Industry Definition Operators in this industry produce and manufacturers, as well as products, such as
distribute motion pictures and videos. It television shows and made-for-television
excludes third-party distributors and disc movies, aimed specifically toward television.
Industry at a Glance
Movie & Video Production in 2015
% change
NBCUniversal Media 0
LLC 13.5% -6
-5
Viacom Inc. 6
.3% -10 -12
Total advertising
expenditure 39.4%
Action and adventure films
Demand from
movie theaters
16.8%
Per capita disposable Drama films
income
Trade-weighted index
p. 5 27.1%
Comedy films
SOURCE:
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 36
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 5
Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive Over the past five years, operators in the low-cost rental and video streaming
Summary Movie and Video Production industry services, such as Redbox and Netflix,
have engaged in some consolidation as a have provided new opportunities for the
result of media cross-ownership. industry, they have failed to produce the
However, declines in feature film same massive margins that traditional
production have led to inconsistent and 3D films often command. Many
industry performance. Movie producers movie producers have contended with
have struggled with decreased ticket sales the high shooting and editing costs
because of increased at-home content associated with blockbuster films simply
viewership. According to the Motion because these films generate the highest
Picture Association of America (MPAA), box office sales. Tentpole films, which are
the total number of movie theater tickets high-budget films that garner box office
sold in 2014 was 1.27 billion, revenue needed to support a production
representing a 6.0% decline from 2013. companys less profitable other projects,
have come to dominate popular cinema.
Both industry profit and industry
Online
sales will play a growing role in the revenue are anticipated to remain stable
over the latter half of the five-year period
industrys success to 2015, industry revenue projected to
increase by a slim 0.2% over 2015. This
As a result, industry revenue is estimated increase is in response to continually
to grow at a modest annualized rate of high production costs, low DVD and
0.7% to $34.1 billion in 2015. Due to the physical media sales and escalating
overall decline in theater attendance, competition from at-home television
industry operators have dedicated the streaming services. Over the next five
vast majority of their production budgets years, online sales will play a growing
to action films, sequels, 3D blockbusters role in the industrys success as
and series reboots that often perform consumers continue transitioning to
well, instead of dramatic films, digital media. Producers are expected to
independent projects and comedies. embrace online distribution over the
According to IHS Screen Digest, the period, although reductions in box office
industry also depends on after-release sales are anticipated to result in only
DVD sales, which peaked in 2004 and 0.1% annualized revenue growth to $34.2
have steadily declined since. While billion in industry revenue by 2020.
Key External Drivers Technological change for Television distribution costs. New technological
Networks and Providers developments are expected to increase
Technology is quickly altering all facets of over the next year, presenting a potential
the Movie and Video Production opportunity for the industry.
industry. Advances in video equipment
and storage are allowing production Total advertising expenditure
companies to make increasingly Movie production companies depend on
sophisticated productions, even on very product placements in movies and
low budgets. In addition, IMAX and 3D in-theater advertisements of other
movies have stimulated box office industries products to boost their
demand over the past five years. Digital production budgets. Greater aggregate
technology is also cutting production and expenditure on advertising demonstrates
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 6
Industry Performance
Key External Drivers that a higher number of companies are revenue because consumers have more
continued likely willing to work with production money to spend on items that are made
companies to present their products in using the industrys production services,
films. Total advertising expenditure is including DVDs, Blu-rays and digital
expected to increase in 2015. downloads. Per capita disposable income
is expected to increase over 2015, thereby
Demand from movie theaters potentially increasing industry revenue.
Fewer box office receipts and lower
consumer demand for feature films Trade-weighted index
negatively affect this industry. Operators The trade-weighted index measures the
in the Movie and Video Production strength of the US dollar relative to the
industry can maximize box office revenue currencies of major trading partners.
by timing movies with holiday weekends Changes in the value of the US dollar
or the summer months, when consumers affect the relative cost of making
typically have the leisure time to visit movies in the United States and
movie theaters. The Movie Theaters overseas. If the US dollar appreciates,
industry is anticipated to grow in 2015. which trends alongside arising trade-
weighted index, some producers will
Per capita disposable income move to international locations to take
The industrys revenue depends on the advantage of relatively lower
amount of money consumers have production costs. The trade-weighted
available to spend on discretionary index is expected to increase sharply in
purchases. Growth in disposable income 2015, representing a potential threat to
typically has a positive effect on industry the industry.
12 8
6 6
4
0
% change
% change
2
-6
0
-12 -2
-18 -4
Year 08 10 12 14 16 18 20 Year 08 10 12 14 16 18 20
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 7
Industry Performance
% change
generating high ticket sales rather than
increasing the number of dramas and -3
Inundation of 3D While the industry has benefited from the Furthermore, the growing costs
films production of more films over the past associated with these large productions
five years, mounting film-related costs have led many major producers to reduce
have constrained the industrys ability to or eliminate budget allocations toward
produce as many films as in previous small-scale films not expected to generate
years. For example, according to the significant box office revenue.
MPAA, 708 films were released in 2014 Additionally, operators in the industry
(latest data available), representing a have implemented new technologies and
24.0% decline in overall released motion moved toward alternative revenue
pictures from a decade ago. This decline streams to support industry growth.
in the number of films released can be Moderately successful movie sequels and
partly attributed to 3D film releases, revamps of older movies in high-
which reached a record high of 47 in definition have stimulated industry
2014. Typically, 3D films are costly to revenue. While these films often earn low
produce, due to expensive camera revenue, they do not require casting an
equipment, months of audio and visual entirely new set of actors and are often
editing and the wage costs of highly shot in a series to save time and money.
skilled video and sound editors. For example, filming of The Hobbit, a
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 8
Industry Performance
Inundation of 3D three-part prequel to the Lord of the generate sales volume. According to the
films continued Rings trilogy, was completed in mid- MPAA, in the United States and Canada,
2012, but the second and third sequels 1.27 billion movie tickets were sold in
were not released in theaters until 2014, a 6.0% decline from the year
December 2013 and 2014. Over the past before. While a slight rise in the average
five years, film producers have struggled ticket price in the 10 years to 2014 has
with many time-strapped consumers buoyed industry revenue, the Movie and
participating in other leisure activities, Video Production industry has still
such as viewing television programs. This exhibited inconsistent performance due
trend, coupled with the decline in movie to high production costs, low after-
ticket sales, has made it arduous for release DVD sales and increasing
producers to attract moviegoers and competition from online entertainment.
