Midterm Flashcards
The six phases of a project include
development, pre-production, production, post-production, distribution and exhibition
The Five “P’s” of Marketing
Product, price, placement, promotion, profit
In terms of real monies to be spent, the contemporary film industry establishes a P&A budget generally defined as
A value of “50% of production budget.” That is: assume negative costs of $50 million, then the P&A budget would initially be set at 50% of that number or $25 million for a total outlay to produce, market and distribute the film of $75 million.
Negative costs
Total cost of producing the film
Above the line
Creative costs (story, script, producer, director, principal cast, supporting cast, etc)
Below the line
Production costs (direct production, pre-production, post-production, excludes anything above the line)
What is the balance between above and below the line
1/3 = above 2/3 = below
P & A
Prints and Advertising
The expense for manufacturing the actual 35mm print or the hard drive for each theater’s film showing plus all other promotion (marketing & advertising) to support the film.
Exhibitors
The official title for theaters/theatre owners
Limited Release
Small number of screens, typically in select theaters in target cities, and typically less than 1,000 screens. Usually based on economics, marketing strategy, and/or award eligibility periods.
Wide Release
Typically considered 1,000 screens or more
How many more screens/cinemas are in North America?
Over 42,000 and 6,000 cinemas
Number of screens does not necessarily equal the number of theaters because why
“multiplex” theaters. That is, there are more screens than actual theater locations.
How much does it cost for a print or DCP (Digital Cinema Package) of the film?
$1000-$2000 for 35mm or $100-$150 for DCPS
Virtual Print Fee
The cost difference between a 35mm print and DCP
As of 2013, for the most part, the VPF has ceased since
1) well over 95% of all theaters are now converted to digital projection; and 2) According to recent trade articles, many film distributors have publicly announced they will no longer distribute films in 35mm format.
Platforming
Opening a film on a limited number of screens and markets, then increasing the number of screens and/or markets on subsequent weeks. Note: the increase is based on strategy and the film’s on-going success. This means the platforming is not necessarily defined by a weekly, bi-weekly, or even monthly expansion.
Bicycling
The act of manufacturing a limited number of prints and then rotating them (“bicycling”) them around the country to various theaters. Bicycling allows for a lower P&A expense
Sequencing
Refers to the pattern of distribution based on the principle of the “second best revenue alternative.” Sequential distribution means that films are normally distributed to the market that generates the highest marginal revenue over the least amount of time.
Rentals
The accurate term given to the exhibition of films by theater owners.
Four-walling
The “buying out” of an entire theater for a limited amount of time by the studio/distributor/production company.
How long can it take from outline or story treatment?
Over a year through arranging financing, final script, cast and crew. 18 months to bring a film from conception to final print stage followed by marketing and distribution.
Majors
Large organizations with production and distribution arms, extensive library assets, and in many cases with actual production facilities.
Are ticket sales for new film releases responsive to ticket prices?
No, they are not responsive to nominal changes. they are deemed to be inelastic.
There are a lot of costs due to move-going (babysitters, parking, popcorn)
Generally, demand for major-event movies are also essentially…
price- inelastic
Price-inelasticity
The price of movie tickets doesn’t change with the cost of producing, marketing and distributing the film or depending on popularity (high demand to view)
Why are 3D films more expensive?
Due to the increased costs for filming and projection equipment
A detailed movie budget
What the executive producer/producer presents to the financiers for investments to be made. This is essential
What numbers are given to film producers as a rough estimate and exact?
Rough- Budget needed during scriptwriting
Exact- Budget determined during pre-production
Preproduction
Represents the beginning of your project, and often is the easiest to project in terms of cost. This category should cover all expenses from the project’s inception through the night prior to the film’s start.
When is the bulk of the budget spent?
During production
Post Production Costs
Include an editing workstation, software, hardware, special effects software, a sound mixing program or mix‐in, salaries for the post‐production crew, test screenings, and other.
How much is budgeted for unexpected above and below the line expenses?
10% contingency
Studio films=no contingency, studio absorbs costs if it goes over
Project participation
Pays a percentage of calculated profit as determined by a fixed definition
Marketing is..
Consumers who want or need your product and how have the willingness and ability to buy
Segmentation
Principle that markets are heterogeneously definable by sameness. Provides starting point for analysis and planning in marketing.
What is the end goal of segmentation?
