TEL T 207 Final Lectures 12 16 2013 Lecture 13 Early Hollywood Sets the Stage for Modern Video Early video evolved from technology The technology is key to this market Early power was vested in the inventors and manufacturers Film patent trust vs the pirates Pirates o Europeans came over and couldn t enter the industry and there were some Americans that wanted to do their own thing Fled to LA bc it was close to Mexican border Film patent trust dissolved in 1915 o Broke antitrust laws by doing the following No imports Limited lengths No star actors All filming and exhibition must pay a license fee Film supplies and results were price fixed o Claimed they had the right to do it because they had the patent still The Pirates Transform Themselves the studios were born o tried to get risk factors eliminated greatest example of vertical integration o Early o o o brought production distribution and exhibition together bought up everything to minimize risk factors why vertically integrate Gives you more profit in the end Profits from each and every system along the way Don t have to waste time negotiating or pay transaction costs production in the studio system Issue of financing and return on investment Studios and studio heads were the ones in charge of making the movies Believed that people needed to stick to the mold made for you Had to comply with what studios were wanting Multiple films per year for multiple years Supply side leverage Bundling book blocking and theater chains Theaters were forced to book buy a block of movies o Couldn t choose what movies you got o Had to buy crappy movies to get good movies o Couldn t show movies from other studios when they bought certain bundles Entered in exclusivity agreements What roles do the studios now perform Instead of vertical integration they participate in so many different markets and become an economy of scope Gives them leverage in all of those markets Now they have blockbusters and some genre films Spend a lot more money but make the same amount as in the past Studios makes most of its money by international sales and by exporting our intellectual property Commonalities of blockbusters Special effects Big star actors Ads Action films Can translate across cultures Pre existing intellectual property and sequels Lecture 14 Movies Gatekeepers for the industry In house o Own range of options o First look contracts Independent producers o Very open end possibilities Negative pick up deals o Even more open access The process Development o Pitch idea o Script o Retainer agreements with lawyers and agents Pre production o Sign above the line individuals o Completion bond agreements 5 of budget is insurance for if you cant complete the movie o errors and omissions insurance o workers comp insurance o film insurance o location releases and permits o union and guild agreements o financing agreements at each stage options contract o don t pay for full contract until all pieces are there o secure rights to a script o buy something in advance for cheaper if it doesn t work out they ve only lost some of the options contract post production o distribution agreements o music permissions o video clip permissions o exhibition agreements windows of release refer to the points in time at which films TV and other media are release in certain distribution channels and not others back in the day o best theaters in the best city o next best pre release theaters in the city s downtown area and maybe the best theaters in the next best cities o broader urban coverage o neighborhood theaters in bigger metro areas o only after it runs in larger cities did more places get it movies were distributed in this way because of the price o higher at first and gets cheaper over time o price discrimination for consumers get as much money out of people as you can as tv technology improves it will begin to a bigger and bigger threat for movie theaters movie has to really be appealing to make you want to pay for it and leave your home theater technology greatly affects this allows for internet for downloading and Netflix ondemand technology better home theaters at the same time movie theaters are doing incentives to bring you in more interactive viewing 3D experience making the experience more like home Lecture 15 Television and the turning point 3 dominant strategies from the master switch conglomeratization intellectual property development o content technology and portfolios spotting niches and serving them better other dominant strategies finding distribution workarounds developing new and clear content treating your network like a garden o have to grow your garden and know how to harvest your garden what is power networks used control to exclude people and other businesses they acquired properties to horizontally and vertically integrate they developed technology networks and content that gave them exclusivity of business models and or content companies use their market power to set up and dominate single networks o a few firms could grow and crush competitors power is access to the options Lecture 16 Television continued TV in 1939 RCA dominates from its powerful manipulation There were 16 stations in 1948 and by 1950 were nearly 100 stations Audience expanded by 4000 In In 1948 the FCC froze new filings for TV licenses 1952 FCC issued the Sixth Report and Order Reallocation of the 12 VHF Spectrum Created 20 new channels in the UHF spectrum shorter range Reserve sections for non commercial broadcast TV There were still interference problems With the combo of rules there was a technological limit to national networks In addition to spectrum allocation there was a battle for a new standard New standards destroy previous technologies Color TV CBS v NBC RCA o Resolved mostly in RCA s favor o Featured backward compatibility o 5 years after the standard was adopted only NBC was broadcasting in color backward compatibility when you get new technology but can still use the old early players nbc abc cbs Dumont tv network The way that these networks distributed nationally was by using AT T long lines Networks made money by advertising Because of lack of ability to exclude people no way to have paid subscriptions Local stations can t compete with content of national Fox wb and upn depend upon the UHF spectrum New networks Tv signals were difficult to send beyond electromagnetic frequency ranges One of the most underappreciated technological inventions was coaxial cable o Now