Industry Performance
The internet and Over the next five years, the internet will
industry structure play an integral role in driving sales volumes Producerswill likely
for films. In particular, many film producers
will likely form partnerships or agreements
distribute more content to
with film distributors to develop innovative online channels rather than
high-volume distribution. For example, the box office
mobile applications, online ticket
purchasing and prerelease sneak peeks are
important tools to generate public release, thereby enabling more film
excitement for films and make the process producers to create projects that appeal to a
of buying movie tickets as simple as consumer market less inclined to attend
possible. Furthermore, augmented reality movies at the theater. Owners of movie
company Blippar has developed an image- theaters may implement price variances for
recognition and tracking application that movie tickets based on the type of film, such
enables smartphone and Google Glass users as whether the movie is a recent blockbuster
to view videos, webpages and other media. or no longer the latest release. As a result,
As a result, many film producers will this trend will benefit movie and video
become reliant on billboard producers, as more consumers will be
advertisements, which may display a film encouraged to see a major movie in-person
trailer to Google Glass wearers, to drive long after the opening weekend has passed.
movie ticket sales volumes. This strategy may also encourage consumers
The industry will likely follow the trend to view low-budget films or films that
that continues to shape the distribution received negative critical reviews.
methods of television broadcasting Production companies could potentially
companies. Operators will possibly release a recover at least a portion of the losses
wide variety of films that consumers can incurred as a result of poor box office
access from their mobile devices, tablets and performance by charging consumers
computers only weeks after the theatrical discounted ticket prices.
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 10
Industry Performance
Industry Performance
Life Cycle Stage The industry is exhibiting a decline
in industry value added
The industry is operating in a fully saturated
market that is currently consolidating
Low movie ticket sales volumes, coupled with
low DVD sales, have hampered revenue
10
Quantity Growth
Many new companies;
minor growth in economic
importance; substantial
5 technology change
Promotional Products
0 Movie Theaters Market Research
-5 Decline
Shrinking economic
Movie & Video Distribution
importance
Industry Performance
Industry Life Cycle The Movie and Video Production industry revenue to become increasingly volatile as
is currently in the declining stage of its life film producers have relied on the success
cycle. During the 10 years to 2020, of a few films to support their growth.
This industry industry value added, which measures the Movie studios generally specialize in
is D
eclining industrys contribution to the overall the production of a certain movie genre,
economy, is forecast to decline at an such as animated or horror, with a few
annualized rate of 0.3%. Comparatively, differentiated industry products and
US GDP is expected to grow at an average brands. Also, the number of movie
annual rate of 2.2% during the ten-year theater admissions has remained steady
period. During this time, movie producers over the past decade, according to the
struggled with mounting production costs, Motion Picture Association of America
coupled with low DVD and physical media (MPAA), which has caused movie
sales volumes, which have failed to offset producers to contend with stagnant
lackluster movie ticket sales. Many movie sales volumes and higher costs to
and video producers have also produce films. In particular, the
consolidated to cut operational costs. proliferation of 3D films has
Nevertheless, other leisure activities, significantly added to the industrys
particularly television programs, have operational costs. Many states, in
constrained movie ticket sales volumes response to state budgetary issues, may
over the period. The proliferation of cut their tax incentives for film
tentpole films, which are big releases that producers to create films in their state,
are required to support movie producers which will further exacerbate the
bottom lines, have caused industry industrys current struggles.
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 13
8.0%
Other films
8.7%
Thriller/suspense films
39.4%
Action and adventure films
16.8%
Drama films
27.1%
Total $34.1bn Comedy films
SOURCE: WWW.IBISWORLD.COM
Products & Services often filmed on a specific exotic location popularity during the past five years, to
continued and based in a particular era, have risen account for an estimated 5.0% of revenue
in popularity to account for an estimated in 2015. IBISWorld groups them in with
21.7% of industry revenue in 2015. Action the broader comedy category, which
movies have also steadily increased in makes up 27.1% of industry revenue. In
popularity, making up about 17.8% of the five years to 2020, comedies are
revenue in 2015. Action movies anticipated to rebound due to their broad
commonly place characters into a series audience appeal. In 2015, top grossing
of challenges that focus on physical feats, comedy films consisted of Spy,
extended fights and frenetic chases rather Trainwreck and Get Hard.
than focusing on character development.
As a result, these films demand large Drama films
budgets in order to provide realistic sets, Dramas are mostly dialogue-driven
massive pyrotechnics displays, premium depictions of human stories and are
filming technology and A-list talent to therefore not bogged down by excessive
drive audiences to theaters. special effects costs. This genre became
Altogether, action and adventure less popular during the past five years,
movies became more popular during the comprising an estimated 16.8% of
past five years with well-known franchise industry revenue in 2015. The top
releases like Avengers: Age of Ultron and grossing movies in this genre in 2015
Transformers: Age of Extinction include War Room, Black Mass and
generating significant revenue. In 2015, The Imitation Game (released
notable action and adventure films Star Christmas 2014).