Maximizing market potential
Market segmentation
The process of dividing a large market into smaller segments of consumers who are similar in their characteristics, behavior, wants or needs.
Why is segmentation important?
It allows marketers to decide the characteristics and buying behavior of a group
Geographic segmentations
Breaks the market into different geographical units – towns, cities, states, regions.
Personal Demographics
Popular way of segmenting markets. People with similar needs and interests.
Psychographics
Divides consumers into groups based on lifestyle, personality, opinions, motives or interests
USP
Unique Selling Proposition, the key selling point for a product
Potentail marketing mediums/channels
Publicity (press release, feature stories, sneak peaks), Film festivals, Trailers, TV, Network, Cable, Spot-TV, newspapers, Radio, Internet, Tie-ins
Typical exhibition terms call for..
A sliding percentage of box-office gross after allowance for the exhibitor’s “nut.”
Nut
House expenses including, but not always limited to, location rents, telephone, electricity, insurance, mortgage payments, staff salaries, general overhead, etc.
*typically provides cushion of profit, negotiated or not
Standard Agreements
70% for first couple weeks after subtracting the nut, and exhibitor being 30% or less. Then biweeks adjusting by 10% (60:40, 50:50)
Aggregate Agreements
Distributor gets 55% and exhibitor gets 45% of ticket revenues without subtracting the nut before the split
If the movie doesn’t do as well as expected then..
The distributor usually has the right to a certain minimum floor payment (direct percentage usually more than 50% of box off receipts before subtracting the nut). With Aggregate, no floor payment is needed
Potential Revenue Streams
Box-office, pay/on-demand TV, Internet, DVD sales, DVD rentals, Network TV< Syndicated TV
SVOD
Subscription Video on Demand - you enter into an agreement
TVOD
Transactional Video on Demand - you pay depending on what you want to watch
AVOD
Advertising Video on Demand - you pay with your eye balls instead of credit card (Youtube)
The goal of broadcast networks, local station and basic cable
Maximize the size of an audience targeted by advertisers
The goal of specialty cable is
To attract the most viewers possible from the target audience
The goal of public TV station
To provide altrenative educational/informational programming
Network TV comes from..
Film Studios, indépendant producers, in-house programming
Cable networks often create and produce their own programming…
or buy programming from syndications or buy programming from independent producers or production houses
What did Financial Syndication open up?
Studios can own networks and networks can own studios - kept TV networks from becoming too powerful
Syndicated programming is sold by who?
Distribution companies to local broadcast stations and cablenetworks
First-run syndication refers to
Programs produced primarily for sale to individual stations (for example, Dr. Phil, Judge Judy, Wheel of Fortune, Ellen, etc.).
Off-network syndication refers to
Programs that have previously aired on a broadcast network (for example: Law & Order; Blue Bloods; Seinfeld, Two and Half Men, Everybody Loves Raymond, Friends, Andy Griffith Show)
Syndicated prices are based on…
market size, the number of “runs” per episode, the number of episodes in the syndicated package, the length of the agreement.
First-run prices are based on…
Annual or multiple-year contract
How many stations are in America?
Approx. 1,800
Including digital cable device, there’s nearly 1,000
Day-part
programming by the time of day to hit a targeted viewing audience
Rating Points
The percentage of all TV-owning households tuned to a particular show
How many households with TV sets/people per house
118.4 million/2.5 per household
Nielsen uses a technique called
statistical sampling to rate the shows
Advertisers pay to air their commercials on TV programs using rates that are based on
Nielsen’s Data
Programmers also use Nielsen’s data to decide…
Which shows to keep and which to cancel.
Share
The percentage of all “switched on” sets tuned to a show. Measures show compared to competitors in time slot
DMA, ADI, TMA
Designated Marketing Areas, Areas of Dominant Influence, Television Market Areas,
Sweeps
Specific time periods in the year which advertising rates for upcoming periods are established
Sweep periods
November, February (stay-at-home viewing), May (effects new fall shows), July
National (network) ads
Commercials purchased at the network and run across all of the network’s affiliates without exception.
National spot ads
Commercials by a “national brand” that are purchased in specific local markets and at the local station level.
