Motion Picture Industry Analysis

Date: 02/24/2015

To: Dr. Sal Kukalis

From: Ryan Musante

Subject: Industry Analysis: Feature Film Production

The motion picture industry produces and distributes films for theatrical release, home entertainment, and various other markets. The product of this industry is passive entertainment, typically viewed as a leisure activity. Various genres target all market segments, the largest of which is in the 18-35 year old age group. The same product is released via two main distribution channels, theatrical and home video. Theatrical release offers the benefits of large screens, immersive sound, and a social environment. Home video and streaming releases offer convenience and repeat viewing at no extra cost. The basic structure of the industry is broken into three segments: Production (creation of films from concept to finished product), Distribution (advertising and selling films), and Exhibition (screening films).

Industry regulations involve the acquisition of permits and releases to use land and people in the production of films. More famously, the motion picture industry features strict guidelines for censorship. In order to avoid government censorship, the industry created the Motion Picture Association of America (MPAA) to monitor and rate films for public release. Most of these regulations are not detrimental to the production and release of films. Other regulations that limit distribution can be problematic. For example, China will only show 40 or so foreign films a year, limiting penetration for American studios in that market. Regardless, the industry commands roughly $38 billion in worldwide revenue. Revenues can be sizable, but expenses are so high that returns are typically moderate, and often negative. Only through a given studio’s few massive successes are they able to stay on their feet in this expensive industry.

A Brief History of the Motion Picture Industry

Less than 15 years after the invention of...