Wars: The Force Awakens and Jurassic
World were among the highest-grossing Thriller and suspense films
films of all-time. The action and Thriller and suspense movies, which deal
adventure movie segment is expected to with themes of insecurity or uncertainty,
continue dominating the box office have increased in popularity during the
during the next five years as more films past five years. Propelled by successful
in this genre become animated and, movies like Spectre and Spotlight, this
therefore, more profitable to produce. genres share of industry revenue has
The production of animated films has grown to comprise an estimated 8.7% of
steadily risen due to production revenue in 2015. Over the next five years,
technologies increasing in quality and this genre is expected to continue to gain
decreasing in price. Animated action and popularity, thus allowing this market
adventure movies of 2015 include segment to comprise a larger share of
Minions and Inside Out. industry revenue.
Products & Services Chapter 3 and Poltergeist, which operators, if successful, can generate
continued accounted for some of the segments top substantial revenue within the other
grossing films in 2015. Industry category by appealing to a market niche.
Major Markets The Movie and Video Production majority of the domestic market for
industry produces many types of media, industry movie and video productions
and these works are ultimately comes from downstream entities that are
distributed to the public through the licensed to exhibit, broadcast or rent
various licensed downstream distributors feature films. These establishments
who are granted access to air these films mainly include movie theaters, video
to the public. rental stores and online distributors of
feature films. The domestic market has
Domestic market declined over the past five years in
The domestic market represents 56.2% of comparison to revenue generated from
the industrys customer base. The vast foreign markets.
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 16
43.8%
International distributors of feature
films, short films and others
56.2%
Domestic distributors of feature
films, short films and others
A very small portion of the domestic licensed to distribute feature films. The
market is exclusively licensed to exhibit, industry also grants permission to small
broadcast and rent short films. These numbers of video rental stores, online
establishments are typically the same as distributors and public entities to exhibit
those licensed to distribute feature films, and rent audiovisual works. Because the
but they represent only a slim portion of foreign market represents such a huge
the industrys customer base as a result of source of industry revenue, changes in
the minimal numbers of short films public taste can have a serious impact on
produced in a given year. Additionally, the types of productions the industry
some establishments are licensed to chooses to pursue. For example, domestic
exhibit, broadcast and rent other gross box office sales for the 2013 sci-fi
audiovisual works. These are disparate film Pacific Rim were $101.8 million, far
establishments that range across all lower than its $190.0 million production
industries, and the works they distribute budget. However, the film was designed
typically include miscellaneous for wide international release and
audiovisual productions such as exercise generated $309.2 million in foreign box
videos, travel videos, training videos, office revenue, more than 75.0% of the
public service announcements and other films total revenue. The industry has
instructional videos. increased its distribution to include many
foreign countries, particularly China,
Foreign market Japan, South Korea and Mexico.
International establishments are also Unlike the domestic market, there are
licensed to distribute the industrys many international regions that do not
movie and video productions to foreign wish to simply distribute dubbed versions
audiences. Many feature films depend of popular movies and videos. Since
heavily on revenue generated from subtitled and dubbed productions
markets outside of the United States, generally do not receive the same degree
thus the foreign market represents a of popularity among foreign audiences,
significant 43.8% of the industrys client the industry will occasionally license
base. Much like the domestic market, the rights to international production
vast majority of the industrys foreign companies that wish to use the concepts,
client base consists of establishments likenesses and storylines of domestic
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 17
Major Markets audiovisual works. For many foreign Although this represents a minimal
continued films, these projects will typically have a portion of the industrys total client base,
completely new cast, but the adapted film foreign film adaptations represent a key
will contain many of the exact plotlines, money-generating activity for industry
scripts and concepts of the original piece. production companies.
International Trade The Movie and Video Production productions, provided that the recipient
industry uses its discretion when of the materials is given express consent
granting foreign production companies, by the MPAA to do so. Since many of the
distributors and broadcasters the right to productions that are created in this
use and disseminate their productions. industry are works of art and intangible
Additionally, domestic audiovisual goods that cannot be physically
production companies must often pay for exchanged or quantified, international
the rights to distribute works created by trade in the industry is not documented
foreign producers. Digital works of art by the US International Trade
are protected as intellectual copyright Commission. Any revenue generated
through various trade associations such from the distribution of movie and video
as the Motion Picture Association of productions to foreign entities is
America (MPAA). Domestic producers considered part of the industrys
will allow foreign companies to use their overall revenue.
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 18
West
AK
0.1 New
England
ME
Great Mid- 0.2
Lakes Atlantic 1 2
NY 3
WA MT ND 14.3
5 4
1.6 0.0 MN
Rocky
0.3 1.4
WI
OR Mountains SD
0.1
Plains 0.8 MI
1.4
PA
1.8
6
7
1.0 ID IA OH 9 8
0.2 WY 1.3
0.1
NE
0.4
IL IN WV VA
3.1 0.9 1.3
West NV
0.2 0.1
KY
UT MO
0.5 NC
0.8
1.1 CO KS 0.9 1.5
1.7 0.3 TN
SC
Southeast
1.1
CA 0.4
38.4
OK AR GA
0.6 0.2 AL 2.4
AZ MS 0.4
1.0 NM
0.4 Southwest 0.1
TX LA
0.6 FL
3.4 5.7
West
HI
0.4 Additional States (as marked on map) Establishments (%)
1 VT 2 NH 3 MA 4 RI Less than 3%
0.2 0.2 1.8 0.2 3% to less than 10%
10% to less than 20%
5 CT 6 NJ 7 DE 8 MD 9 DC
20% or more
0.9 2.0 0.2 1.3 0.6
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 19
%
is largely located in California, which 20
West
Great Lakes
Mid-Atlantic
New England
Plains
Rocky Mountains
Southeast
Southwest
ensure that the state remains a hub for film
production through various tax benefits. In
general, the films made in Hollywood
dominate the domestic and international Establishments
film market. New York, particularly the Population
New York City metropolitan area, also has SOURCE: WWW.IBISWORLD.COM
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share The industry is becoming increasingly losses from less successful productions
Concentration concentrated, and the top four major or small-scale independent projects,
players make up an estimated 54.7% of giving large studios with a diversified
industry revenue. Due to the intense movie portfolio an advantage over
Level
industry consolidation and media smaller, specialized production studios
Concentration in this cross-ownership that has occurred over that lack the resources to produce and
industry is M
edium the past 20 years, many of the industrys release a variety of movie genres each
most prominent film studios have been year. Additionally, large players can
acquired and absorbed into the expand their market share by producing
operations of the countrys largest films with a variety of genres, styles and
broadcasting and Internet servicing levels of investment, and produce both
providing companies. branded and franchise films. Many of
Larger corporations are more these players simply acquire smaller
successful in this industry since they are production companies and provide
able to mitigate the risks involved in these enterprises with the necessary
movie production. For example, revenue budgets to produce projects on a limited
from popular movies often balances out release schedule.
