...American Film Industry - A Model of Oligopoly Kim R. Williamsbernard Virginia College, Online The American Film Industry - A Model of Oligopoly Introduction The American Film Industry or Hollywood refers to the successful oligopoly economy of the major Hollywood studios in the 1920s to the 1940s. The term implies that it studios, so the production of films constituted the decisive factor in the economic system. But the concept of system refers here to large companies, production, film distribution / sales and film screening at this time controlled. Vertical Integration The actual switching was indeed for most firms in New York City, but the company has production facilities in Hollywood grew up to be enormous. Mergers and acquisitions, was formed in 1920 out gradually a powerful oligopoly. The competition in the film industry in Europe has been weakened by the First World War and so many American studios took advantage of the opportunity, the demand for new films to cover most of themselves. The weakness of Edison's monopoly (MPPC) was the insufficient integration of the functional areas of the value chain. This is precisely what the new rendered large companies. Their economic power stemmed from the fact that they took over the production of films, the distribution and the distribution of films and the Exhibition or the operating theater itself, so the functional areas vertically integrated (Balio, 1985). The Oligopoly The oligopoly among five...
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...Portrayal of Oligopoly in the movie "A Beautiful Mind" The movie A Beautiful Mind is all about the life of John Nash, an Economist and Nobel Prize winner who is known for his contribution to Economics and how it helped many people, particularly those in the business industry. Oligopoly, a market structure where few firms dominate and also the middle ground between monopoly and capitalism, was portrayed in the said movie. The portrayal of oligopoly in the movie was in the scene where Nash, together with his friends, was at the bar having a drink and somewhat doing school works. When a group of ladies which consists of a blonde girl and four brunette girls arrived, Nash and his friends were arguing about getting laid with those girls and then suddenly, he came up with a realization that opposes Adam Smith’s claim that in competition, individual ambition serves the common good. He said that if they will all go for the blonde, they will block each other and no one is going to get her so they just go for the friends. By doing so, the best result will come because everyone in the group is doing what is best for himself and the group, which will led to the best possible payoff in which all of them will get laid. In relation to the business industry, firms under oligopoly consider everyone affected by their decisions because it could make things worse not just for them but for everyone else. Nash believes that Adam Smith’s claim is incomplete because there are situations where...
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...sold in 2007. But beyond the headlines, the industry is a study in contradictions: the number of theaters is declining, but the number of screens is at an all time high revenues are up, but attendance is largely flat – that 1.4 billion tickets is little improved from 1997 when 1.35 billion tickets were sold and a fraction of the 4 billion sold in 1946. Then the average person attended 28 films a year, today it is 6.2 the U.S. population is increasing, but the size of the market in the core demographic group is growing more slowly Americans spend more time than ever on entertainment – 3,500 hours annually – but only 12 are spent at the movies.3 The average person spends as much time watching TV every 3 days. Movies remain as popular as ever, but opportunities for viewing outside the theater have greatly increased. While motion picture studios increased revenues through product licensing, DVD sales, and international expansion, the exhibitors – movie theaters – have seen their business decline. Movies are more available than ever, but fewer are venturing to the theater to see them. Many theaters have ceased operation, driven from the market by consolidation and as patrons stayed away. Will the marquee at the local theater exhibitor soon change to: “A Horror Show at the Cinemaplex?” How has this come to be? What can exhibitors do to respond? Use Porter’s five forces model to analyze the profit potential of the movie theater industry and how to...
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... Netflix Inside the large video entertainment industry is Netflix Inc., which was founded in 1997. In 2008 the video rental and retail combined to make up $26.7 billion of Netflix’s market (Schneider, 2010). This market can be separated into a number of different groups DVD vending kiosk, online rental and sales, mail delivery services, and video demand services accessible through numerous devices (Schneider, 2010). Thanks to the advancements in technology the rental portion is dwindling down from physical DVDs to digital downloads. It is simply more convenient to use a video game console, DVD player, or Blu Ray Player to access videos straight from home. Consumers are not limited to watching movies at home, since Netflix has developed the ability to view movies on smart phones or even tablet devices. The ability to watch a movie on demand is growing exponentially. Market Structure Due to fast increase in technology, Netflix is in an Oligopoly structure. One of the primary indicators that they are in this structure is that there are only four major firms in the video rental industry ("Economics Online", n.d.). The video rental industry can be determined to be controlled by Blockbuster, Comcast, Redbox, and finally Netflix. These companies are the only real major players in movie rental industry. Another indicator this is an Oligopoly is because of the barriers that need to be overcome to be able to break into this industry. There are very stringent copyright laws, which...