GRP (Gross Rating Points)
The sum of all ratings figures
Reach
The percentage of households or target audience exposed to a message at least once over a pre-determined span
Frequency
The number of times a ad is used during a period of time
What is the compensation for affiliates and networks
Affiliates receive cash from networks, advertisers and other paid programming (dependent). Networks are compensated by advertisers and/or other paid programming
Upfronts
When better rated spots are sold to big advertisers who contract for large spot schedules. Provides firm revenue
Duplication of Viewing Law
The percentage of the audience of program B which also watches program A simply varies with the rating of program A, with only small deviations.
The Double Jeopardy Effect
When viewers of programs with low ratings are less loyal than viewers of programs with high ratings. Spiral effect of lower ratings=less views
Stripping
The continuous use of episodes over several days per week.
Lead-off
Placing the strongest program in the first position of the daypart to attract the largest possible audience.
Hammocking
Placing a new or weaker show between two strong programs.
Lead-in
Placing a strong program before a new or weaker show
Block Programming
Placing programs of the same genre back-to-back.
Tent-Poling
Using the strongest program to anchor the schedule at 9 p.m.
Counter-Programming
Offering a programming slate that attracts an audience different from that of the competition.
Stunting
Doing anything unusual to the regular lineup.
Bridging
Rarely used strategy of starting an hour program on the half hour to get a head start on the competition.
Returns Reserve
a % of sales revenue owed to the record company/book publisher/DVD company by the distributor but withheld from any payments due at that time, but they are paid out at a future date per the contract
Why do we have returns reserve?
to protect the distributor from overpaying the record company/book publisher/DVD company on product that may be returned by retailers.
SRP
Suggested Retail Price
Recorded music, DVD and book retailers can be segmented into
1) mass merchants;
2) “big-box” stores;
3) independent stores;
4) gift stores;
5) specialty stores; e-commere/e-tailers/digital stores.
Brick & Mortar
Physical, geographic stores
Click & Mortar
Online/e-commerce stores
Vertical Restraints
Are agreements between firms or individuals at different levels of the production and distribution process
Purpose of vertical/horizontal restraints
To prevent resellers from competing on price and driving down profits
Vertical Price Restraints
Along the same supply chain with the intent to fix the price or control the supply of a category of goods or services. Illegal
Resale Price Maintenance
ensures fair return on investment for both manufacturer and reseller.. Rule of reason.
Rule of Reasons developed by
the United States Supreme Court in its interpretation of the Sherman Antitrust Act.
Rule of Reason
only combinations and contracts unreasonably restraining trade are subject to actions under the anti-trust laws and that size and possession of monopoly power are not illegal.”
One sheet (product one sheet, product sheet, new release sheet, release sheet, tip sheet)
Standard selling tool for manufacturers and distributors
One sheet includes
- cover image or film key art
- title/artist/director/cast/etc.
- mini-bio or summary of the
- project
- sales points
- SRP
- Co-op marketing
- budgets/terms/plans
- Sales history (if any)
- Merchandising tools
- Marketing highlights
- Promotion plans
- Publicity plans/highlights
- Tour schedule
- UPC or ISBN numbers and bar codes
- Appropriate company/organization logos
Sales Cycle
The time period it takes a distributor to solicit orders from its complete retail account base
A distributor bases its initial manufacturing order numbers on..
Sales orders
Street Date
The advertised date than an artists new CD release will appear in retail stores
“Just In Time Management”
Inventory management strategy that strives to improve a business’s return on investment by reducing in-process inventory and associated carrying costs.
Two main segments of book publishing
Trade & Educational/professioanl
Trade Books
Hit driven, mostly fiction/non-fiction
Primary book configurations
“Hardcover”; “Paperback”; “Mass Market”; “E-book”; “Audiobook”
How many book titles are released each year in the US?
Over 1 million (4000,000-major publishers, rest are small/self- publishers
The average book released in the United States sells approximately
3,000-4,000 units.
Plan-o-gram
Illustrates how and where retail products should be placed on store shelves increase purchases. Established by retailer, never distributor/manufacturer
“Open-to-buy” budget
The budget allocated by a retailer to bring in product in any particular period is
Free Standing Insert (FSI)
marketing tool often dubbed a “circular” and found extensively in Sunday newspapers that retailers use to advertise products directly to their community customer base.
“Price & Position” program is
a co-operative marketing and sales program whose aim is for a manufacturer to obtain high visibility in-store placement along with a price-pointing strategy to generate quick sell-through.
Purpose of price & position program
1) subsidized by the manufacturer or distributor; 2) used to give product high visibility with a discount price point thus encouraging purchases by consumers.