Competitive Landscape
Average Costs of
all Industries in Industry Costs
sector (2015) (2015)
100 n Profit
16.3 14.8 n Wages
n Purchases
80 n Depreciation
15.5 n Marketing
21.3 n Rent & Utilities
n Other
Percentage of revenue
60
24.3
52.1
40
7.6
4.6
20
4.5
3.4
21.4 8.2
3.7
0 2.3
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Movie & Video Production in the US December 2015 22
Competitive Landscape
Cost Structure wages because halting film production facilities in areas that have high foot
Benchmarks due to labor disputes is costly for the traffic for filming. On-site production
Movie and Video Production industry. permits vary in price, but in-studio
continued
production costs are typically substantial,
Marketing with many producers competing for
Box office sales from a big first-weekend limited production space. Production
audience can ultimately produce over often also involves the rent of expensive
one-third of the gross income of that trailers for the cast and some equipment.
movie. Studies have shown that This segment of the cost structure is
consumers today are far more interested expected to remain stable over the five
in reading critical reviews than ever years to 2020.
before, and many consumers consult
reviews online before heading to the Other
theater. Additionally, increased publicity Other miscellaneous costs will vary
for a movie improves the revenue that depending on the type of project and its
comes in from distribution contracts anticipated budget. Transportation costs
made with broadcasters and on-demand can include expensive cars rented to
services shortly before or after a movies show on-screen or the limousine rides
initial release to theaters. Advertisers are that talent may take to a marketing event.
willing to pay a premium to feature Depreciation is anticipated to account for
advertisements shown alongside a film an estimated 3.4% of industry revenue,
with a large audience. In 2015, marketing although this can be significantly higher
is expected to account for an estimated for major production companies that own
8.2% of industry revenue. and operate their own filming equipment
Advertising has been a necessary and editing software. Typical
expenditure for high-budget movies in depreciation costs remain low because
order to recoup production expenses, and most movie production does not involve
it has helped commercially viable smaller extensive capital expenditures on
movies turn a large profit. Advertising equipment, provided that these materials
ranges from online trailers, television are rented.
commercials, magazine ads, billboards Other costs included in most
and radio spots. productions include office supplies,
auditing, legal fees and a large degree of
Rent & utilities subcontracting. For instance, many
Rent and utilities is expected to make up movie production companies subcontract
about 3.7% of industry revenue in 2015 the duplication of movies onto recordable
because movie producers often rent large media (see IBISWorld report 33461).
Competitive Landscape
Competitive Landscape
Barriers to Entry producers have difficulty distributing of this equipment. Additionally, advanced
continued their films to a mainstream audience. movie cameras are being constantly
However, movie production at the updated with new features that make it
lower end of this industry does not easier to film a professional quality
necessarily require formal training, movie. It is possible to make an
although some requisite level of independent film, provided that the
production skills, industry knowledge necessary funding is available and the
and filmmaking equipment are all producers are comfortable working with
necessarily tools to enter the industry. lesser-known talent. High industry
The costs of equipment used in assistance from state and federal
production can be offset or minimized by governments cover some industry costs,
the use of lease and hire arrangements facilitating the start-up of small movie
with specialist hire firms that carry stocks production companies.
Industry Companies in the Movie and Video film premieres in the United States and
Globalization Production industry have been courted by adding special footage to films for
national governments for decades. audiences in key markets. Additionally,
However, the incentives for producers to industry operators may add extra
Level & Trend create their works offshore or to shoot in subplots, scenes and characters to
lobalization
G in the United States change constantly. attract global audiences. As production
this industry is Foreign ownership in this industry is costs increase, industry operators need
Highand the trend common; for example, key industry player to appeal to international markets to
Sony Pictures Entertainment is owned by cover costs and retain profit, especially
is I ncreasing Tokyo-based Sony Corporation. Also, because the global market can offset
operators are conducting joint ventures losses from poor domestic box office
with international companies to attract ticket sales.
global audiences. For example, 2013s Industry operators are deriving larger
Iron Man 3 was produced by Walt Disney portions of industry-relevant revenue
Studios, Marvel Studios and the Beijing- from the distribution of DVDs and online
based company DMG Entertainment. media content, which requires strong
According to the MPAA, about 70.0% international demand to bolster sales.
of studios annual box office revenue is For example, Sony Pictures
derived from international markets. Entertainment, a subsidiary of Sony
Industry operators are increasingly Corporation, distributes motion pictures
catering to global markets by releasing and other forms of entertainment to
movies to global audiences before the about 159 countries.
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 25
Major Companies
21st Century Fox | The Walt Disney Company | NBCUniversal Media LLC
Viacom Inc. | Time Warner Inc. | Other Companies
39.0%
Other
Player Performance Formerly operating under the News produces and acquires motion pictures.
