Changes of Time Warner Company by taking into consideration the developments and trends in the motion picture industry


Studienarbeit, 2017
18 Seiten

Leseprobe

Table of content

List of figures

1 Introduction

2 Motion picture industry
2.1 History

3 Background of the study
3.1 Theory of Merger and Acquisitions
3.2 Trends and developments

4 Application part
4.1 Time Warner
4.2 Reorganization process at Time Warner

5 Conclusion

6 Reference list

List of figures

Figure 1: Feature films produced in the UK from 2003 to 2015

Figure 2: Major Studio Release Windows (DVD) from 2000 to 2016

Figure 3: Age of UK cinema audiences over the time period of 2008 to 2015

1 Introduction

The Motion Picture industry is a continuously and rapidly changing industry due to technical advancements or industry trends guiding the film industry into a certain direction. Particularly innovation and the power of customer demand are the main triggers for the swaying trends in the film industry. The steadily growing motion picture industry is becoming more and more important based on the popularity across the population. In 2016 the global box office revenue reached its peak of about 38 billion U.S. dollars and experts are now predicting a further increase to about 50 billion U.S. dollar in 2020. Nowadays the motion picture industry belongs to one of the fastest growing industries around the world while India is the largest film market in the world, followed by China and the U.S. (Romero, A., 2017). Hence it is absolutely necessary for companies that are engaged in the film industry to react according to external trends efficiently and in an adequate manner in order to remain competitive. That´s why it is important to recognize industry trends in advance and to be aware of potential risks arising if companies do not follow them.

This paper begins with a general historic overview in order to give an insight into the most important events in the motion picture industry. Afterwards there will be a theoretical part including a general description of the function of merger and acquisitions that have been implemented in the particular company and motion picture example. In the main part the paper addresses the major changes the motion picture industry is surrounded by. These can be on the one hand developments that has been emerged over time or on the other hand trends that are currently shifting the motion picture into a certain direction. Subsequently there will be a description of the Time Warner profile and its most recent data. Based on the changing industry trends in the motion picture, Time Warner as a company has to adapt its business operations according to the industry environment. These company shifts are highlighted in the following and analysed with a special focus on the internal reorganization process of the company. At the end there will be a summary about the essence of the text and a review of the most important changes that have been made in the motion picture industry and at Time Warner in particular.

2 Motion picture industry

2.1 History

The motion picture emerged in the 19th century and was a revolution during this time. It was necessary to combine a lot of arts like photography, optics and sound recording to create a form of motion picture. In the early beginnings film producers had the idea to accompany the movie that had been shown with the sound of an orchestra which was sitting in front of the screen. Between 1927 and 1929 the American film industry evolved the conversion of the sound and picture in one film whether there were high equipment costs for the technique and a long period of time for the production of that kind of movies but companies like Warner Brothers succeeded by steadily improvements of their technology (Britannica.com., 2017). People rapidly recognized this new type of entertainment as an impressive experience. Over time the technology for audio and video enhanced and the motion picture became a very popular mass medium in the 20th century. There were many changes in the motion picture over the past decades especially concerning the effort that was made for producing a commercialised film. The number of actors, set and casting crew members has significantly risen due to the increased complexity of films and the technical equipment and mental knowledge that is need (Manvell, R., 2010). Also in regard to the improvements in new cables, new satellites and better television systems it is nowadays possible to produce higher video content or animation productions. Based on the global integration and better supplier, distributer and producer networks the motion picture industry is able to deliver and merchandise their films more efficient and to release more movies than ever before in shorter periods of time (Britannica.com., 2017).

3 Background of the study

3.1 Theory of Merger and Acquisitions

A major driver of company change include the acquisition of other companies to remain competitive. There are several reasons why companies like Time Ware merge or acquire other companies. In this case Time Warner accepted an acquisition deal of 85 billion dollar by AT&T (Faz.net., 2016). Merger and acquisitions are a powerful tool for managing a company´s challenges with its environment. Mostly they are triggered by external influences that force the company to change and to adapt its strategy according to its environment. In this particular case the externality was caused as Comcast acquired DreamWorks Animation Studios and was one of the reasons for Time Warner and AT&T to merge due to the increased hazard that Comcast gains a monopolistic position in the motion picture industry. Merger and acquisitions can therefore solve a problem that a company is surrounded by as for example an increased competition or competitive activities that affects the own business operations. In this case it is necessary for the company to react in order to remain competitive and to restrain the company´s position in the market. It can be beneficial regarding an improved and greater distribution network whereby the company is able to deliver and serve a wider range of customers. Corporations also use merger and acquisitions for the purpose of having more control over the market and being able to exert power among its competitors. These monopolistic tendencies are forbidden in many developed countries and are regulated by antitrust laws to prevent them from becoming too powerful (Gareth, J., 2012, p. 100-101). Even the amalgamation between Charter Communications, Time Warner Cable and Bright House Networks result from a reaction of competitive activities. There is currently a general trend of acquisitions throughout the motion picture which is founded by the fact that companies tend to approve collaborating to avoid being overhauled or having a loss of profit and market share as a consequence.

The fuzzy difference between merger and acquisitions relies on the manner a purchase of companies is communicated. Considering whether a company is being bought by another company or competitor in order to get the legal control over their business operations. At this point the target company ceases to exists whereas the buyer is able to exert power over both entities. This type of purchase is called acquisition and has usually a negative connotation based on the hostile and nonvoluntary procedure of acquisition. A merger in comparison is usually a friendly agreement of two or more equal sized companies which communicated to extend their business operations by merging into one single company. This kind of amalgamation is not very typical and happens only on rare occasions but it is seen as a more friendly acquisition (McClure, B., 2017).

