Bbr Vol 2 Issue 4

BRUINBUSINESSREVIEW

VOLUME II ISSUE IV

ENTERTAINMENT

November 2008

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HBA Career Night Location: Anderson EDR Time: 6 PM—9 PM

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“Private Enforcement of the Public Interest in China: Potential and Pitfalls” A Lecture by Donald Clarke Location: 4357 Bunche Hall Time: 4 PM—5:30 PM 11.25 .08

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Internships for 2008-09: What’s New on Bruinview? Location: Career Center, Second Floor, Rm. 200 Time: 3:30 PM—4:30 PM Personal Statement Critique Session Location: Career Center, Second Floor, Career Lab Time: 2:30 PM—3 PM 12.01.08 Amgen Info Session Location: Career Center, Third Floor, Conf. Rm. B Time: 5:30 PM—6:30 PM 12.04.08 Eli Lilly & Company Info Session Location: Career Center, Third Floor, Conf. Rm. B Time: 6:30 PM – 8PM Warner Bros.: Accounting in the Entertainment Industry Hosted by: Beta Alpha Psi Location: Kerckhoff 135 Time: 5 PM—7 PM 12.05.08 Anderson School Marschak Colloquium Location: Public Affairs Building 2270 Time: 1 PM – 3 PM

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TABLE OF

CONTENTS 4

The Fall of the U.S. Auto Industry

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News Briefs

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The Business of Entertainment

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Making it in the Music Industry

11 Major League Economics 13 Trends in the Entertainment Industry 15 Business Careers in Entertainment: Producers & Agents 17 Big Entertainment Companies 19 Regional Specialties 21 Marketing in the Entertainment World 23 From Wall-E to Shrek: The Brains Behind it All 25 A Look Inside the Box Office: Entertainment Rivalries 28 NYU: Stern School of Business

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THE FALL OF THE

GM CEO, Rick Wagoner

U.S. AUTO INDUSTRY

By Jaeman Kim Staff Writer

Amid the financial crisis, the bailout is all that everyone seems to be talking about. But it doesn’t just end with financial institutions. There is also concern that the Big Three automakers in Detroit, General Motors (GM), Ford, and Chrysler, may also need government help. Due to the declining economy, these three once-powerful companies are now facing the very real possibility of bankruptcy. As a result, they are also asking the government for a bailout in the hopes to keep themselves alive. GM has recently begun telling federal officials that a bankruptcy filing would set off a chain reaction affecting hundreds, if not thousands, of suppliers and dealers. They argue that it would not only hurt GM, but the rest of the Big Three as well. On Friday, November 15th, Senate Majority Leader Harry Reid (D-NV) stated that he would move forward with a bill that would give the Big Three access to the $700 billion Troubled Asset Relief Program (TARP) currently reserved for banks and financial firms. The Bush Administration, along with many other Republicans, however, is opposed to giving the Detroit automakers any kind of access to TARP. Rather, President Bush is asking that Congress release an already-approved $25 billion loan to the auto industry. During what looks to be a showdown between President Bush and incoming President-Elect Obama, GM is trying to make the case that a bankruptcy filing will have disastrous consequences on the whole economy. Auto-related industries currently employ 3.1 million people in the United States, encompassing everything from seat manufacturers to auto dealers. GM employs 123,000 by itself, and also does business with thousands of different suppliers. GM, Ford, and Chrysler share many of the same suppliers for parts such as wheels, electronics, and instrument panels. In fact, according to a recent analysis, 96% of Chrysler’s largest suppliers also do business with GM and Ford. A GM bankruptcy would therefore create another set of bankruptcies among these part suppliers, most of whom depend on only a few automakers to stay in business. Failures of part suppliers would then go on to affect Ford and Chrysler. Another argument, and perhaps the most compelling, that GM is making is that a bankruptcy filing would heavily affect the government’s pension-benefit insurance agency, also known as the Pension Benefit Guaranty Corp, or PBGC. The PBGC currently has a $14 billion deficit. Were GM to go bankrupt, this amount would more than double, adding to an already slowing economy. This is currently one of Washington’s biggest fears, and may be a strong argument as to why a bailout may be necessary.

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Auto Industry Workers by Segment as of September 2008. Source: The Wall Street Journal

NEWSBRIEFS By Julie Chen Staff Writer

VIDEO GAME INDUSTRY EXPECTS TO THRIVE Despite economic troubles that have hurt some retail stores that sell games, industry executives expect video game sales to remain strong through the rest of 2008 and into 2009. Nintendo’s Wii continues to sell out, while the DS game machine has consistently risen 20% in sales in the past few years. Though producers Sony and Microsoft have had to lower some of their prices, video games are still selling well at low-cost retailer Wal-Mart and game seller GameSpot. Top executives in the industry expect 2008 North American and European video game industry software sales to increase by 20%. Vivendi’s CFO Phillippe Capron said, “Video games do well in a recession because they are the cheapest form of entertainment.”

FDIC’S PROPOSED MORTGAGE PLAN The Federal Deposit Insurance Corp. Chairwoman Sheila Bair announced a plan to use $24 billion in government funding to help 1.5 million American households avoid foreclosure. The agency’s plan would guarantee 2.2 million modified loans through the end of next year. Borrowers would get reduced interest rates or longer loan terms to make their payments more affordable. Housing payments for delinquent borrowers two or more months late would be reduced to 31% of gross monthly income. FDIC officials want to use part of the $700 billion bailout plan of the financial industry to pay for it. With the Bush administration adamantly opposed, Congressional Democrats could take up the FDIC’s plan when they return for a lame-duck session. The FDIC says the government’s backing will make the lending industry more willing to modify loans because the government and taxpayers will absorb 50% of the losses if the borrower defaults again. Also, loan servicing companies would be paid $1000 for each loan they modify.

