Re-Defining the Independent Film Value Chain

Re-defining the Independent Film Value Chain
A paper by Peter Bloore

Introduction:
An industry value chain or system could be summarized as a connected series of activities, that combine to create and deliver a product (or value) to customers. These activities could include research and development, manufacturing, packaging, marketing, and distribution. Strictly speaking, a value chain represents those activities as carried out within a single company, and a value system represents those activities being carried out by a series of different businesses or freelancers, acting together to create and deliver the product. The value chain and system has already been applied by business academics and consultants in various sectors, including for example the automobile industry and food processing and retail sector (Lynch 2006, pg 203-6). It can also be applied to the film industry. In the US studio system a film is often developed, produced, distributed and exploited without leaving a single integrated company or consortium: a simple corporate value chain. This is also the case with a small number of international studio-style companies.1 However the independent feature film production and distribution sector (the prevalent model outside America) is a value system business, in that a feature film is not made and delivered to its final audience by a single company. Instead there is a chain of companies, businesses, and freelancers, all working on different elements of the production and exploitation process, and adding value in different ways along the chain. Furthermore once the film is exploited, the money handed over by the consumer (whether it be in return for a cinema ticket, DVD purchase or online download) is subject to various revenue shares or commissions as it passes back through the chain, which then complicates the revenue flow. There has recently been a rise of interest in the analytical concepts of the film value chain and value system, as a result of

Bibliography: Anderson, Chris (2006) The Long Tail: How Endless Choice is Creating Unlimited Demand (The New Economics of Culture and Commerce); Random House, London. Aris, A. and Bughin, J. (2006) Managing Media Companies: Harnessing Creative Value; John Wiley, Chichester, England. Blume, Steven (2006) The Revenue Streams: an overview in Squire, Jason E. (Ed.) (2006) The Movie Business Book, 3rd Edition, Simon and Schuster. Bournemouth University (2008) Curricula: Unit Guide: Media MBA, Film Business Module, unpublished internal document. Cass Business School (2006) Curricula: MSc in Film Business; Film Business Academy, Cass Business School, unpublished internal document. Davies, Adam and Wistreich, Nicol (2007) The Film Finance Handbook, New Global Edition, Netribution, London; pages 154-174. Downes L. and Mui, C. (1998) Unleashing the killer application: Digital strategies; Harvard Business School Press, Boston; cited by Küng, Lucy (2008) Strategic Management in the Media: Theory to Practice, Sage, London; page 20. The Economist (2008) Coming soon: Hollywood and the internet, Feb 23rd 2008. Elberse, Anita (2008) Should you invest in the Long Tail, Harvard Business Review, July–August 2008, pgs 88-96. Eliashberg, Jehoshua; Elberse, Anita; Leenders, Mark (2006) The Motion Picture Industry: Critical Issues in Practice, Current Research, and New Research Directions in Marketing Science, Vol. 25, No. 6, November-December 2006, pp. 638-661. Evans P. and Wurster T.S. (2000) Blown to bits: How the new economics of information transform strategy, Harvard Business School Press, Boston; cited by Küng, Lucy (2008) Strategic Management in the Media: Theory to Practice, Sage, London, pages 20-23 19 Finney, Angus (2009) The International Film Business: a market analysis (working title); unpublished working papers for book publication. Goldman, William (1983) Adventures in the Screen Trade: a personal view of Hollywood and screenwriting; Warner Books, New York. Goodell, G. (1998) Independent Feature Film Production. New York, St Martins Griffin. Cited by Vogel (2007) ibid. Janssen, M. and Sol, H. (2000) Evaluating the role of intermediaries in the electronic value chain in Internet Research: Electronic networking applications and policy; vol 10, number 5, pgs 406 – 417. Kuhn, Michael (2003) One Hundred Films and a Funeral: PolyGram Films: Birth, Betrothal, Betrayal, and Burial (Hardcover); Thorogood Publishing, London Küng, Lucy (2008) Strategic Management in the Media: Theory to Practice, Sage, London. Küng, L; Leandros, N.; Picard, R; Schroeder , R.; van der Wurff, R. (2008) Impact of the internet on media organisation structures in: Küng, Lucy; Picard, Robert; Towse, Ruth (2008) The internet and the mass media; Sage, Los Angeles. Lampel, Joseph; Shamsie, Jamal; Lant, Theresa (2006) Toward a deeper understanding of cultural industries in Lampel, Joseph; Shamsie, Jamal; Lant, Theresa (2006) The Business of Culture: Strategic Perspectives on Entertainment and Media; page 9. Lynch (2006) Corporate Strategy, 4th Edition, Financial Times/ Prentice Hall, London. Mintzberg, H. Lampel, J. Quinn, J.B. & Ghoshal, S. (2003) The Strategy Process. 4th Ed. New Jersey. Pearson Prentice Hall. Nardonne, J. (1982) “Is the movie industry contracyclical?”, Cycles, 33 (3) (April), cited in Vogel, H. (2007) Entertainment Industry Economics, 7th edition, Cambridge University Press, pg 101, and 575. Porter, Michael E. (1980) Competitive Strategy, Free Press, Macmillan, New York. Porter, Michael E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, Macmillan, New York, pgs 33-38. Porter, Michael. E. and Millar, Victor, E. (1985), How information gives you competitive advantage: the internet revolution is transforming the nature of competition, Harvard Business Review, July – August 1985, pgs 149 – 160. Porter, Michael E. (2001) Strategy and the Internet, Harvard Business Review, March 2001, Harvard, Boston, pgs 63-78. 20 Squire, Jason E. (Ed.) (2006) The Movie Business Book, 3rd Edition, Simon and Schuster, New York. Tapscott, D. (1996) The Digital Economy; McGraw Hill; New York; cited by Küng, Lucy (2008) Strategic Management in the Media: Theory to Practice, Sage, London; page 20. Vickery, Graham and Hawkins, Richard (2008) Remaking the Movies: Digital Content and the Evolution of the Film and Video Industries (ISBN 9264043292) in The Organisation For Economic Co-operation and Development (OECD), Science & Information Technology Journal 2008, vol. 2008, no. 1, pp. 1 - 135, OECD Publishing, France. Vogel H. (2007), Entertainment Industry Economics – A Guide for Financial Analysis (7th Edition), Cambridge University Press, Cambridge. Yoffie, D. (Ed.) (1997) Competing in the age of digital convergence; Harvard Business School Press; Boston; cited by Küng, Lucy (2008) Strategic Management in the Media: Theory to Practice, Sage, London; page 20. Zerdick A., A. Picot, K. Schrape, A. Artopé, K. Goldhammer, U. Lange, E. Vierkant, E. López-Escobar and R. Silverstone (2000), E-conomics: Strategies for the Digital Marketplace, European Communication Council Report, Springer-Verlag, Berlin. Credits Thanks to Dr John Oliver of Bournemouth University Media School; Val Taylor and Jon Cook of University of East Anglia; students on the Media MBA at Bournemouth University; and especially Angus Finney of the Film Business Academy at Cass Business School. 21