19 Financial Models

Michael Noone, Jonathan Young, Jake Mikucki, and Tucker McIlwrath

Movies 

During the 19th century, political and economic factors helped to critically determine the direction of the industry. The rise of finance capitalism, during this period, and concentration of wealth into great industrial corporations, trusts, and cartels eventually proved a model for the film entrepreneurs who transformed the motion picture from its earlier chemical, mechanical, and electrical origins into a potent national cultural force.

Between the years of 1900 and 1920, thousands of hopeful film production companies had been incorporated in America and more followed in what has been described as a “cinematic goldrush” (Epstein, 2005). As early as 1915, estimated half billion dollars was invested in the industry, with both business magazines and established Wall Street brokerage houses, beginning to take a new look at the burgeoning film marketplace (Epstein, 2005).

As paradoxical and absurd as it sounds, it’s cheaper for a Hollywood studio to make a big-budget action movie than to make a shoestring art film like Sideways. Paramount’s action flick Lara Croft: Tomb Raider. On paper, Tomb Raider’s budget was $94 million. In fact, the entire movie cost Paramount less than $7 million. How did the studio collect over $87 million before cameras started rolling? (Epstein, 2005)

It is estimated that by 2020, Global box office revenue’s will increase by eight billion dollars (Statista, 2016). The percentage of revenues an exhibitor gets depends on the contract for each film. Many contracts are intended to help a theater hedge against films that flop at the box office by giving theaters a larger cut of ticket sales for such films, so a deal may have the studio getting a smaller percentage of a poorly-performing film and a larger percentage of a hit film’s take (Zipin, 2017). Studios and distributors generally make more from domestic revenue than from overseas sales because they get a larger percentage. Still, overseas ticket sales are incredibly important, especially today (Zipin, 2017). It’s why you’re seeing more sci-fi, action, and fantasy films, and why superhero movies are such a phenomenon: They’re easy to understand, whether you’re in Malaysia or Montana.

Television

Television is a billion-dollar industry. There was a time when there were only three channels. Companies can now provide thousands of channels. Of course, some channels are the same and are not available because they are meant to broadcast a live event. Cable companies like Comcast and Spectrum, make their money by selling package deals. These companies have no problem showing any sport event, political event, or movie just for a couple more dollars.

Televison channels make their money by company’s buying air time to advertise and from the cable companies that sells certain packages with their channel in it. The most profitable way for channels is selling air time. Depending on the event, these channels can make a pretty penny. For instance, the Super Bowl. It is the most viewed sporting event in the United States. When Fox broadcast the game, they charged $5 million dollars for only 30 seconds (Smith, 2017). Most people that view the game are mainly interested in the commercials because companies purposely make them enjoyable. Another big event that channels make a lot of money off of is the MLB World Series. There is not as many viewers as the Super Bowl, so the cost for air time is about $350,000. This may not seem a lot of money but the World Series is best of seven games. If the company wants to show there add once a game, it adds up quickly if it gets to game six or seven (Lafayette, 2017)

Cable television overall profits are increasing. The U.S Census Bureau created a graph that shows cable providers and other subscription programing revenue. In 2010, cable providers made a total of 31.22 billion dollars. The next year made 33.62 and then the following year made 36.43 billion. In 2013, cable television made 39.27. In 2014, a total revenue of 42.27 billion was earned then, 2015 revenue jumped to 47.82 billion dollars.

Photography 

Photography has changed so much over the years.  We went from film (developing film in a dark room) to taking pictures on our smartphones and transferring those pictures to social media such as Facebook, Instagram, etc.  These social media platforms are connected to the whole world, so now that picture that you uploaded is all over the internet and after not too long, it is out in the world for all to see.  So, film has changed in so many ways but I think the most important way is that film has gone from being more independent, and keeping to yourself to sharing with one another, even people you don’t really know.  Developing film still exists today, but it is not our only way of seeing, or developing photography.