THE ECONOMY TAKES ITS TOLL ON HOLLYWOOD In the past, many experts believed that Hollywood was immune to economic downturns since worried consumers have a tendency to spend more on entertainment when times get tough. The recent financial crisis has invalidated this notion, as the entertainment industry is suffering greatly. The industry’s woes are reflected by recent financial announcements. NBC universal is cutting $500 million from its budget in 2009. Disney announced that its quarterly earnings dropped 13% from last year, citing a significant decline in TV ad and theme parks revenues. The departure of DreamWorks from Paramount last month shed $50 million in overhead. Independent filmmakers, whose survival is tenuous in the best of times, have the most to lose.

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IRAN WANTS OPEC TO CUT 1.5 MILLION BARRELS Iran called on OPEC to cut production by a further 1 million to 1.5 million barrels per day when it meets in Cairo at the end of November. Iran’s OPEC governor, Mohammad Ali Khatibi, wants the cartel to slash output because demand for oil has declined due to the global financial meltdown. OPEC, which produces about 40% of the world’s crude oil, decided to cut production by 1.5 million barrels a day last month in response to a dramatic fall in oil prices from a record $147 in July to below $70 in October. Despite the cut, oil prices have continued to decline. Light, sweet crude for December delivery fell to as low as $48.25 a barrel on the New York Mercantile Exchange last Friday.

OBAMA TO THE RESCUE? President-elect Barack Obama urged Congress to quickly pass an economic rescue plan that would extend jobless benefits among other actions. The plan intends to help over 1 million Americans who will run out of unemployment insurance by the end of the year. Obama pledged to persuade banks to start lending or start cutting loan checks directly from the government. He also proposed temporarily suspending the fees the Small Business Administration charges for participation in its flagship loan-guarantee programs. Obama said, “If Congress does not pass an immediate plan that gives the economy the boost it needs, I will make it my first order of business as president.”

EURO ZONE IN RECESSION The 15-nation region that uses the euro saw its gross domestic product fall by 0.2% in its second and third quarters, officially putting it into its first-ever recession since its conception. European heads of state are now moving quickly to keep their economies from sliding even more. Economists believe that the latest data and survey indicate that the euro zone would experience a sharper fall in GDP in the current quarter than before. The European Central Bank has cut back interest rates and is expected to cut another 50 basis points in December to ease to 2%. Leaders of advanced nations congregated in a G20 meeting in Washington to discuss the global financial crisis with their emerging market counterparts.

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INDUSTRYPROFILE:

theBUSINESSof ENTERTAINMENT By Christine Liu Staff Writer We are located right in the heart of the Entertainment Capital of the World, just one mile from Hollywood, less than ten miles from many of the major entertainment studios, and with movie premieres right in our backyard. The entertainment industry is one of the largest sectors in the U.S. economy, and is growing internationally as well. Americans altogether spend at least 120 billion hours and $200 billion on entertainment every year. Annual household spending on entertainment is about $2,200. Globally, annual entertainment spending hits about a half a trillion dollars. Each year, the motion picture and video industry generate about $38 billion for the state of California, and $34 billion goes directly to Los Angeles County. Our daily lives are inundated with every form of entertainment possible, and there is a special niche for every type of entertainment genre in every type of physical form, such as the news industry, entertainment programs, print, mobile communications, and the Internet. Advertising is dedicated toward getting the message and name of the product out to the general public as well as creating an image of the product for consumers. There are many tactics advertising agencies use to establish this, ranging from simply informing consumers of the product to persuading consumers with subtle advertising.

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ENTERTAINMENT GENRES NEWS A large segment of the news industry now includes entertainment news stations such as Entertainment Tonight, The Daily Ten, The Insider, E! News, etc.

MOBILE COMMUNICATIONS With the introduction of the iPhone, mobile entertainment has been revolutionized and is now a rapidly developing industry.

TELEVISION The reality show division has morphed and conformed to almost all possible preferences, including shows about fashion, food, animals, families, and houses. It has caused a significant decrease in jobs for actors.

INTERNET There is a trend of audiences switching from television shows to internet shows. Major networks have recently begun scouring the Internet for potential television shows.

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making it in the

MUSIC INDUSTRY By Gloria Ho Senior Staff Writer

Due to the current plethora of technology and, by extension, digital outlets through which artists can reach to a wide audience without ever having to sign with a major music producer, the music industry’s traditional business model has been undergoing some drastic changes in the last decade. Fortunately for it, the music industry is constantly evolving, thus adapting to change is nothing new. With the present state of technology and websites like YouTube, MySpace, and others of a similar nature, music producers have found that, in addition to being expensive to implement, the traditional business model is not as effective as it once was. Before the Internet became the place to go for songs and music videos, major players in the music business had relied on the radio, MTV, record sales, and headlining tours for revenue. CD and DVD sales were also a vital source of income.

Now with the advancement of technology, however, much of that has changed. With consumers demanding media entertainment on their cell phones, iPods, and laptops, the music industry began generating revenue from mp3 downloads, ring tones, licensing, and merchandising advertising. Earlier this year, Sony BGM Music Entertainment announced the launch of Platinum MusicPass, a sequence of digital album cards that allow purchasers to download albums and bonus features as mp3 files for the cost of $12.99. Such is an example of how corporations in the music industry are tailoring their marketing strategies to meet the demands of consumers accustomed to having all of their media entertainment needs met via the Internet.

