|SIC Codes:||7812 7822|
|NAICS Codes:||512120 512110|
Companies in this industry produce and distribute motion pictures. Major companies include Disney, FOX, MGM, Paramount, Sony Pictures, Universal, and Warner Bros (all based in the US), as well as Spain's Promotora de Informaciones, Toho Co of Japan, and Danish firm Egmont International Holding.
Consumer spending drives demand. The profitability of individual companies depends on creativity, marketing, and distribution. Large companies often have the advantages of long-term contracts with key actors and directors, a permanent staff of technical employees, and wide distribution networks. Small companies can compete successfully by creating marketable movies, often for niche audiences, on low budgets. The industry is concentrated: the 50 largest companies account for about 70 percent of revenue.
Licensing of rights for exhibit, broadcast, and renting of motion pictures accounts for about 35 percent of industry revenue; other products include commercials, music videos, special features, and post-production and technical services. Some companies sell merchandise or earn fees from licensing brand names to third-party manufacturers. Distribution of previously released products is through theaters; wholesalers and retailers; network, local, cable, and satellite TV; the Internet; and other distributors. Production may be on a proprietary or fee-for-service (contract production) basis. Because long-term profit from successful motion pictures can be very high compared to upfront production costs, companies often prefer to produce movies on a proprietary basis and own the product. When customers own the product, they pay fees for production and distribution services, a common arrangement for non-movie products, such as commercials, educational features, music videos, and direct-to-video DVDs. Independent production companies increasingly contract with major studios for distribution services, which include marketing.Buy Now