising on MTV because it has a large audience. Do you think this would be an effective advertising strategy? Why?