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Unfortunately, revenue from these digital sales does not completely offset the decline in sales of ‘physical’ music — music purchased from the store. Citing the sharing of CD files and illegal downloads as the root cause of the problem, major music labels have experienced a downward trend in overall music sales for the past several years. However, that doesn’t mean the music industry as a whole is hurting. Rather, the rise of technology has fostered the growth of smaller label companies and allowed some artists to distribute their work directly to fans. The rise of technology has also made it possible for postproduction and music studios to pop up all over the country as the necessary equipment for musical endeavors becomes more accessible and portable. Individuals in remote locations far from Hollywood can now take part in local, regional, or national projects without ever having to travel. Moreover, the music industry was also quick to adapt to the growth of social media. Two years ago, 25% of consumers had never visited a social network site such as YouTube, Facebook, or MySpace. Now that percentage has dropped to 7%. The music business took advantage of the popularity of these sites by creating artists’ pages on MySpace and seeding discussion forums to create buzz and controversy around upcoming releases.

Though the business model traditionally favored by the major record labels is not as effective as it once was, the rise of technology has created room in the business for smaller music producers and for new, innovative business models to be tried. One such model allows fans to order made-on-demand CDs directly from artists through their website. By cutting out the record label company all together, the artist receives a larger share of the sale price. Another innovative business idea that takes advantage of current technology is to offer live streaming of sold-out concerts in New York City to local residents at large-screen movie theaters. While the experience may not be the same as attending a live concert, the audience would be able to get a better view of the stage with the added bonus of comfortable seats.

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Major League Economics By Eric Park Staff Writer The Philadelphia Phillies were crowned Major League Baseball’s champions to conclude the 2007-2008 Season. Now the free agency period of baseball has begun and free agent players will be seeking new contracts and possible new employers. In past free agency periods, teams have granted immense contracts to players. This was highlighted in December of 2007 when the New York Yankees gave star player Alex Rodriguez a record 10-year, $275 million contract. However, the downtrodden economy has hurt job markets, but its effects on player contracts have yet to be seen. Major League Baseball teams brought in $6.5 billion of revenue this season, but also saw a decrease in attendance for the first time in four years. The main reason for this is the flagging economy and the decrease in disposable income of the average consumer. The front office of the league has begun to express concerns about its financial future. In an interview with the Associated Press, MLB Commissioner Bud Selig stated, “We're living in a tumultuous economic period. Many economists believe that we're going to have significant problems. Maybe this could turn out to be the most difficult period since the Great Depression. I view these coming months with trepidation." The contracts of the current free agency period will show teams’ levels of adherence to the commissioner’s request for prudence in spending.

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There are still individuals who believe that player contracts will be unaffected by the economy. Scott Boras is the premier agent in baseball. His reputation comes from his superstar clients, such as Alex Rodriguez, and his ability to negotiate the most lucrative contracts. He said recently, "In our myopic world, there are a lot of fixed elements that frankly are not as applicable to the outside world." His reasoning behind this was his belief that teams have a strong comprehension of revenues through television contracts and marketing sponsorships unlike companies from other industries. Teams will spend money to bring in marquee players because they will help their teams win, and will raise revenue through ticket sales and merchandise. Manny Ramirez was traded from the Boston Red Sox to the Los Angeles Dodgers with 53 games left in the season. During those 53 games, he led the Dodgers to the playoffs by batting .396 with 17 home runs and 53 runs batted in before losing in the National League Championship series. His performance boosted team finances as he generated an estimated $10 to $15 million of revenue. Due to his value, Manny Ramirez will receive lucrative offers from numerous teams this off-season. Star players will garner favorable offers due to their playing ability and marketability. But owners are still facing uncertainty in revenue and attendance for the upcoming few seasons. Therefore, they will be looking to cut team costs. Mike Celizic of NBC Sports explains which players will be affected by these reductions. “Owners are faced with a dilemma. They have to cut expenses, but they have to put a product on the field that will compete for a shrinking pool of entertainment dollars. So they’ll still spend for the big names, and they’ll save money on the bottom of the roster,” he said. It will be the role players that will take pay cuts and accept contracts that are lower than their market value in the 2008 free agency period. This parallels the current job market because the middle and lower classes have felt the largest layoffs and pay reductions in this economic downturn.

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trends in the

ENTERTAINMENTINDUSTRY By Dmitry Shuster Staff Writer If the entertainment industry can be described in one word, it would be: broad. It encompasses many sub-industries and fields ranging from movies to music to video games, and includes everything in between. In order to understand the recent developments and phenomena associated with this large and powerful industry, it is important to analyze the recent paths that the industry as a whole has taken, as well as the various trends that affect its constituents.

VIDEO-ON-DEMAND After the dot-com boom, programming was a critical driving force in the entertainment industry. In recent years, entertainment has taken on new forms in order to keep up with consumer preferences and unveiled new and effective forms of business development and advertising. One such example is Video-on-Demand or VOD, which changes the way content is delivered to and accessed by consumers. A step beyond pay-per-view, VOD allows an individual to view whatever he or she wants at the exact time desired. As digital subscriber packages become more technologically accessible and reliable, the appeal and benefits of VOD grow proportionally. In a sense, VOD is interactive multimedia that gives viewers complete control over what they watch, thereby changing program creation, advertising, and public media.

HOLLYWOOD & BIG BUSINESS Many experts will say that content is key in Hollywood. However, content is often driven by hits and is cyclical in nature. For this reason, movie studios are in need of steady cash flow and they look to corporate sponsorships. Magazine and television industries have relied on corporate sponsors for years, and the film and music industries are catching up to the trend, which began in the mid-1980s when the Creative Artists Agency signed Coca-Cola as a corporate sponsor. For Coca-Cola, Creative Artists Agency performed various marketing and advertising services, as well as access to celebrities and spokespeople, which led to increasing brand recognition and endorsements. This relationship resulted in a winning situation for both parties and became a precursor for future relationships between businesses and the entertainment industry.

