PESREL analysis of entertainment and media industry

Introduction
The Entertainment and Media industry is a constantly evolving group, with prospects in certain subsectors being much better than in others. Revenue trends in certain core segments, including broadcast television and radio, tend to vary with consumers' and advertisers' preferences towards new forms of media. Several conglomerates control a large proportion of the industry, somewhat limiting competitive pressure.

Political
1. Entertainment industry have a large public influence especially in media as some multinational companies owns many newspapers, magazines, television and radio stations and internet sites.

2. Media has a major involvement with the US political process through its lobbying activities and campaign contributions.

3. The mass media constitute the backbone of democracy, as it is through them that political information are supplied for voters to base their decisions on. They identify the problems in society and serve as a mediator for deliberation. They are also the watchdogs that people rely on for revealing errors and wrongdoings by those who have power.

Top 20 organizations whose employees and their immediate family members have donated the most money to the Obama Victory Fund through June 2011

Environmental
1. Entertainment Company lacked of environmental report.1
According to an analysis of the world's top entertainment corporations that Claremont McKenna College's Roberts Environmental Center recently released. The entertainment sector lags behind most others in corporate environmental and sustainability reporting. The report scores companies based on the reporting, intent, and performance of their environmental and social sustainability efforts. No company scored any points in environmental performance and only Disney, Bertelsmann, News Corp., and Time Warner received points for environmental reporting. A few companies mentioned climate change and only Bertelsmann reported having an environmental management system in place.

2. Natural disasters
Natural disaster has big influence in entertainment industry. For example, Japan suffered triple disasters that killed nearly 20,000 in 2011. Earthquake, tsunami and nuclear accident hit the whole entertainments industry in the months after March 11. TV stations lost tens of millions in revenue as advertisers pulled commercials for weeks, to see them replaced by public service messages. The annual box office took a $325 million hit as cinemas were largely deserted through the same sombre period as the nation mourned.

3. Development and utilization of new energy sources.
As people's attention to environmental protection, energy development and utilization are a hot topic in various industries. Saving energy and improving energy efficiency means that cost and expenses will decrease. This also follows the global trend of sustainable development

4. International Environmental Law
5. Environmental awareness
6. Pollution in the process of industrial development

Socio-cultural
⑴ Changing regional customer preferences
Changes in public and consumer tastes and preferences for entertainment and consumer products could reduce demand for our entertainment offerings and products and adversely affect the profitability of any of our businesses. Consumer tastes and preferences that change in often unpredictable ways. Vital success factor therefore is the ability to successfully predict and adapt to changing consumer tastes in different region. Moreover, they must often invest substantial amounts in new before they learn the extent to which these products will earn consumer acceptance. If the entertainment offerings and products do not achieve sufficient consumer acceptance, their revenue may decline and thereby adversely affect the profitability of one or more of their businesses. Changing fashions, which are difficult to predict also have an effect on the market.

(2) The Ageing problem Population ageing is unprecedented Population ageing is pervasive Population ageing is enduring

Percentage of the total population aged 60 or over2

Aging situation without parallel in human history—and the twenty-first century will witness even more rapid ageing than did the century just past.
While mankind may rejoice in the opportunity of long-life, the aging population brings new challenges as well as opportunities.

The number of people over 60 years old has doubled in the past 30 years and is expected to grow at the same pace by 2050. Increasing pension payments at a time of massive layoffs could result in an unsupportable burden for the world’s economies. Economically, a growing number of the elderly people could result in another fiscal collapse for developed countries, which represent mature markets for entertainment, as increasing pension payments weigh on local budgets.

Up until now public leisure provisions have been particularly valuable to the less well-off, because most of the amenities have been free or accessible at modest cost. In the future it is likely to become more difficult for the public sector to be run in this way, particularly when governments are concerned with cutting the public financial deficit. However, for retired people, keeping active leisure pursuits is seen as an important way of enhancing wellbeing for the financially secure. Older people are a growing segment of the leisure market.

(4) Gradual decrease in working hours
Machines were rapidly replacing human labour. People do take longer holidays, and work has become less physically demanding. Automation has been proceeding apace and most countries in the developed world have seen average hours worked decrease greatly. For example in the U.S in the late 19th century it was estimated that the average work week was over 60 hours per week.3 Today the average hours worked in the U.S is around 334. This means that people will have more leisure time to entertain themselves.

(5) Life style changes
Internet is now integrated into daily life. A trend of getting internet access at home or through the mobile phones and buying online is developing throughout the world. The Internet has changed the way people go about their daily lives. People are Using a mobile phone or portable computer to access the Internet 'on the go'. More people than ever before used the Internet for reading newspapers or magazines, to post or download videos, or to buy groceries. Activities previously carried out on the high street, are now increasingly being carried out online.

