Download Entertainment Marketing

Entertainment Marketing
Types of Entertainment Businesses
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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
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Section 10.1 – Entertainment and
Marketing – That’s Entertainment
Entertainment has existed in
many different forms for
Centuries
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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
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Section 10.1 – Entertainment and
Marketing – That’s Entertainment
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
3. Recorded Music
5. Video games (home or arcade)
2. Radio
4. Newspapers and magazines
6. Films ( theatrical or home)
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Section 10.1 – Entertainment and
Marketing – That’s Entertainment
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
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Section 10.1 – Entertainment and
Marketing – That’s Entertainment
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
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Section 10.1 – Entertainment and
Marketing – That’s Entertainment
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
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Film star agent
Graphic Artist designing CD cover
Roller coaster concept designer
Concession-stand worker at local
movie theater
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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
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Section 10.1 – Entertainment and
Marketing – The Influence of Entertainment
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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
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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
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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 lowerbudget 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
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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
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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
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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
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Section 10.2–Types of Entertainment
Businesses – Objectives
Explain types of
businesses in the
entertainment
industry
Identify forms of
entertainment
marketed to
consumers
ABC TV
Hockey
Team
ESPN
Movie
Studios
The Walt
Disney
Company
Video
Distrib.
Theme
Parks
Broadway
Shows
Publishing
Cruise
Lines
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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
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Section 10.2–Types of Entertainment Businesses
– Business Structures
The Major Companies
Only a few major companies that produce film, television,
radio, music, print media, and internet entertainment and
marketing:
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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
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Section 10.2–Types of Entertainment Businesses
–
Business Structures
New Line
AOL
Cinemas
New
Rhino
Line
Television
Records
Atlanta
DC
Comics
Braves
Time
TBS
Magazine
Time
Warner
Sports
CNN
Illustrated
Warner
CW
Television
Bros.
Network
Pictures
The
WB
Television
WB.com
Cartoon
HBO
Network
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Section 10.2–Types of Entertainment Business–
Business Structures
The Major Companies – cont.
Major conglomerate companies are structured with a Vertical
distribution
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2.
3.
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
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Relies on others for the product and most of the promotion
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Section 10.2 – Types of
Entertainment Businesses – Movies
Movie production is a multi-billion-dollar
operation
Process:
1. Studio create product or release movies for
smaller independent producers
2. Films are released by distributor (usually
studio or related company)
3. 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
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Section 10.2 – Types of
Entertainment Businesses – Movies
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
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Section 10.2 – Types of
Entertainment Businesses – Movies
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
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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
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Section 10.2 – Types of Entertainment
Businesses – Theme
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
Parks
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Section 10.2 – Types of Entertainment
Businesses – Theme
Parks
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
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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
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Section 10.2 – Types of Entertainment
Businesses – Television
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
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Section 10.2 – Types of Entertainment
Businesses – Television
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
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Section 10.2 – Types of Entertainment
Businesses – Television
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
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Section 10.2 – Types of Entertainment
Businesses – Television
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
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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
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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
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Section 10.2 – Types of Entertainment
Businesses – Music
Industry
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
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Section 10.2 – Types of Entertainment
Businesses – Music
Industry
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
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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
Computer Games
teenagers spend more time on
Early development began in the early
computers than watching
1950s, but only researchers, scientists,
television
and military personnel had access to
Internet users can:
computers and video technology
– Watch movies, listen to music,
Growth over time has been consistent and
communicate with friends,
expansive
track news and information
Computer game explosion began in mid
from around the world
1980s due to game consoles such as
Internet shopping has not yet
Nintendo
replaced brick-and-mortar
21st century has seen game ideas coming
store
from fiction adventures to movie tie-ins
– A Retail business with a
Industry continues to expand with a atphysical location of store
least 1/3 of all revenue coming from onsite
line gaming
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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
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