GROWTH OF VIDEO GAMES Improvements in technology have led to unique advancements in video games. The multi-billion dollar video game industry has been regarded as the fastest growing industry in the entertainment world. Several companies are developing relationships with studios whereby video games lead to blockbuster movie hits such as Max Payne and Hitman. The effects of this industry are far reaching and closely tied to advertising, marketing, technology, engineering, programming, and other fields.

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THE RISE OF SPECIAL EFFECTS Another recent trend in the entertainment industry, and particularly in the movie industry, has to do with special effects. Many movies, as well as other forms of media, are incorporating new and appealing special effects. This gives rise to companies such as Pixar, LucasFilm Industrial Light and Magic, Silicon Graphics and others. Movies such as Harry Potter and Lord of the Rings utilize new technologies and continue to bear more and more special effects. This proves that the divide between creativity and engineering is constantly being decreased by the entertainment industry.

ENTERTAINMENT AND GLOBALIZATION Another trend that is changing social and economic landscapes alike is the globalization of the entertainment industry. Everything from movies to music is spreading across the world with blinding speed. American movies are dubbed in dozens of foreign languages and American pop music is being listened to by millions of people all across the world. Television shows from channels such as MTV are being broadcast in India, Germany, and Latin America. As the industry becomes more and more globalized, it creates more opportunities for business partnerships and relationships with local studios, firms, advertising agencies and Internet portals. Expansions take place through new emerging markets where acquisitions and alliances are often the first steps to an entertainment firm’s development and expansion.

TRENDS OF CONVERGENCE Many are witness to the fact that forces within the entertainment industry – magazines, television, books, movies, Internet – are converging on many occasions. As the Internet spreads into new domains, it links all of these forms of media and entertainment. As a result, streaming media, live chat, targeted advertising, and other entertainmentrelated niches appear and become increasingly accessible. Thus, business opportunities are also becoming readily available, particularly in fields such as graphic design, web development, content creation and direct marketing. As the key components within the entertainment industry converge and become linked through various forms of media, so too do consumer preferences. Convergence is clearly illustrated by the fact that entertainment exists in virtually all mediums – publications, television, music, movies, video games, Internet content, and even mobile phones.

ENTERTAINMENT AND ECONOMICS Another critical impact on the entertainment industry comes from the economy. As the financial crisis worsens, companies have less capital mobility and liquidity. Furthermore, the fact that consumers are spending less is greatly impacting the operations of companies in the entertainment industry. This is illustrated by the following charts, which show that consumers intend to spend the same or less or entertainment-related activities.

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Business Careers in Entertainment: PRODUCERS&AGENTS By Shannon Kung Senior Staff Writer The entertainment industry has mastered the art of packaging and shipping out creative products to the masses in a timely manner. To accomplish such a feat, it takes hundreds if not thousands of people. However, two of the most important jobs belong to the producer and the agent. In relation to the business world, agents have the qualities of sales people who are able to promote their clients and drive deals. Producers, on the other hand, are the overseers who manage the ins and outs of the complete process.

PRODUCERS Producers generally supervise the film production, acting as a communicator, guide, etc. with the goal of completing the film on time and within budget. Their main focus is to keep track of the budget and ensure that the film can receive the best possible resources given the constraints. The budget is of the utmost importance because over budget projects cannot continue without money and will literally be shelved and won’t be distributed. Producers have a very hands-on job as their job requires them to dabble in every aspect of the production, whether it is coordinating the rehearsals, negotiating contracts, or hiring and approving the creative talent such as actors and directors. As can be expected, producers work under constant pressure. They need to have the patience, commitment, and organizational skills needed to run a successful production. In addition to the stress of running a film, producers also have to deal with looking for their next project. Although their job is exciting, producers lose the stability that would otherwise be had in a nine-toDifferent Types of Producers five job.

Usually a representative of film studio, oversees financial, administrative, and Executive Producer creative aspects Producer

Typically has greatest involvement and oversight in a film’s various producers

Co- Producer

Reports to Executive producer and provides money to finance project

Associate Producer

Representative of Producer, shares responsibility delegated by Producer

Assistant Producer Works under Associate Producer Line Producer Oversees day-to-day activities

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There is no specific training, major, or requirement needed to be a producer, who may come from many different backgrounds and walks of life. However, producers need to have a love for the job and the creative instincts and intellectual capacity to bring their project to fruition. They usually have experience in the entertainment industry, and often former actors, business managers, writers, etc. get into producing later in their careers. Although there is no formal training or educational qualifications for being a producer, there are some colleges that offer programs in arts management.

AGENTS Agents, as most notably portrayed by Jeremy Piven in Entourage, are stereotypically abrasive and ruthless; however, they are power players because, in essence, they get things done. Agents are the driving force behind the entertainment industry. They strive to find the best matches between the talent and what the studio is looking for. An agent has two clients, the talent, such as models and actors, and the buyer, consisting of the casting director, the production company, or other employers of such people. Agents promote the talent by showing his or her head shots and portfolios to the buyers and try to find the right match for each side. Agents will arrange the auditions, and if the buyer likes the talent, will coordinate the contract process. In order to get their represented talent selected, agents will typically spend a great deal of time networking with the directors, producers, etc. In addition to focusing on their current clients, agents must always be recruiting new clients, whether in the form of advertisements or scout work at various competitions or try-outs.