End Cap
display location located at the end of a shelving row in a store
Pick Bin
area in distributors warehouse where manufacturers products is physically located.
E-Readers
electronic book reader
Popular E readeres
Kindle, Nook, Reader, Bebook, iPad
Effective in-store merchandising tools include:
Floor Display Point of Sale Video End Cap Display Poster Displays Free Standing Inserts
Distribution Fees calculated as..
percentage of wholesale price
recorded music and books distribution fee of
18-33% of the wholesale selling price
Marketing costs for recorded music, dvds, and books are…
between 6-12% of net sales rev
Recorded music estimates initial marketing on a cost per unit sold basis of
$1.50 per unit basis
Authors usually receive royalties of …
15-30% of net wholesale revenue
Book distributors offer a discount to retailers of
42-55% of SRP
Average every day discounting is roughly…
44-48% off SRP
Net Pricing is…
final price after any cash allowance or deductions are considered.
Reasons for Net Pricing
cost of manufacturing, cost of a licenses or the desirability of the product.
Music Distributors often work on a wholesale pricing principle called Net pricing which means…
distributor is selling an item at a specific price per unit
retailers have the right to return ___ ___ product for credit on their invoice
Slow selling
Average CD returns are about …
20-30% of total units shipped
Returns Authorization is needed for
Retailers requesting to send product back to the distributor
returns reserve is
percentage of sales revenue contractually owed by the distributor for the label/book publisher/DVD or game studio
UPC
Universal Product Code
UPCs used by businesses must be capable of processing
EAN-8, EAN-13, and 12 digit UPC symbols.
what is a Barcode? JUST GUESS
black vertical bars with the spaces. duh.
company prefix is assigned to your company by…
GS1 US. each one is unique
Item Reference is
A number assigned by your company. 1 - 5 digits
International Standard Book Number (ISBN) is a…
10 digit number that uniquely identifies books
Purpose of the ISBN is
is to establish and identify one title from one specific publisher
Four Parts of ISBN:
- group or country identifier to ID a groups of publishers
- publisher identity to ID a particular publisher within the group
- Title Identity to ID a particular title
- check digit is the single digit at the end of the ISBN which validates the ISBN
SKU, Stock Keeping Unit is….
used for companies to systematically track inventory or product availability. Assigned at the merchant level.
SKU is assigned to each
unit. DUH.
Other tracking methods besides the SKU are
UPC, EAN, and GTTN
ISRC, International Standard Recording Code is…
internationally recognized ID tool for sound and music video recordings.
ISRC is uniquely..
permanently ID’s the recording. regardless of format and changing of ownership
ISRC does not ID what…
The song itself. ONLY RECORDINGS
ISRC codes are always __ characters long.
12.
ISRC Codes consisted of four parts:
- first two characters are alpha-2 country code
- next three characters are the ID’s organization which registered the code
- next two characters for the year of registration
- last 5 digits ID the particular sound recording
Digital distribution generally covers the following areas::
Streaming, downloading, subscriptions, mobile, and kiosks
B-to-B
Selling the sells aka business to business; Example = Distributors
B-to-C
Business to Consumer; example = retailers
One stops
wholesaler service where retailers can order ALL product they need at a single source.
Rack Jobbers
firms that are retained by retailers to manager the retailers music sections INSIDE the store
Selling Cycles typically range from ___ weeks (for mainstream music), to ___ weeks (for Jesus music)
2 weeks; 8-9 weeks
The completion of the selling cycle allows distributors to…
aggregate (or Total) sale orders and accurately estimate the initial manufacturing units.
a company will manufacture 10%-15% additional units above the aggregated initial orders because …
The amount should cover orders and early re-orders without much risk of having over-manufactured too much product IF actual consumer demand did not meet the initial order quantities.
Individual video game titles sell less than _____ unites during its life cycle
150,000
Roughly __ % of all video game sales happen during the 4th quarter of each year ; Why??
66; because of Thanksgiving, Black Friday, and Cyber Monday.
Third party game developers will pay hardware manufacture between ___ per game unit sold as a royalty for allowing games to be played on those consoles
$5 - $10
Film Studios, TV production companies, and book publisher may charge a game developers a …
Licensing fee of 10 - 20% of NET SALES REVENUE to license the use of intellectual property to create a game
