Entertainment Marketing

Entertainment Marketing
Types of Entertainment Businesses 2

Section 10.1 – Entertainment and Marketing – Objectives
Define entertainment marketing Identify different types of entertainment media Explain the economics of entertainment marketing Discuss the global impact of entertainment marketing 3

Section 10.1 – Entertainment and Marketing – That’s Entertainment
Entertainment has existed in many different forms for Centuries Ancient Rome – Gladiator Battles Ancient Greece – First Plays 12th Century China – Operas 1500s-1600s London – Plays at Globe Theater Africa – Dance Throughout history and around the world, people have enjoyed music, sports, spectacle, art, and other forms 4

Entertainment Today People spend on average almost three hours a day watching TV Ninety-eight percent of all homes have at least one TV set Television provides many opportunities for marketing Entertainment Marketing is the process of developing, promoting, and distributing products, or goods and services, to satisfy customers’ needs and wants through entertainment, or any diversion, amusement, or method of occupying time The entertainment industry includes the following forms of entertainment (in terms of time spent): 1. Television Radio 3. Recorded Music 4. Newspapers and magazines 5. Video games (home or arcade) 6. Films ( theatrical or home) 5

Entertainment Today – cont. Entertainment industry is a $250 billion market Produces products and services with the following goal: Provide diversion, excitement, and amusement Entertainment today revolves around: Celebrities, cartoon characters, and concepts such as water parks, video games, concerts, and festivals Entertainment provides an enjoyable way to pass the time, and people are willing to pay for it 6

Media and Entertainment Media are the methods used for communicating or transmitting messages Can be pure entertainment or marketing-related messages Media is the driving force of entertainment Can dictate product offerings Media outlets: Film, television, radio, publishing media, the Internet Companies that control the media influence how the public is entertained 7

Entertainment Marketing Jobs Companies that control the media and media offerings are large businesses: Disney, Sony, Universal, NBC Jobs at these companies are associated with entertainment marketing Film star agent Graphic Artist designing CD cover Roller coaster concept designer Concession-stand worker at local movie theater 8

Section 10.1 – Entertainment and Marketing – The Influence of Entertainment
Entertainment marketing influence: Clothes we wear Hairstyles Style in general Everyday expressions are also influenced by entertainment “I’ll be back” – Terminator “Show me the money” – Jerry Macguire Sports also influence nonathletic entertainment Television announcers Movie & television stars Many products or services influenced by entertainment are fads Fads are a short-term popular trend, style, product, or service Popular styles that might be seen in school are influenced by videos, musicians, and current films Fads are constantly changing, and as soon as the mass culture adopts them, the trendsetters move on and adopt something new 9

Section 10.1 – Entertainment and Marketing – The Influence of Entertainment
FADS 10

Section 10.1 – Entertainment and Marketing – Entertainment and the Marketing Concept
Movie and TV studios are constantly striving to anticipate customer wants and needs and provide what the public wants Selling entertainment to the public is a challenge and usually has a short “shelf life” and is perishable Examples: Movie experience ends when the movie ends and you cannot take the product home for reuse Amusement-park experience ends when you leave the park Marketer must cover costs and make profits immediately Selling entertainment is a gamble because the costs and expenses are paid up front If the product is rejected, the producer has not other source of revenue The challenge for marketers is to keep the customer coming back 11

Entertainment and Consumer Spending
Section 10.1 – Entertainment and Marketing – The Economics of Entertainment Entertainment is in the top ten of the highest-grossing segments of the economy and generates revenue from many sources, goods, and services It influences and impacts many other areas of the economy, relying on celebrities to sell products Entertainment and Consumer Spending Entertainment marketing relies on meeting consumer demand for diversion and excitement at a price the customer is willing to pay Television has been the most popular and inexpensive forms of entertainment diversion for almost half a century Due to travel, ticket, concessions, and other related costs, visiting theme parks might be one of the most expensive forms of entertainment 12

Shopping for Entertainment
Section 10.1 – Entertainment and Marketing – The Economics of Entertainment Shopping for Entertainment Shoppers can afford to buy only a limited amount of product before exceeding their budgets Consumers are faced with trade-offs – Opportunity costs Opportunity Costs is a decision to spend money in one way instead of another way Affects both individual and corporate Ex – Disney can spend money on one big budget film or two lower- budget films Entertainment and Sports businesses rely on people spending their discretionary income Discretionary income is money available for spending after essentials (ex. food, rent, medicine) have been paid 13

Merchandising and Entertainment
Section 10.1 – Entertainment and Marketing – The Economics of Entertainment Merchandising and Entertainment Merchandising is a big part of the entertainment industry Businesses use Cross Selling The method of selling additional related products tied to one name Example: Burger King promoting a current film Example: Amusement Park using a popular film character for a ride Example: Audi + Iron Man 14

Global Entertainment Marketing
Section 10.1 – Entertainment and Marketing – International Entertainment Entertainment marketing is international in scope and generates revenue globally as well as nationally People around the world enjoy their leisure time the same way Americans do Leisure time the time free from work or duties Entertainment is the second greatest American export after agriculture Global Entertainment Marketing American companies are know around the world for their characters, films, books, television, and merchandise Warner Brothers The Walt Disney Company As developing countries have more income among their citizens, they become attractive markets for American entertainment 15