3.2 Trends and developments

The motion picture industry consists basically of a few big and several small vendors that are depended on innovations. Their success factors are continuously changing techniques to improve the video and audio quality of movies in order to provide a more realistic experience during the film. Thus technological advancements are important for the film studios to retain the latest available resources and to remain competitive in the industry. These advancements include the new 4D technology that has been development in the film making for instance for the movie Avatar or Kung Fu Panda. Another indicator of the current motion picture industry is a more globalized network that enables a better collaboration with other film industries. It facilitates to search and hire high skilled actors from different countries around the world and promotes an exchange of knowledge and expertise concerning technological improvements. Further developments include the increased investment in digital movie screens worldwide due to a rising income and a general growth of the emerging markets. Thus there a more possibilities for developing countries to enhance the existing motion picture industry (Technavio.com., 2016).

Apart from these general developments that shape the current film industry there are also several trends passing through the motion picture industry. These changes are a symbol of a general aging audience and a clash of the traditional and modern perspective of watching movies, for instance to watch in a cinema or in a theatre or an animation movie in 4D versus a real movie. Such a shift in demand and a change in audience expectations characterize the present film industry and has consequences for the way the motion picture industry will develop in the future (Mandelbaum, J., 2013). A significant trend that nowadays influences the whole film industry was the rethinking in the late 2005 which showed that it is not necessary to spend huge sums of money for the best possible resources in order to make a successful movie. According to this many filmmakers decided to change their focus from movies with a high budget to micro-budget movies. As UK filmmakers showed that films can be produced for less than $500.000, a general trend started to emerge and many filmmakers began to cast less known actors or used cheaper equipment. As the graph below shows there is an increase in the development to produce micro-budget films from 2010 to 2015 and it is still favoured.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Feature films produced in the UK from 2003 to 2015 (Stephenfollows.com., 2017).

Another trend of the motion picture industry is the growing split between big cinema productions in comparison to specialized cinema´s like for instance theatre´s or open air cinema´s like drive-in cinema´s. Studies found out that the amount of film productions released in the cinema´s has been doubled over the last fifteen years. Although the cinema attendance has only be increased by 16% which means that filmmakers have nowadays to struggle with the customer´s attention according to evermore movies of other production companies. This results in an increased competition in the motion picture industry that leads film companies to spend huge sums of money into advertising, promotion and distribution of the films (Ft.com., 2017). As a consequences cinema tickets became more and more expensive over time and nowadays there is a customer trend to search for alternative and more specialized cinema´s like theatres or live cinema´s in order to have a broader choice of witnessing the cinema experience (Nadaud, C., 2014).

Due to the increased global integration and digitalization the windows release is getting faster and cinema´s do not have to wait a long time to get the movie by another country (Ranaivoson, H., 2014, p.24). Compared to 1995 where the windows release needed around 134 days to move from the U.S. to the U.K., it is possible in 9 days today. This is a tremendous increase of the speed of process in the supply chain. Furthermore the time until the movie came out as a DVD in the video rental shops has been fallen by 34% from 2002 to 2014 (Stephenfollows.com., 2017). According to this there is a trend regarding the supply chain activities which have been optimized in order to being able to release a movie in different countries at the same time. As it is illustrated in the chart below, there is a rapid increase in releasing windows (DVD) in ever shorter time intervals.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Major Studio Release Windows (DVD) from 2000 to 2016 (Natoonline.org., 2017).

As a result of this shift companies have better possibilities to schedule and adapt their marketing activities according to the release dates. At the present day there is a general trend of establishing third windows that enables customers to watch the latest films directly from their mobile device or television. These channels can be used either offline or online and are distributed by service providers like Netflix or Amazon Prime that charge customers for the service (Granados, N., 2015).

The motion picture industry is also changing with respect to two major demographic circumstances. Firstly, and according to the general aging population in the Western World involving in particular Europe and the U.S., there is a trend to produce films that are targeting an elderly film audience (Clark, N., 2013). This trend is resting upon an increased life expectancy and physical activity in general and the fact that going to the cinema has already been popular in the time of the baby-boomer generation (Cox, D., 2012). Film companies that previously underestimated the demand of the senior generation are now starting to concentrate their efforts on movies that are aimed to attract the elderly audience which is involves a large quantity people that tends to have more free time during the day (Bbc.com., 2014). Nancy Utley, co-president of the 20th Century Fox company subsidiary Fox Searchlight, stated that there is a huge potential for the motion picture industry with her quote “There is an older audience that is growing, and it´s an underserved audience, which makes for an obvious and important opportunity” (Barnes, B., 2011). As it is exemplified in the diagram below, this film industry trend is likely to continue as there will be more and more elderly people that are willing to spend their money in the cinema.

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Details

Titel
Changes of Time Warner Company by taking into consideration the developments and trends in the motion picture industry
Autor
Jahr
2017
Seiten
18
Katalognummer
V417283
ISBN (eBook)
9783668670822
Dateigröße
586 KB
Sprache
Deutsch
Schlagworte
changes, time, warner, company
Arbeit zitieren
Paul Petersen (Autor), 2017, Changes of Time Warner Company by taking into consideration the developments and trends in the motion picture industry, München, GRIN Verlag, https://www.grin.com/document/417283

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