Internet users per 100 inhabitants5

The entertainment industry has been transformed by the spread of Technology.

1. Become one of the competitive power (Iron man 3's visual effects were handled by 17 companies, including Scanline VFX, Digital Domain, and Weta Digital. Finally the film become The fifth-highest-grossing film, the highest-grossing 2013 film )

2. Change of development strategy. (Internet growth allows companies to market and make their content available to a worldwide audience, so they may further focus on Global entertainment)

3. Copyright infringement (illegal download site, pirated DVDs and illegal online streaming of films.) Digital downloads also create copyright problems. That's exactly what DJ Danger Mouse did in 2004 when he combined the Beatles' "White Album" with JAY-Z's "Black Album."

4. A threat to the underlying economic structure of the entertainment business. (Traditionally, the industry relied on a top-down structure, with large media companies wielding the power. Studios created programming for movie theatres and TV networks, and then generated additional income when shows sold on DVD and in foreign markets. Record companies paid star performers huge contracts, then recouped the investment through album sales. Now, thanks to innovations such as streaming video, those business models are breaking down. The digitization of music -- which makes it easy for music to be copied and shared -- has decimated the recording industry, with album sales falling steadily.) [source: Elizabeth Blackwell]

5. Generate a huge expansion in entertainment options. (Videogame systems such as Nintendo's Wii and Microsoft's X-Box have created a boon in at-home gaming. With the growing popularity of Smartphone applications, games can now be played almost anywhere.

6. Social data begins to influence decision-making in the entertainment industry(For instance the attitude towards certain characters in TV series could affect their storylines going forward or the production of a sequel to a Hollywood film could be decided on current and historical social sentiment towards its leading actors.)

Legal
1. Copyright is a vital issue in the media industry; therefore legal protection is advised so that their original material cannot be used in somebody’s name. However copyright can only be applied on the application of the idea, not the idea itself.

2. It is illegal to discriminate anyone on grades of race, sex, disability when recruiting in the workplace.

3. National security is another issue filmmakers and producers face so they must be aware of certain laws such as the Official Secret Act 1911 and the Prevention of Terrorism Act.

3. In the production of a film or TV program there are certain things that need to be kept secret so that other companies can't copy their idea and so it doesn't ruin the plot to the audience. Employers will often need to sign a confidentiality agreement from when working on a project. (Confidentiality Act 1991)

4. Accuracy - The film industry must make sure that they don't mislead their audience. They must also be aware not to alter or change any facts as this will undermine theirs audience's trust in their content.

5. Harm and Offence - TV producers have a responsibility to protect children and young people from unsuitable content as well as their rights of freedom of expression and freedom to receive information.

6.Health and Safety - They aid safety management systems within each film or production reviewing each company's health and safety policy, and ensuring that health and safety arrangements and appropriate personnel are in place. Most employers are required by the law to insure against liability for injury or illness to their employees arising out of their employment. Employer liability insurance is compulsory, as set out by the Employer Liability Act 1969. Also, they can consider the Public Liability insurance, while not optional it is useful especially in the media industry if for instance a crew member or an equipment causes damage to a member or members of the public when they are conducting work in a public area which can protect a firm from lawsuits.

8. Employers Rghts - All employees in the workplace automatically have employes rights which must be taken into account by the employer.
These rights include:
Maximum of 48 hours per week
Paid annual leave
A safe clean workplace
Pay during sick leave
The rights to request flexible working
Request breaks
Training time
Changes to employment conditions
Protection from discrimination
Right to join a trade union

Economic
1. Subprime Lending Crisis (2008) ------ Lehman Brothers --- consumption level and Disposable income
2. European debt crisis (2010) ---------Paris DLP
3. Employee (2011 P&R) increased lead to cost changed (new visitor)
4. Interest change ----------HKDL borrowing and LIBOR (2012)
5. Foreign currency ----------- depreciation of USD, JPY (2010 Japan Store), EUR.
6. Inflation-----------China, USA, EUR
7. Fuel Price?!

Conclusion
The Entertainment Industry can change rapidly, thus a skilled management with the ability to invest in outstanding content, foresee trends, and capitalize on expansion opportunities are characteristics that a good media entity should possess. A focus on growth markets, such as online content, adds to the long-term appeal of some companies; investors should be wary of those large holdings in declining sectors. Additional investment attributes would be a healthy return on capital and solid cash flows. Furthermore, now and then some companies may be viewed as attractive in light of future prospects, such as well-received movies. Finally, some entertainment equities, especially broadcast TV station owners, often offer attractive dividend yields, along with large capitalization stocks with high marks for price stability can also be found in this industry.