Corporation (News Corp) corporate Fox Searchlight Pictures and Twentieth
umbrella, 21st Century Fox is a global Century Fox Animation produce and
21st Century Fox media and entertainment company that acquire specialized motion pictures and
Market share: 17.9% operates in the following business animated motion pictures. The company
Industry Brand Names segments: cable network programming, also has a 33.0% equity interest in Hulu,
Fox Filmed Entertainment television, filmed entertainment and an online video service that provides
Twentieth Century Fox direct broadcast. In June 2013, News video content from Fox. The companys
Film Corp separated into two independent holdings in Hulu are intended to
Twentieth Century Fox publicly traded companies: 21st Century maintain a competitive edge and generate
Fox 2000 Fox, which operates in cable, broadcast, revenue growth from consumers that
film and pay-television, and News Corp, view movies from their laptops or tablets.
which controls the companys former The companys agreement with
businesses, including newspapers, DreamWorks Animation SKG Inc. allows
information services, marketing services, 21st Century Fox to distribute animated
real estate services, digital education, motion pictures. Its motion picture
sports programming and pay-television distribution strategy conducts prerelease
distribution in Australia. marketing for feature films by marketing
The company produces and distributes three to six months before a films release
motion pictures through its Twentieth date. In 2013, an agreement made with
Century Fox Film brand, Twentieth Metro-Goldwyn-Mayer Studios Inc.
Century Fox and Fox 2000, which (MGM) will allow 21st Century Fox to
21st Century Fox (US movie and video production segment) - financial
performance*
Revenue Net Income
Year** ($ million) (% change) ($ million) (% change)
2010-11 4,232.5 -7.7 748.2 -0.9
2011-12 3,874.0 -8.5 520.5 -30.4
2012-13 4,430.6 14.4 686.9 32.0
2013-14 4,976.6 12.3 753.2 9.7
2014-15 5,419.2 8.9 760.3 0.9
2015-16 6,099.7 12.6 925.4 21.7
Major Companies
Player Performance distribute 583 MGM films and television to grow at an annualized 7.6% to $6.1
continued programs per year. Also, through billion. In fiscal 2012, the companys
agreements with Lions Gate Entertainment separation of its publishing, media and
Corp. (Lionsgate) and Anchor Bay entertainment businesses into two
Entertainment (Anchor Bay), the company distinct publicly traded companies has
releases about 1,604 Lionsgate and 683 enabled 21st Century Fox to focus on
Anchor Bay home entertainment and its film entertainment business
television programs per year. segment. As a result, industry-relevant
operating income skyrocketed 32.0%
Financial performance during the fiscal year, enabling 21st
In the five years to fiscal 2015, Century Fox to explicitly invest in
industry-relevant revenue is expected film entertainment.
Player Performance Founded in 1923, the Walt Disney total, Disney has distributed six films and
Company is an international family provided financing of $154.0 million for
entertainment and media enterprise that DreamWorks. In 2012, amendments to
The Walt Disney operates in the following business the agreement limited Disneys
Company segments: media networks, parks and distribution to the United States, Canada,
Market share: 17.2% resorts, studios and entertainment, Latin America, Australia and most of Asia.
consumer products and interactive In 2010, Disney significantly
Industry Brand Names
media. Industry-relevant revenue is restructured its movie production
Walt Disney Pictures
derived from its studio entertainment operations by selling Miramax to
Touchstone Pictures
business segment, which produces and Filmyard Holdings for about $663.0
Pixar
acquires motion pictures, direct-to-video million to refocus the Disney brand
Miramax
content, musical recordings and live away from independent movies. Also in
Lifetime
stage plays. 2012, Disney acquired Lucasfilm Ltd.
Hollywood Pictures
Disney currently holds an agreement LLC, the studio that created and had
Image Movers Digital
with DreamWorks studio to distribute live retained the rights to the popular Star
Marvel
action motion pictures under the Wars franchise. This contributed to
companys Touchstone Pictures brand. In Disneys focus on highly recognizable
The Walt Disney Company (US movie and video production segment) -
financial performance*
Revenue Operating Income
Year** ($ million) (% change) ($ million) (% change)
2009-10 5,292.3 6.3 914.6 24.9
2010-11 5,613.8 6.1 960.1 5.0
2011-12 5,308.0 -5.4 1,251.0 30.3
2012-13 4,768.3 -10.2 1,135.3 -9.2
2013-14 5,781.5 21.2 1,540.3 35.7
2014-15 5,859.4 1.3 1,639.6 6.4
Major Companies
Player Performance NBCUniversal Inc. (NBCU) is a global In February 2013, previous co-owner
media and entertainment company that General Electric had its 49.0% of NBCU
develops, produces and markets stake bought out by Comcast for $16.7
NBCUniversal entertainment, news and information. billion. In 2011, the company acquired
Media LLC Owned by Comcast Corporation, NBCU is The Blackstone Groups 50.0% interest in
Market share: 13.5% headquartered in New York City and was Universal Orlando, which owns two
founded in 2004 as a combination of the theme parks, Universal Studios and
Industry Brand Names
National Broadcasting Company Inc. Islands of Adventure, as well as an
Universal Pictures
(NBC), created in 1926, and Universal entertainment complex, Universal
Focus Features
Studios Inc. (Universal), created in 1909). CityWalk. While unrelated to industry-
*Estimates
SOURCE: IBISWORLD
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 28
Major Companies
Player Performance relevant revenue, the acquisition allows networks (such as HBO), digital
continued the company to develop a revenue base distributors and pay-per-view services.
for sales from movie character licensing
and merchandise. Financial performance
NBCUs industry-relevant revenue is In the five years to 2015, industry-relevant
derived from its filmed entertainment revenue is expected to grow at an annualized
business segment, which produces, rate of 5.3% to $4.6 billion. In 2012, revenue
acquires, markets and distributes live- increased an estimated 16.7% due to
action and animated film through NBCUs merger with Comcast Corporation,
Universal Pictures, Focus Features and which has allowed the company to benefit
Illumination Entertainment. Industry- from Comcasts production facilities. Strong
relevant revenue is generated from the box office performances of Jurassic World
distribution of films in movie theaters, and Minions contributed to the industrys
the sale of films for home entertainment impressive growth over 2015. Moreover,
and licensing films. The company licenses industry-relevant revenue is projected to
films to cable, broadcast and premium grow an additional 11.2% in 2015.