Big Five Entertainment Talent Agencies: Creative Artists Agency (CAA) Endeavor Talent Agency (Endeavor) International Creative Management (ICM) United Talent Agency (UTA) William Morris Agency (William Morris, or WMA)

Like sales people, agents are paid on a commission basis. Agents typically take a 10 to 20% commission, which is usually dependent on whether the job is unionized or not. No reputable agent will charge for their services, which is why it is usually recommended for new talent to sign with established agencies. However, agents may suggest new headshots or additional training to new talent, which may cost money. Many people often get the role of an agent confused with the role of a manager. Agents have the authority to represent their client and formally establish deals. Managers can only informally establish connections and are not authorized to negotiate contracts. Talent agents usually start at the bottom of the pole in the mailroom. People are rarely hired on the spot to become agents. After a few years in the mailroom, a person can be promoted to assistant to the agent, then junior agent, agent, and finally partner. However, the process is often long and grueling. Agents are notorious for working long hours. They must have not only the necessary organizational and communication skills, but also a lot of determination and conviction.

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THE

ENTERTAINMENTGIANTS By Sunny Wong Staff Writer

20TH CENTURY FOX 20th Century Fox is one of the largest American film studios and a subsidiary of News Corporation, a large media conglomerate founded by Rupert Murdoch. The company is located in West Los Angeles, near the Century City area and was formed as a result of a merger between two companies, the Fox Film Corporation and Twentieth Century Pictures in 1935. The company has produced some of the most wellknown movie franchises, including the Star Wars, Home Alone, and Alien and Predator series. One of the main distinctive features of the 20th Century Fox is its logo. Originally, the logo contained very little animation, just a view of the tower with the searchlights. In 1950, however, the logo was adjusted so that the “0” in the 20th was slightly tilted in order to produce a more dynamic effect. In 1994, several notable changes were implemented. CGI was used to redo the logo that made it appear more three-dimensional. It was also the first time that the “A News Corporation Company” appeared under the 20th Century fox logo.

THE WALT DISNEY COMPANY The Walt Disney Company is one of the largest entertainment and media companies in the world, owning and licensing eleven theme parks as well as a several television networks such as ABC and ESPN. Founded in 1923 by Walt Disney, the company has entertained generations of people through its cartoons and films such as Beauty and the Beast and Alice in Wonderland. The Walt Disney Company owns many theme parks and resorts around the world. One their largest theme park is The Walt Disney World Resort in Florida. Occupying approximately 22,500 acres of land, the park contains seven themed lands, a sports complex, as well as a host of other amenities. The most recent Disneyland style theme park opened in Hong Kong in 2005. Like many of the other Disneyland theme parks, Hong Kong Disneyland has several themed lands such as a Tomorrowland and Fantasyland. However, due to its small capacity, there is not yet a Frontierland. Besides theme parks, the Walt Disney Company also owns and operates several media networks such as ABC studios, ESPN, The History Channel, and the Disney Channels. Some of the more notable television shows include Ugly Betty, Brothers and Sisters, and Criminal Minds, which recently shot a few scenes near UCLA’s Anderson School of Management.

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TIME WARNER As one of the world’s largest media and entertainment conglomerates, Time Warner provides consumers with Internet service, telecommunications and media publishing. One of its largest subsidiaries is America Online (AOL), which provides online advertising services on its network as well as third-party Internet services. As advertising is its main source of revenue, AOL provides a gamut of advertising services such as a video, banner, and text advertising. Time Warner also provides cable television access through its subsidiary Time Warner Cable (TWC). As of December 2007, the company operated in 27 states and has serviced over 14.6 million customers. TWC also offers solutions to businesses through its wide variety of high speed data services such as Internet access and website hosting. Some of its main competitors are AT&T Inc. and DirecTV Group Inc. Finally, Time Warner’s Filmed Entertainment segment provides consumers with motion pictures and television shows. The subsidiary is known as the Warner Brothers Group and New Line Cinema Corporation. Together this business segment has released many recent prominent films such as the Harry Potter and Rush Hour series.

MARVEL ENTERTAINMENT Marvel Entertainment is an entertainment company centered on a library of over 5,000 characters such as Spider-Man, Iron-Man, and X-Men, as well as a host of other less memorable characters such as Ant-Man. Marvel licenses many of its characters for a variety of uses in media and publications in addition to consumer products such as toys, apparel, and even footwear. Recently, Marvel has licensed a great deal of its characters for use in the motion picture industry. Spiderman-4, for instance, is set for production and will be released in 2011. Besides licensing, Marvel Entertainment also generates much of its revenues from its publishing segment, which creates comic books and paperbacks. With over 5,000 Marvel characters, these publications have been readily distributed around the mass market in various retail outlets and bookstores .

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REGIONALSPECIALTIES By Erika K. Solanki Staff Writer

HOLLYWOOD, CALIFORNIA & THE FILM INDUSTRY The name Hollywood was coined in 1886 by H. J. Whitley, who derived the name from the beautiful California holly, which traditionally covered the hillsides with bright red berries each winter. While filmmaking in the greater Los Angeles area preceded the establishment of filmmaking in Hollywood, the first Hollywood motion picture was made only two years after in 1911. The nameless movie was directed by David and William Horsley and Al Christie, and was filmed on Hollywood Boulevard at the corner of Whitley Avenue. The first feature film made exclusively in a Hollywood studio was The Squaw Man, directed by Cecil B. DeMille and Oscar Apfel. By 1915, the majority of American films were being produced in the greater Los Angeles area and four major companies, Paramount, Warner Bros., RKO, and Columbia, had studios in Hollywood, along with other minor companies.