Section 10.2–Types of Entertainment Businesses – Objectives
The Walt Disney Company ABC TV Movie Studios Video Distrib. Theme Parks Cruise Lines Publishing Broadway Shows ESPN Hockey Team Explain types of businesses in the entertainment industry Identify forms of entertainment marketed to consumers 16

Section 10.2–Types of Entertainment Businesses – Business Structures
Entertainment industry in the United States is concentrated in areas such as film, TV, radio, music, and theme parks Most businesses that provide entertainment for consumers are large corporations with many investors and employees Most businesses started as sole proprietorships (single owner) or partnerships (owned by two or more people) and grew over the years Entertainment companies are often corporate conglomerates Companies that have merged with or bought other companies and absorbed them into larger, more competitive businesses Often more competitive because it has bought out competing companies to become the major producer 17

The Major Companies Only a few major companies that produce film, television, radio, music, print media, and internet entertainment and marketing: The Walt Disney Company Sony Entertainment Viacom (Paramount) Time Warner Vivendi SA (Universal) The News Corporation The companies have experienced many mergers and acquisitions to build a wide range of firms to compete in all entertainment areas 18

Time Warner New Line Cinemas TBS CW Television Network The WB.com Cartoon Network CNN DC Comics New Line Television Time Warner AOL Time Magazine Warner Bros. Pictures WB Television HBO Sports Illustrated Atlanta Braves Rhino Records 19

Section 10.2–Types of Entertainment Business– Business Structures
The Major Companies – cont. Major conglomerate companies are structured with a Vertical distribution They perform all of the functions in the channel of distribution from producer to consumer They create and produce entertainment products and services They market them They distribute them This compares to a local video-rental shop with a horizontal distribution structure Relies on others for the product and most of the promotion 20

Section 10.2 – Types of Entertainment Businesses – Movies
Movie production is a multi-billion-dollar operation Process: Studio create product or release movies for smaller independent producers Films are released by distributor (usually studio or related company) Film shown by theaters, or exhibitors Cost of producing films and television programs is so high that most projects can only be produced by large studios that are corporations with capital and facilities It costs today about $130 million dollars for a major studio to produce and market a film ($90 to produce, $40 to market) 4 out of ever 10 films do not break even Have costs and expenses equal to income revenue Only large companies can spread out the risk of failure Studios must be assured of: films appeal to specific consumer base, overseas ticket sales, and success in rental market When a film proposal looks favorable it is approved for production by the studio management 21

Major Studios and Indies Major studios are the core of the film business and are considered oligopoly A business situation in which a few firms affect but do not control an industry Independent movie companies (indies), are not affiliated with major studios, but they operate on their own to make films Lakeshore Entertainment Group Lions Gate Entertainment Lucasfilms, Ltd 22

Theatrical Distribution Primary market for film is theatrical distribution First week a film is in theaters, all ticket-sale money goes to the distributor, or studio Revenue is split more evenly after that All concession sales stay with the theater Major source of income for the theater About half of the income from theaters comes from foreign ticket sales Movie business today also relies on secondary products DVD sales, rentals, distribution to cable or other TV markets, foreign distribution 50% of revenue from a film The film business balances art with entertainment needs of the audience Artistic and creative aspects may be dropped in order to reach a wider audience and make money quicker 23

Section 10.2 – Types of Entertainment Businesses – Theme Parks
First amusement parks appeared in Europe around 1550 and were called “pleasure gardens” Consisted of landscaped gardens, games, music, and simple rides By 1910 there were over 2,000 amusement parks in the United States Consisted of carousels, roller coasters, and Ferris wheels By 1920 many amusement parks closed 24

1955 Disneyland opened in Anaheim, California 28, 154 guests visit park on opening day 90 million viewers watch park opening on ABC Disneyland Differences: More family friendly than parks were before Disneyland opened Park had a variety of areas with different themes Park had exhibits and attractions for all ages Cleanliness, organization, and friendly employees were a major part of the whole experience Disney signed sponsors to help build the park and sponsor rides 25

The Price of Rides Cost of creating new rides can be as expensive as $50 million Rides must be carefully designed and have themes to attract customers New rides must be bigger and better to succeed Rides either focus on thrill or activities Water Parks Gained in popularity in the late 1980s Utilizes water slides, lazy rivers, pools, wave-making machines, waterfalls, and play structures 26

Section 10.2 – Types of Entertainment Businesses – Television
The number one entertainment medium for many Americans Adults spend on average 3 hours a day watching TV Teenagers spend 4 to 6 hours a day watching TV Children spend almost 25 hours per week watching TV Television offers diversion and information to many people, but it also a link to the world and can influence consumer behavior Viewers who admire certain television personalities buy products that they use and wear styles they wear Television shows either survive or get cancelled according to the size of their audience Advertising sponsors support television networks and will pay for airtime during successful shows Shows with large viewership will continue and shows with few viewers will not 27