Player Performance Viacom Inc. is a global entertainment Paramount Pictures, the countrys oldest
company that reaches about 700.0 film studio; Paramount Vantage;
million global subscribers through the Paramount Classics; Insurge Pictures;
Viacom Inc. following business segments: television, MTV Films; and Nickelodeon Movies
Market share: 6.3% motion picture and online and mobile brands. Also, industry-relevant
Industry Brand Names platforms. Established in 2005, the operations include the companys home
Paramount Pictures company was originally part of CBS entertainment business segment, which
DreamWorks Corporations media business segment distributes DVDs produced by
Nickelodeon until the companies split in 2006 to Paramount and other Viacom brands,
MTV Films separate television and radio operations and third-party distributions, such as
from other segments. DreamWorks.
Industry-relevant revenue is derived In 2010, Paramount and Marvel
from filmed entertainment content from partnered to allow Paramount to
Major Companies
Player Performance Time Warner Inc. is a global media and nonentertainment assets and changed its
entertainment company that operates in name to Warner Communications Inc.
film, television and publishing through Industry-relevant revenue is derived
Time Warner Inc. its Turner, Home Box Office, Warner from the film entertainment business
Market share: 6.1% Bros. and Time Inc. segments. The segment, which is composed of feature
Industry Brand Names company was formed in 1971 when films, home videos, production and
Warner Bros Kinney National spun off its distribution. Warner Bros. produces
Warner Home Video
New Line Cinema
Imprint Entertainment Time Warner Inc. (US movie and video production segment) - financial
Castle Rock
Entertainment
performance*
Revenue Operating Income
Year ($ million) (% change) ($ million) (% change)
2010 1,962.0 0.9 713.1 -4.8
2011 1,943.6 -0.9 679.1 -4.8
2012 2,030.7 4.5 797.4 17.4
2013 2,005.8 -1.2 784.4 -1.6
2014 1,866.5 -6.9 614.1 -21.7
2015 2,092.1 12.1 668.0 8.8
*Estimates
SOURCE: IBISWORLD
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 30
Major Companies
Player Performance feature films under its subsidiaries division of Warner Bros., Warner Home
continued Warner Bros. Pictures and New Line Video, distributes DVDs and provides a
Cinema. Warner Bros. film strategy strong in-house distribution network. An
focuses on producing feature films in a agreement through 2015 allows Warner
mix of genres, while also aiming to build Bros. to distribute DVDs from Paramount
franchises and create blockbuster films. Pictures film library, which consists of
In the past decade, the company has more than 600 catalog titles.
produced many of the industrys highest
grossing movies, including The Lord of the Financial performance
Rings trilogy, the Harry Potter series and In the five years to 2015, industry-relevant
The Dark Knight. Additionally, Warner revenue is forecast to grow at an
Bros. has cofinancing agreements with annualized rate of 1.3% to $2.1 billion.
Village Roadshow Pictures through 2017. Propelled by American Sniper, San
These agreements are pivotal for production Andreas and Mad Max: Fury Road,
because Village Roadshow Pictures absorbs revenue increased by 12.1% in 2015 and is
half of all production costs. anticipated to increase going forward. In
Distribution agreements between recent years, production costs have
Warner Bros. and Alcon Entertainment increased due to the trend of producing
(Alcon) through 2015 allow the company more event films, such as franchise films,
to distribute Alcons feature films. A which typically include higher talent costs.
Major Companies
Other Companies Summit Entertainment LLC for $412.5 expected to total $1.3 billion. Over the
continued million in 2012. The acquisition added past five years, the company has
experienced managers to the companys benefited from the success of its Twilight
growing production team. The companys franchise films and the recent box office
2015 US movie production revenue is success of The Hunger Games series.
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 32
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Capital Intensive
Labor Intensive
Operating Conditions
Capital Intensity industry drives up the cost of labor even disrupt production through strikes, which
continued further by requiring high wages for many often causes industry operators to foot
of its unionized members. Labor unions large production bills or suspend
can leverage higher wages by negotiation production until labor negotiations have
or, in some cases, by threatening to been completed.
Technology & Systems New technology is rapidly transforming the movie industry, and movies and
the Movie and Video Production industry. trailers are also produced in new formats
Level Advances in video equipment and storage in order to meet various screen
are allowing for movies with increasingly specifications. Direct digital sales have
The level
of high display resolution to be produced, become an enormously popular method
Technology even with a low budget. Video cameras of providing media to consumers without
Change is H
igh have more automatic settings, decreasing the exchange of any physical items.
the need to re-shoot scenes. Also, digital Additionally, digital animation has
production and editing software has cut quickly become a popular format. Movies
costs and time in postproduction. As created exclusively with the use of
cinemas adapt to digital distribution computer animated graphics cut costs by
methods rather than traditional tape reels, eliminating expensive set pieces and hiring
the distribution process will also be less voice-over actors who are capable of
costly for producers. completing work in a matter of days
Producers are also revamping the instead of weeks. Some forms of animated
process of distributing movies to films, particularly action films that combine
consumers. Many studios, retailers and live action with animation and other 3D
electronics manufacturers, for example, elements, can still increase the total budget
are selling UltraViolet (UV) copies of of principal photography. Despite the
films, which allow consumers to access associated expense that is partially passed
purchased movies via various devices, on to viewers, 3D movies are extremely
such as televisions, computers, tablets popular. Not only are theaters showing 3D
and smartphones. Although all other films, but home entertainment systems are
major studios are onboard with UV, also now sold with 3D capabilities.
major company Disney has developed Various forms of 4D technology that uses
Keychest, which is a similar service. These tilting seats, scents, strobe lights, fogs and
cloud-based services allow consumers to other physical effects have become
watch a movie on their computer, increasingly popular as industry
television, handheld or any other device operators find new ways to reel in
that can connect to the internet. Tablet moviegoers who have gradually flocked
computing devices have revolutionized toward at-home streaming.