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Career Opportunities: Cinematographers (Director of Photography): the person who uses the camera to translate the director’s vision of a scene into what appears on the film Film Director: the person who directs the making of a film, visualizes the script, controls a film’s artistic and dramatic aspects, all while guiding the technical crew and actors in the fulfillment of the vision Location Manager: the person in charge of closing the deal for the shooting location of a movie or television show Line Producer: the person who oversees the daily operations of a film or television production Make-Up Artist: the person who help bring characters to life Production Assistant: usually considered the “grunt” of a set and a great starting point for those interested in an entertainment career Production Designer: the person responsible for the visual look of a project Prop Master: person that is in charge of any portable object on a set Screenwriter: someone who writes the script for a film, television show, or commercial Television Director: the person who directs the activities involved in making a television episode

BURBANK & THE TELEVISION INDUSTRY While Hollywood or Tinseltown is the world-renowned symbol of the entertainment industry, much of the actual production occurs in Burbank. Many company haves headquarters or facilities in Burbank, including ABC, DIC Entertainment, Dick Clark Productions, NBC, Nickelodeon, New Wave Entertainment, Technicolor/Thomson, The Walt Disney Company, Warner Bros., Warner Music Group, to name a few.

NEW YORK & THE FASHION INDUSTRY The world’s first organized fashion week, first called Press Week, and now called New York Fashion Week, was held in 1943. The event originally intended to attract attention away from French fashion during World War II because many fashion industry insiders were unable to travel to Paris to see French fashion shows. Currently, the semiannual fashion week held in Bryant Park in New York City is officially called the Mercedes-Benz Fashion Week. Admission is by invitation only to the fashion industry, fashion press, and assorted celebrities. Fashion careers are basically of two types—those in fashion design and those in the sales and marketing side of the industry (fashion merchandising). You can further modify your fashion career by choosing to focus on an exact style or type of item of clothing. Other fashion career opportunities comprise costume design for TV, film, and theater productions. Personal stylist positions with high-end department stores and private clients, fashion photography, and modeling agencies, are among the other opportunities.

NEW YORK & THE THEATRE INDUSTRY Broadway theatre, usually referred to as Broadway, refers to the theatrical performances presented in the Theatre District in Manhattan in New York City. Broadway theatre is usually considered the highest level of commercial theatre in the Englishspeaking world. Significant theatre presence in New York dates back to approximately 1750, when actor and managers Walter Murray and Thomas Kean established a theatre company. When considering the business aspect of Broadway, career opportunities are available in advertising, business development, marketing, media, and public relations.

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MARKETING IN THE ENTERTAINMENT WORLD By: Benjamin Lo Staff Writer Marketing and the entertainment industry often go hand-in-hand as there is no other medium that proliferates more through the average American’s life. On a given day, a typical American will watch over four hours of television and spend approximately two hours on the Internet. With all this time locked into various entertainment mediums, the American population will encounter thousands of overt and subtle advertisements that exist in any form from highway billboards to T-shirt logos. In order to understand how advertising and entertainment work together, we must be able to analyze various forms of advertising that the entertainment industry utilizes to target consumers around the world, which include specialized targeting, product placement, and virtual advertisements.

SPECIALIZED TARGETING Specialized advertisements can consist of the obvious commercials we see on television, billboards, and magazines. These types of advertisements are created for a specific audience to convince them to purchase a good. Various forms of entertainment mediums provide different benefits. For example, magazines offer advertisers a much more targeted audience for their product. Television, on the other hand, reaches out to a less specific audience, but has the benefit of reaching many more viewers. This form of advertisement is often the most popular as it is directly in front of us for the sole purpose of informing and reforming our train of thought in terms of consumer products. As we walk the street or turn on the television, we will be exposed to quick images and 30 second advertisements that serve to lure consumers toward the specific product or service.

PRODUCT PLACEMENT Product placement has become one of the most pervasive forms of advertising in the entertainment industry because it attracts consumers in a very subtle way. It does its job by placing advertisements among celebrities or in movies and television shows. Producers will pay millions of dollars to have their product placed into a movie or on a celebrity so that viewers will pick up on the product indirectly, while they are actually viewing the movie or watching a celebrity. For example, one of the most popular forms of product placement is for companies to sponsor an athletic team with equipment in the form of jerseys and shoes. For example, when Nike outfits a basketball team, people who watch the game will absorb the specific Nike shoes or other products the team members are wearing. Another example is when companies spend millions of dollars to place their product into a movie. A classic example of this is having an Aston Martin vehicle show up in a James Bond

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movie. While the audience is watching actions scenes in the movie, they are also being exposed to subtle advertisements from Aston Martin. An even more subtle form of product placement is when companies take their product out of the entertainment industry and place it into the real world. Many companies now get people to wear or use their product in the real world so that the general population will be exposed to it in everyday life. For example, many drink companies such as Sobe or Pom will offer free drinks on popular street corners. Their hope is to get as many people holding their free drink bottle on the street as possible. This, in turn, becomes free advertising for them. As more and more of the entertainment industry is switching to the Internet, so too are various new forms of advertising being developed to stay with the shifting medium. More obviously, consumers encounter banners and pop-ups as they surf the web, which are all designed to serve the same purpose as specialized advertisements. One of the newest forms of advertising that has surfaced with the Internet entertainment medium is hyper-targeting. This often controversial form of advertising takes information consumers submit to various entertainment and networking website such as Facebook or MySpace to deliver ads that are specifically targeted toward their interests. This form of advertising can scan through personal profiles as well as your website history to present to you ads that producers know will interest you.

VIRTUAL Another form of advertising that is originating in Internet entertainment mediums is known as viral ads. Companies are looking into creating different sources of Internet advertisements that will engage the consumer, such as interactive Internet videos on YouTube or games that they can post online. Their goal is to create some sort of entertainment medium on the Internet that consumers will want to watch or play. By doing this, they hope that the advertisement itself will be spread from consumer to consumer by word of mouth or e-mail so that the consumers will do the work of advertising for the companies.