TV Production Television programs originate from a variety of sources: Networks producing their own shows Major studios may produce products TV program may be a major feature film bought from a studio after it has been in theaters Producers of TV shows are not necessarily the distributors TV stations may have not connection to a producer of a program Independent stations may decide to become an affiliate Independent broadcaster that contracts with larger national networks for programming An affiliate can pick up the larger networks programming as well as independently produced programs Independently produced programs can remain in production even after being dropped by larger network 28

TV Ratings Ratings are the rankings of TV-show or radio-show popularity in a certain period of time Type of market research that determines if a program stays on the television schedule or is dropped Nielson Media Research is the most famous rating company Through surveys of viewers, electronic data collection, and other methods, Nielsen ranks the popularity of a TV program within its time slot and geographic area Low ratings represents a show without enough viewers and advertising not reaching an audience Will likely be dropped or cancelled by network as advertisers will not buy time during a show and show will not make money for network 29

TV Commercials 30 minute TV show will typically consist of 22 minutes of program and 8 minutes of commercials Commercial time can be split between national and local ads Based on arrangements between local station and network Prime Time is the most expensive advertising time charged for the programming in the evening from 8pm to 11pm Advertisers are willing to pay more to place their ads on popular shows during this timeframe because the feel it will pay off as this is the time the majority of people watch TV 30

Selling Airtime Size of market and rating of show influences the price of advertising TV networks use major events as primary vehicles to advertise their prime-time line-ups of shows Marketing is involved in all aspects of television programming: Planning Production Selling ad time Promoting the show promoting products related to the show Planning residuals Reruns Overseas distribution Niche Marketing is a type of marketing that focuses on a small target market of consumers who have very similar interests Has expanded in television marketing with many cable channels and specialized TV networks aimed at specific target markets Target market is narrowed down further by the type of show offered on each network and its time slot 31

Section 10.2 – Types of Entertainment Businesses – Radio
Functions like television as either an independent station or part of a national network Schedules local and national advertising Independent stations can obtain programming from national networks or develop their own Radio stations rely on market research from companies such as Arbitron Rating service and Nielson to determine popularity of their programming Prime-Time Radio Different from television in that is occurs from 6am to 9am during morning drive to work commute Focus is more on entertainment than music Radio stations charge the most for advertising during this time slot 32

Section 10.2 – Types of Entertainment Businesses – Music Industry
Dependent on record companies signing artists and producing and releasing albums Record company is also called a label Music industry is risky because many albums do not make a profit Music Industry is continually looking for new talent while trying to release new music from established names Major record labels since 2009: Sony Music Entertainment EMI Group Warner Music Group Universal Music Group 33

Music and TV MTV appeared in the early 1980s and revolutionized the music business with music videos Before MTV, record labels relied on radio airplay to promote sales of records and tapes With the popularity of videos, artists had to promote their music through both radio and video Successful recording artists rely on up-front payment or royalties Money paid to the owner, or author, label, or performer for material that has been copyrighted Musician/author receives royalties whenever music is played on radio or on television ASCAP (American Society of Composers, Authors, and Publishers) and BMI (Broadcast Music, Inc) track and document the use of music Collect Royalties and distribute them to the artists 34

Music and the Internet Beginning with Napster (continuing with Limewire and Kazaa) in the mid 1990s, 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 for musicians and record labels Legal online services such as iTunes has had a positive effect on the music industry Live Performance Provide an additional way to generate revenue from ticket sales, support album sales, and provides public exposure with publicity in local communities Community events: Personal appearances Visits local radio stations 35

Section 10.2 – Types of Entertainment Businesses – Performing Arts
From productions on Broadway to plays in local venues, theater is a popular entertainment provider Due to producer discretion, performance art is a very centralized business today Producer decides: Play to be performed Director Cast Musicians Promotions to run at theater Stage crew Box office Ticket sales Due to high cost of productions, many plays or productions are financed and produces by large entertainment companies that produce films and television 36

Section 10.2 – Types of Entertainment Businesses – The Internet and Computers
Researchers have shown teenagers spend more time on computers than watching television Internet users can: Watch movies, listen to music, communicate with friends, track news and information from around the world Internet shopping has not yet replaced brick-and-mortar store A Retail business with a physical location of store site Computer Games Early development began in the early 1950s, but only researchers, scientists, and military personnel had access to computers and video technology Growth over time has been consistent and expansive Computer game explosion began in mid 1980s due to game consoles such as Nintendo 21st century has seen game ideas coming from fiction adventures to movie tie-ins Industry continues to expand with a at-least 1/3 of all revenue coming from on-line gaming 37

Section 10.2 – Types of Entertainment Businesses-Other Entertainment Businesses
Circuses Innovative shows such as Cirque du Soleil, which produces magical and fantasy-themed shows, have attracted a new audience Themed restaurants Food is often secondary to the entertainment environment Opera and Ballet Limited markets – larger metropolitan areas, educated audience, high incomes Many companies are publicly funded, nonprofit organizations Non-governmental organizations that focuses on providing a service rather than a profit 38

Entertainment Marketing

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