Ownership and Integration- Monday's lesson notes

 March 01, 2021

  Why are these questions difficult? 

• Horizontal integration;
• Synergy; 
• Technological convergence; 
• Parent company; 
• Hardware;
• Cross media convergence; 
• Vertical integration; 
• Proliferation;
• Institutional convergence; 
• Conglomerate; 
• Subsidiary;
• Content; 
• Oligopoly;

Horizontal integration- where an organization develops and grows by buying up competitors in the same section of the market.

• Situation when two firms in the same industry and at the same stage of production come together.
• Could be through the businesses merging together or through one firm taking over another.

E.g. Media production and distribution company Warner Bros. buy out the media production and distribution company DC Comics. 

May be in different industries- one 'if' film and other in comic books- they both produce media products for same markets and audiences. 

Vertical integration

• Situation when two firms in the same industry but at different stages of production come together. 
• Could be through at the two businesses merging together or through one firm taking over another. 

E.g. A car company could buy a tyre manufacturer, or television studio buy up a production company which produces some of its television programs.  

Why does it matter? 

Horizontal and vertical integration are two paths/business a company may take to expand and become powerful. 

They make it more difficult for smaller companies to compete. 

E.g. Warner Bros. and Belstone Pictures. 

Question about ownership and integration.

Example: 

• Company structure;
• Warner Bros Pictures as part of AT&T, now owns Warner;
• What it allows in terms of horizontal and vertical integration;
• Huge budgets;
• High concept movies; 
• Tentpole strategy; 
• Access to DC Comics rights; 
• Synergistic campaigns across all media platforms; 

+Use interesting facts and figures to support your points- Wonder Woman and WW84. 

You will contrast that typical Hollywood behavior against?

Belstone Pictures- small, British independent film production company. 

Points of discussion:

• Production- scale of production, small budget, low concept and niche films;
• Audience- funding, multi-role, collaborative approach, controlled shoot (one farm, one tank);
• Distribution/ Exhibition: no cinema release, tiny marketing budgets, importance of film festivals to secure distribution deals, distribution deal with Kaleidoscope uk, deal with Netflix and its pros and cons, etc. 

+Use interesting facts and figures to support your points- Tank 432, Tucked, Making Tracks. 

Vocabulary: 

• Convergence- two or more types of media coming together.
• Cross media convergence- media companies coming together to work across different media, e.g. WW films and DC Comics- WW Comics and rights.
• Synergy- different elements of a company owns two or more types of media. 
• Cross-media ownership- when a company owns two or more types of media. 
• Conglomerate- large parent company which owns a range of smaller companies or more types of media.
• Subsidiary- smaller companies owned by a parent company. 
• Oligopoly- when the market is dominated by a small number of companies.

Benefits of cross media convergence

There are three key factors at play: 

1. Effectively save costs by doing business with sibling (other Time Warner) companies.
2. Reduce risks and maximize profits through creation of additional non-film revenue streams.
3. By working alongside other Warner (AT&T) companies,  the synergistic benefits of cross promotion are effectively doubled. 

Important:

• Learn terminology 
• Learn case studies
• Learn useful facts and figures about case studies, compare and contrast, the market behavior of Warner Bros Pictures and how they reach an audience, compared to how Belstone Pictures go about the same challenge.