Entertainment Industry & Marketing Interaction Specialized

Television Commercials

Billboards

Virtual

Product Placement

Sponsorships

Celebrities

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HyperTargeting

Viral

FROM WALL-E TO SHREK: THE BRAINS BEHIND IT ALL By Stefanie Ju Staff Writer This past summer, Pixar gave us the heartwarming robot love story Wall-E, filled with unique visual imagery and an impressive and easyto-follow storyline. Comparing this high tech new feature film to the beginning ventures of basic cartoon animation (think Snow White) makes it quite obvious that the world of animation has evolved greatly with time. Animation companies such as Pixar have become highly recognizable to the point where its largest projects are common household names and its movie logos are plastered across every five-year old child’s lunchbox. Successful animation studios have perfected the art of fusing world class creative talents with precise applications of the newest technologies, eventually creating an end product that brightens up the lives of moviegoers all across the nation and even the world. The artists of these studios must dream up the ideas, writers mesh them together into plausible storylines, and technical teams make it possible for all of these ideas to be seen by audiences. Here are some of the most famous animation companies, each with a different focus and style, but all of whom produce memorable and popular hits year after year.

PIXAR Pixar is one of the most recognizable animation studios of our time. With Toy Story, Pixar ushered in one of the most significant eras of animation. The first ever fully computer generated film, Toy Story began the transition from traditional to computer generated animation—what we see in the majority of animated films today. Pixar is responsible for such popular films such as Finding Nemo, A Bug’s Life, and The Incredibles. At Pixar, employees have coined the phrase “The Pixar Process” to describe the timeline films go through from beginning to end of creation. It includes four stages: 1) development: creating the storyline; 2) pre-production: addressing technical challenges; 3) production: making the film; and 4) post-production: “polishing” the final product. The majority of Pixar’s employees are separated into two groups—the creative department and the technical department. As the titles suggest, the creative department is responsible for creating, writing and animating all of Pixar’s films. In addition to recruiting some of the most talented animators in the world, Pixar also puts them through a three-month long course in order to learn more about the elements of production. The creative team is dedicated to breathing life into the characters they create. The technology department develops software in order to create the actual movies and further the quality of the images. Since Pixar’s inception, it has greatly influenced the advancement of computer graphics in the world of filmmaking. It continuously updates its software systems and invests in its research and development, understanding that this time and money will only generate additional productivity in the future.

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DREAMWORKS ANIMATION Dreamworks Animation is an independent American animation company dedicating its time to creating computer generated animated films. Originally founded by a trio of entertainment moguls, Dreamworks Animation (then Dreamworks SKG) created various films using traditional animation techniques, including The Prince of Egypt before eventually switching to and dedicating its time solely to computer generated productions. Today, Dreamworks Animation’s major goal is to produce two of these computer generated films per year, appealing to children and adults alike with the rich storytelling. In 2004, it became the first animation company to reach this goal, successfully producing and releasing two computer animated films in a single year—a great feat in this industry. Its most popular releases include the Shrek series, Kung Fu Panda, and Madagascar. Partnered with Hewlett-Packard and, more recently, Intel, Dreamworks stresses the importance of constantly updating its technology and equipment in order to keep up with the most cuttings edge techniques in the animation world. Dreamworks understands that the artistic thought behind these productions is extremely important, but the only way to continue developing new programs and actually creating more popular films is by constantly updating the company’s technical knowledge about new computer graphics.

WARNER BROS. ANIMATION As an older animation company, Warner Bros. Animation has a rich history in the industry, and has adapted to a variety of new technologies throughout the years. This company is a division of Warner Bros. and has produced such famous cartoon characters as Tom and Jerry, Bugs Bunny, and Daffy Duck. Warner Bros’ first animations included these characters and were limited to more basic television shows. After the successful launch of feature animations by other companies, Warner Bros. followed suit, but struggled with feature animation for about a decade. Presently, the company has taken more of a focus on animated television programming and direct-to-video programming. Its most famous productions include all the Scooby-Doo movies, Space Jam, Animaniacs, and a variety of Justice League and superhero cartoons. Warner Bros. has seen the animation industry evolve over a great period of time, changing its techniques when necessary and developing new programs to create even better graphics. Today, not only is it keeping up with its rival companies in the animation world, but it has created its own advantage in the field, launching a new website for children that displays its core animation properties in a single online area. This website is interactive, and allows guests to get a better understanding of Warner Bros’ characters, providing fun supplements to the actual films it produces.

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LOOKING INTO THE

BOX OFFICE: ENTERTAINMENT

RIVALRIES

Motion Picture Association of America [MPAA]: Chairman and CEO: Dan Glickman Members: “Big Six” (1) Warner Bros. Entertainment (2) Paramount Pictures (3) Walt Disney Studios Motion Pictures (4) Sony Pictures Entertainment Inc. (5) NBC Universal (6) 20 th Century Fox Film Corporation Key Statistics: Domestic box office grew 5.4% in 2007, reaching a staggering $9.63 billion The worldwide box office reached a historic high of $26.72 billion in 2007, with a growth of 4.9% Moviegoers purchased 1.4 billion tickets in 2007, about the same amount as they purchased in 2006 590 films were released last year- 30% from the MPAA and 70% from Independent companies. The MPAA controls a disproportionate 87.5% of U.S./Canada market share relative to the number of films they release

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By Grace Chan Senior Staff Writer

2007 Top 10 Grossing Films by Domestic Box Office Rank

Title

Distributor

Rating

Sony

Box Office (mil) $336.5

1

Spider-Man 3

2

Shrek The Third

Paramount

$322.7

PG

3

Transformers

Paramount

$319.2

PG-13

4

Pirates of the Caribbean: At World’s End

Disney

$309.4

PG-13

5

Harry Potter & the Order of the Phoenix

Warner Bros.