Revenue Volatility The Movie and Video Production Americans in recent years have
industry has a moderate level of revenue supported the industry through new
volatility. While the industry may be habits of attending movie theaters and
Level
inherently vulnerable to revenue watching films at home. As a result,
The level of volatility due to its reliance on the industry revenue suffers from declining
Volatility is M
edium consumers who routinely visit movie cinema viewership, but consumers have
theaters and purchase DVDs, many continued to bolster revenue through
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 34
Operating Conditions
Revenue Volatility low-cost options such as online streaming Thanksgiving, Christmas and New Years
continued services. Movie financing will continue to Eve. Therefore, revenue typically spikes in
be heavily dependent on business the early months of summer and again in
sentiment and interest rates, which has the final months of the year. Average
made industry revenue slightly industry revenue volatility, defined as the
susceptible to fluctuations in line with average absolute change in revenue over
economic cycles. the five years to 2015, is estimated to
Seasonal changes also play a large role reach 3.5%. The industry experienced its
in the volatility of this industry. Many largest year of growth in 2012, when
films are released at key points in the year, revenue increased 3.8%. Conversely, its
starting with the summer holidays and biggest decline occurred in 2011 with a
carrying into the winter holiday periods of projected 3.5% reduction in revenue.
Regulation & Policy Screen actors, directors, Pictures Editors Guild and Producers
cinematographers and the industrys Guild of America, among others.
movie production employees are Nevertheless, unionization increases
Level & Trend heavily unionized. Until early 2012, production costs. Firstly, union
he level of
T there were two unions for actors, membership requires additional
Regulation is Screen Actors Guild (SAG) and the bureaucracy, which translates into added
Mediumand the American Federation of Television and expenses for fulfilling union
Radio Artists (AFTRA). These unions requirements, limiting daily workloads,
trend is I ncreasing
merged in March 2012 to create SAG- extending project deadlines and filling in
AFTRA, thus strengthening their the necessary paperwork to confirm that
combined bargaining power with production was completed in accordance
studios and increasing average industry with the requirements of all involved
wages. The Writers Guild of America unions. Unions set higher minimum
represents writers in motion pictures, wages than federal regulations mandate
television, cable, digital media and for production employees. Negotiations
broadcast news. Other guilds include between unions can also become
Directors Guild of America, Motion extremely costly; the threat of a potential
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 35
Operating Conditions
Regulation & Policy strike may lead to across-the-board production company also must carry
continued increases in wages or, in the event of a appropriate insurance in order to cover
stalemate during negotiations, costly any necessary court costs needed to
legal fees. protect its own work.
Exclusive rights granted to creators of Another way that this industry conducts
art and culture help preserve the self-regulation is through age-specific
revenue-generating capabilities of these movie ratings. The Motion Picture
works and various derivative copies of Association of America (MPAA) conducts
their work. Copyright laws not only the ratings. Ratings are an inexpensive
protect movie producers from unlicensed way for the industry to help parents
distribution of their content but also are monitor the content that their children
enforced to ensure that industry watch and decrease the potential costs of
operators receive proper authorization lawsuits. Ratings also help broadcasters
and pay royalties for any copyrighted abide by Federal Communications
material used in their projects. The Commission regulations.
Industry Assistance The US government and various state Idaho, Indiana, Iowa, Kansas, Missouri
government bodies often pass tax and Wisconsin have either prematurely
provisions to encourage domestic movie ended their production incentive
Level & Trend and video production. Tax write-offs programs or have simply allowed these
he level of Industry
T may be included to reduce tax payments programs to lapse without renewal.
Assistance is H
igh on production expenditure or allow for States continue to introduce and pass
and the trend is some flexibility in various revenue incentive measures for the industry,
accounting methods. In recent years, the although many governments now require
Decreasing
code has widely expanded to provide various audits and careful documentation
substantial write-offs, grants, tax rebates on behalf of the film producer in order
and sales tax exemptions for for refunds and grants to be issued.
independent producers of films that are In addition to a high degree of
shot either on a very low budget or in a government programs benefiting movie
designated location. producers, the industry is also heavily
According to a 2014 report by the unionized. The Motion Picture
National Conference of State Association of America (MPAA)
Legislatures, there are currently 39 states represents all six major Hollywood
that offer some form of video production studios and is one of the most powerful
incentives. Tax incentives and credit lobby groups in the country. The MPAA
initiatives appeared throughout many has historically served to issue film
states amid the recession in order to content guidelines and administer its
encourage major films to attract attention MPAA film rating system, but in recent
to states and cities that had suffered years it has become an increasingly vocal
economic hardship. Over the past five advocate for strengthening the US
years, however, states including Arizona, governments anti-piracy laws.