The photography industry, just like the movie and television industries, has gone through some major changes.  When you think about photography, only one firm really stands out.  Well, not so much anymore because of all of the changes this industry has gone through (Scanlon). In the 1970’s and up until 2012 Kodak dominated the country’s photographic supplies and equipment. This is much like how General Motors dominated the automobile industry.  They were very similar as far as the sales and results went.  In the 70’s Kodak had sales of roughly around $2.5 billion.  It accounted for 43% of the free-world market in the photography industry (Scanlon). Fuji Photo Film of Japan had a minor market presence in the 1970’s right behind Eastman Kodak (Kadiyali). In 1979, Fuji Film made an intent to actually enter the market in a huge way.  All industry sources say that a 5% market share is the minimum for market presence.  So, Fuji Film reached this market share in 1980.  This is when it began to push into the US market. Basically, 1980 was the year that Fuji Film officially entered the US market (Kadiyali).

Revenue of Commercial Photography

Moving away from the history of the photography industry, let’s talk about the revenue for commercial photography in the modern-day U.S.  The commercial photography industry is a million-dollar industry.  The revenue from 2008-2020 was really all over the place.  In 2008, it started out strong, and then from 2009-2011 it approximately maintained a steady amount of revenue.  Again in 2012, it shot up, but not as much as it started out with in 2008. (Statista, 2008) All of a sudden from 2013-2014, the revenue had been the highest it has been yet, surpassing the revenue total in 2008.  After that, from 2015-2017 it decreased every year, and they are projecting from 2018-2020, it is only going to continue to decrease, which is unfortunate for the commercial photography industry.  Hopefully this isn’t the case, but only time will tell. (Statista, 2008)

Photography sales in the ’90’s really picked up when disposable cameras hit the market in earnest. Your local drugstore carried them cheap, as low as five dollars. The popularity of these cameras caused a large increase in 35mm film which in turn made film the second biggest contributor to the photography business in around that time. However, the disposable camera sales did outshine the big-time camera equipment. This isn’t necessarily bad as thing considering the 35mm film and disposable camera sales more or less balanced it out.

Work Cited  

Dossier. “Film Industry in the U.S.” Statista, 2017, http://www.statista.com/study/11472/film-industry-in-the-united-states-statista-dossier/.

Epstein, Edward Jay. “How to Finance a Hollywood Blockbuster.” Slate Magazine, 25 April 2005, http://www.slate.com/articles/arts/the_hollywood_economist/2005/04/how_to_finance_a_hollywood_blockbuster.html.

Heubusch, Kevin. “Look at the Birdie. (Cover Story).” American Demographics, vol. 19, no. 7, July 1997, p. 4.

Lafayette, Jon. “Fox Sports Already Scores as World Series Winners.” Broadcasting Cable, 1 November 2017, https://www.broadcastingcable.com/news/currency/fox-sports-already-scores-world-series-winner/169768. 

Kadiyali, Vrinda. “Entry, Its Deterrence, and Its Accommodation: A Study of the U. S. Photographic Film Industry.” The RAND Journal of Economics, vol. 27, no. 3, 1996, pp. 452–478. JSTOR, http://www.jstor.org/stable/2555839.

Smith, Chris. “The Price Of Super Bowl Commercials May Be About To Stall.” Forbes, 2 February 2017.

Scanlon, Paul. “FTC and Phase II: The ‘McGovern Papers’.” Antitrust Law and Economics Review, Vol 5, No. 3, 1972, p. 33. http://heinonline.org/HOL/LandingPage?handle=hein.journals/antlervi7&div=8&id=&page=.

US Census Bureau. “Licensing Revenue of Providers of Cable and Other Subscription Programming in the United States from 2010 to 2015 (in Billion U.S. Dollars).” Statista, 2017, http://www.statista.com/statistics/185218/licensing-revenue-breakdown-of-cable-and-pay-tv-providers-since-2005/. Accessed 30 Nov 2017

Zipin, Dina. “How Exactly Do Movies Make Money?” Investopedia, 22 May 2017, http://www.investopedia.com/articles/investing/093015/how-exactly-do-movies-make-money.asp#ixzz4z50rtizX.

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Introduction to Media Studies by Michael Noone, Jonathan Young, Jake Mikucki, and Tucker McIlwrath is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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