$292.0

PG-13

6

I am Legend

Warner Bros.

$251.7

PG-13

7

The Bourne Ultimatum

Universal

$227.5

PG-13

8

300

Warner Bros.

$210.6

R

9

Ratatouille

Disney

$206.4

G

10

National Treasure: Book of Secrets

Disney

$205.7

PG

Movies are a Major Family Activity Movies continue to draw more people than either theme parks or the major sports combined in the U.S. Going to the movies remains an affordable outing for most families – with admission prices significantly lower than alternative entertainment options. -MPAA2007 Entertainment Industry Market Statistics

Distributors often play around with release dates to try and find optimal times to draw crowds. Release dates are usually based around holiday seasons or long weekends. Logically, distributors do not want to release major movies on the same weekend, which appeals to the same target audience as another distributor’s movie. You can think of the recent switch from Harry Potter’s fall release date to its new summer date. Disney’s Bolt is now slotted to have family audiences to itself during Thanksgiving.

Event

PG-13

Football Game Basketball Game Hockey Game

2007 National Avg. Ticket Price $65.25 $46.75 $44.60

Theme Park Baseball Game Movie Theater

$35.30 $23.50 $6.88

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Animation Showdown: PIXAR VS. DREAMWORKS

All distributors vie for certain release dates, but it is seldom that the fight turns as ugly as the one between Pixar and DreamWorks. Remember when Antz and A Bug’s Life came out practically at the same time? There is a whole story behind the feud. In 1994, through a public falling out with Michael Eisner, was CEO of the Walt Disney Company, Jeffery Katzenberg, head of the motion picture division, was forced to resign. Later that year, Katzenberg formed DreamWorks SKG with Steven Spielberg and David Geffen. Pixar’s creative chief John Lasseter considered Katzenberg a friend, and told him all about A Bug’s Life, including the projected release date of Thanksgiving 2008.

PIXAR

DreamWorks/PDI Katzenberg Release Date: October 2, 1998 Domestic Gross: $ 90 million Worldwide Gross: $ 171 million

Disney/Pixar Eisner/Lasseter Release Date: November 25, 1998 Domestic Gross: $ 162.7 million Worldwide Gross: $ 363.3 million

Later that year, DreamWorks purchased Pacific Data Images [PDI], which was another computer animation pioneer. Lasseter eventually realized that he was deceived when he began hearing about DreamWorks’ project Antz. “Pixar sources say PDI chief Carl Rosendahl set up a lunch with Lasseter to tell him some news that was weighing on him: that Katzenberg had agreed to do the deal with PDI only if PDI committed to deliver Antz before Pixar's Bugs came out.” *Business Week, Nov. 23, 1998 issue] Although Katzenberg was able to take a pre-emptive swipe by releasing Antz almost two months before A Bug’s Life, Lasseter might have gotten the last laugh by achieving twice the worldwide gross of Antz. Regardless of this feud, both DreamWorks and Pixar have been able to tap into the lucrative world of animation.

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Film

Year

Toy Story

1995

Worldwide Gross $361,996,233

A Bug’s Life

1998

$363,398,565

Toy Story 2

1999

$485,015,179

Monsters, Inc. Finding Nemo

2001 2003

$525,366,597 $864,625,978

The Incredibles

2004

$631,442,092

Cars

2006

$461,981,604

Ratatouille

2007

$620,261,049

WALL-E

2008

$482,544,022

DREAMWORKS Film

Year

Antz

1998

Worldwide Gross $171,757,863

Shrek

2001

$484,409,218

Shrek 2

2004

$919,838,758

Shark Tale

2004

$367,275,019

Madagascar

2005

$532,680,671

Over the Hedge

2006

$335,206,062

Flushed Away

2006

$176,319,242

Shrek the Third

2007

$794,561,223

Bee Movie

2007

$287,076,833

Kung Fu Panda

2008

$630,563,684

MBAPROGRAM: ENTERTAINMENT, MEDIA & TECHNOLOGY

By Sonia Bhasin Senior Staff Writer

Students who are currently pursuing their MBA degrees at New York University’s prestigious Leonard N. Stern School of Business have a unique opportunity to specialize their studies in the Entertainment, Media, & Technology specialization. More than 17 courses are offered in this particular specialization, including classes analyzing the marketing, finance, management, accounting, legal, and economic issues facing the entertainment industry. The curriculum blends theoretical knowledge with practical, real world applications. Courses are taught by world-renowned faculty who often have direct experience with the entertainment, media, and technology sectors and continue to maintain important ties with the industry. Along with an intensive curriculum, there are a number of ways in which students gain direct exposure to the entertainment industry. Top executives from industry leading companies serve as guest speakers during the course of the program. Students also partake in case studies with faculty, examining top firms in the entertainment and media sectors, such as Disney, NBC Universal, and Time Warner. Students can supplement their MBA curriculum by taking courses at the Tisch School of Arts and through the Professional Music Business Program. Students also have the opportunity to attend conferences and events that focus on examining the entertainment, media, and technology industries. One area students and faculty in this program analyze is the so-called “infor-tainment” industry, which examines the changing business aspects of the entertainment, media, and technology industries due to technological advancements arising from the convergence of the television, cell phone, and personal computer, with media now available at the click of a button through all three of these channels. The program also analyzes the increasing globalization of the entertainment, media, and technology industries. The Stern School of Business has fostered many close relationships with leading firms in the industry, and more are continually being developed. Students in this program have gone on to work for companies such as Viacom, Miramax, and MTV, to name a few.

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