WWW.IBISWORLD.COM Movie & Video Production in the US December 2015 36
Key Statistics
Industry Data Industry Per capita dis-
Revenue Value Added Establish- Wages Domestic posable income
($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand ($)
2006 35,337.3 12,469.1 7,921 7,708 60,136 -- -- 6,002.3 N/A 35,461
2007 35,289.0 12,258.1 7,855 7,658 68,150 -- -- 5,482.6 N/A 35,870
2008 34,768.9 11,851.5 7,314 6,537 72,152 -- -- 5,801.7 N/A 36,082
2009 31,869.5 12,561.5 7,059 6,807 73,527 -- -- 6,283.2 N/A 35,620
2010 32,908.6 12,199.2 7,036 6,805 72,025 -- -- 6,111.1 N/A 35,684
2011 31,756.1 10,581.1 7,105 6,789 61,895 -- -- 5,119.1 N/A 36,299
2012 32,954.7 11,340.8 6,768 6,485 60,867 -- -- 5,079.4 N/A 37,163
2013 33,871.2 11,316.6 6,850 6,566 62,334 -- -- 5,219.8 N/A 36,369
2014 34,006.4 12,422.8 6,796 6,503 62,755 -- -- 5,254.2 N/A 37,084
2015 34,065.6 11,478.3 6,814 6,527 63,228 -- -- 5,288.6 N/A 38,042
2016 34,547.6 11,843.5 6,793 6,492 64,116 -- -- 5,370.5 N/A 39,069
2017 33,755.4 11,727.6 6,745 6,461 63,478 -- -- 5,290.8 N/A 40,048
2018 34,166.2 11,737.6 6,726 6,429 64,266 -- -- 5,362.7 N/A 41,070
2019 34,372.1 11,878.3 6,751 6,458 64,815 -- -- 5,409.0 N/A 41,968
2020 34,216.7 11,854.9 6,692 6,393 64,868 -- -- 5,405.2 N/A 42,981
Sector Rank 16/38 16/38 14/38 9/38 19/38 N/A N/A 19/38 N/A N/A
Economy Rank 309/1373 253/1373 490/1373 432/1373 519/1373 N/A N/A 328/1373 N/A N/A
Figures are in inflation-adjusted 2015 dollars. Rank refers to 2015 data. SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 37
Industry Jargon BLU-RAYAn optical disc format designed to display ULTRAVIOLET (UV)A format that can involve a disc, or,
high-definition video and store large amounts of data. alternatively, a download, that enables users to collect
FEATURE FILMA full-length film or film longer than one and access audiovisual content.
hour. VERTICAL INTEGRATIONOwning different parts of
IN-HOUSEWhen production duties are performed the supply chain, either in the form of forward
within a movie studio instead of being contracted to integration (owning upstream suppliers) or backward
other companies. integration (owning downstream buyers).
OFFSHOREThe relocation of a companys business
process, such as manufacturing or accounting, from one
country to another, whether the work is outsourced or
stays within the company.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that IMPORTS Total value of industry goods and services
new companies struggle to enter an industry, while low brought in from foreign countries to be sold in the
barriers mean it is easy for new companies to enter an United States.
industry. INDUSTRY CONCENTRATIONAn indicator of the
CAPITAL INTENSITY Compares the amount of money dominance of the top four players in an industry.
spent on capital (plant, machinery and equipment) with Concentration is considered high if the top players
that spent on labor. IBISWorld uses the ratio of account for more than 70% of industry revenue.
depreciation to wages as a proxy for capital intensity. Medium is 40% to 70% of industry revenue. Low is less
High capital intensity is more than $0.333 of capital to than 40%.
$1 of labor; medium is $0.125 to $0.333 of capital to $1 INDUSTRY REVENUEThe total sales of industry goods
of labor; low is less than $0.125 of capital for every $1 of and services (exclusive of excise and sales tax); subsidies
labor. on production; all other operating income from outside
CONSTANT PRICESThe dollar figures in the Key the firm (such as commission income, repair and service
Statistics table, including forecasts, are adjusted for income, and rent, leasing and hiring income); and
inflation using the current year (i.e. year published) as capital work done by rental or lease. Receipts from
the base year. This removes the impact of changes in interest royalties, dividends and the sale of fixed
the purchasing power of the dollar, leaving only the tangible assets are excluded.
real growth or decline in industry metrics. The inflation INDUSTRY VALUE ADDED (IVA)The market value of
adjustments in IBISWorlds reports are made using the goods and services produced by the industry minus the
US Bureau of Economic Analysis implicit GDP price cost of goods and services used in production. IVA is
deflator. also described as the industrys contribution to GDP, or
DOMESTIC DEMANDSpending on industry goods and profit plus wages and depreciation.
services within the United States, regardless of their INTERNATIONAL TRADEThe level of international
country of origin. It is derived by adding imports to trade is determined by ratios of exports to revenue and
industry revenue, and then subtracting exports. imports to domestic demand. For exports/revenue: low is
EMPLOYMENTThe number of permanent, part-time, less than 5%, medium is 5% to 20%, and high is more
temporary and seasonal employees, working proprietors, than 20%. Imports/domestic demand: low is less than
partners, managers and executives within the industry. 5%, medium is 5% to 35%, and high is more than 35%.
ENTERPRISE A division that is separately managed LIFE CYCLEAll industries go through periods of growth,
and keeps management accounts. Each enterprise maturity and decline. IBISWorld determines an
consists of one or more establishments that are under industrys life cycle by considering its growth rate
common ownership or control. (measured by IVA) compared with GDP; the growth rate
ESTABLISHMENTThe smallest type of accounting unit of the number of establishments; the amount of change
within an enterprise, an establishment is a single the industrys products are undergoing; the rate of
physical location where business is conducted or where technological change; and the level of customer
services or industrial operations are performed. Multiple acceptance of industry products and services.
establishments under common control make up an NONEMPLOYING ESTABLISHMENT Businesses with
enterprise. no paid employment or payroll, also known as
EXPORTSTotal value of industry goods and services sold nonemployers. These are mostly set up by self-employed
by US companies to customers abroad. individuals.
WWW.IBISWORLD.COM Movie & Video Production in the USDecember 2015 38
IBISWorld Glossary PROFITIBISWorld uses earnings before interest and tax WAGESThe gross total wages and salaries of all
(EBIT) as an indicator of a companys profitability. It is employees in the industry. The cost of benefits is also
continued calculated as revenue minus expenses, excluding included in this figure.
interest and tax.
VOLATILITYThe level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
20%; high volatility is 10% to 20%; moderate
volatility is 3% to 10%; and low volatility is less than
3%.
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