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...would describe the product worldwide. LEGO is among other companies to reach eponyms of name brand products such as Kleenex, Scotch Tape, Skillsaw, Windex, FED-EX, Sharpie, Xerox, and several other products. LEGO is continuing to expand the elasticity of its product and create demand on the products it creates. LEGO uses data to respond to the market and reinvent its products in order to remain the dominate firm in the building block toy industry. Business Model of LEGO According to Essentials of Economics there are four types of business models; Pure Competition, Monopolistic Competition, Oligopoly, and Pure Monopoly (McConnell, 2009). * Pure Competition: Involves several firms producing of standard products. As an example of a pure competition product would be rubber bands, copy paper, and pens. * Monopolistic Competition: Has a number of firms making differentiated product such as furniture, producing books, televisions, and clothing. Entering or exiting the market is quite easy and a non-price competition. * Oligopoly: Only have a few firms. Those firms that are involved are interdependent of each other in prices other firms could easily become a price war. Prices for the product will determine what choices and direction the firm will take. * Pure Monopoly: in the market there is only one firm in the sole...
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...Tucker faced many overwhelming challenges with production of his dream. We discuss in this report the many economic challenges and decisions Preston Tucker needs to make his dream happen. These events in sequences throughout the movie allow us to examine economic concepts that we can relate to microeconomics. Oligopoly Preston Tucker in the 1940’s who is an entrepreneur and proven engineer comes up with the design of a new car that will change the future of automobiles. Before the Torpedo can be produced, Preston Tucker needs to get money to open a factory and start the making of this brand new car. Once he has the Tucker factory running he must make up the first Tucker Torpedo to showcase for everyone to see. In Detroit at the time there was three major car producers who ran the automobile industry. These three companies were not too thrilled to hear about the Tucker Torpedo being developed as the future of automobiles with more safety to offer than their automobiles. The three companies did not want to compete against Tucker and made a plan to get rid of him. It really shows in the movie how misleading information and political power can ruin a company and lead it out of business. This kind of demonstration in the movie really relates to oligopoly and how big companies can make it really hard for smaller companies to gain entry to the market and compete with them in turn. Innovation and...
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...The concept of oligopolies aren’t new they have been around since the beginning of trade. Never before now have the oligopolistic competition been so savagely contested across so many industries. One of these industries in the United States of America is the Media industry.Any business that is related to the media such as film production, broadcasting, distribution, movie theatre’s, television, book publishing, newspaper publishing, recorded music, etc. belongs to the media industry. The media industry is a powerful communication tool. The media Industry has captivated many companies however, only a few of these companies has grown big. These Media giants companies have taken over and dominated the local media market and soon will conquer the...
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...at its greatest possible level. It is argued that perfect competition would produce the best possible outcomes for consumers and society. A perfectly competitive market will exhibit the following characteristics: -There are no barriers to entry into the market. -No single company can influence the market price or market conditions. -There will be a large numbers of companies in the market. -There is no need for government regulation, except to make markets more competitive. -There are assumed to be no external costs or benefits. Oligopoly, A market structure in which few organisations dominate. When a market is shared among a few, it is said to be highly concentrated. Although only a few companies dominate, it is possible that many small businesses may also operate in the market. Duopoly, A market in which two companies own the entire market share for a given product or service is called a duopoly. A duopoly is the most basic form of an oligopoly. Amazon and Apple have been called a duopoly for their dominance in the e-book marketplace. in the mobile phones market we have two big companies controle the market for the...
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...the way market dictates. On the other hand, too much market power brings other problems along, as the Apple Inc. found to its dismay. Apple Inc. is a company with the largest market power and is therefore called a near-monopoly in the oligopolistic industry it operates in. Even though Apple Inc. operates in the oligopolistic market, since it is not the only provider in the smartphone/tablet market, or in the operating systems market, it takes a dominant market share. In order to analyze Apple’s market position, we need to differentiate between diverse market structures, to identify the market characteristics Apple operates in, to determine Apple’s market position, and eventually its market power. Literature Review Market structure refers to the physical characteristics of the markets in which companies operate. There are two market extremes out of which the first one is called perfect competition, and the second one is monopoly. Under perfect competition, no player has market power, meaning that if a company even slightly increases the price, the demand for its products falls to...
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...American Cinema Unit 2 1. Oligopoly is the exclusive ownership of a industry by several companies acting in concert. Vertical integration is the studios’ control not only of the production of movies but also their distribution and exhibition. The story department consists of workers that are professional readers employed by the studio. They hire these workers to find and develop script ideas out of newspapers, magazine articles, plays, and books. Block booking is the tactic of forcing exhibitors to rent movies in groups rather than separately. Radio-Keith-Orpheum was one of the five major production studios in Hollywood. United States v. Paramount Pictures, Inc., et al. is the Supreme Court decision which ruled that the studio system constituted an oligopoly because it depended on such illegal practices as blind bidding and block booking. Blind bidding is a standard practice in which an exhibitor was forced to rent a movie from a studio without ever having been given the chance to see it or learn anything about it. Minors, was the name given to the three smaller studios in Hollywood during the studio era. 2. A and B are false 3. Studio system ended after the Supreme Court ruled in the late 1940s that the studios were engaging in unfair business practices. The unfair business practices were owning not only film production facilities but also distribution and exhibition facilities. 4. A false, B true, C true, D true 5. I believe that the studio system changed the...
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...monopoly. This is where one single firm will control all production resources and therefore has exploitative capabilities in the terms of pricing and promoting. One example can be that of an electric company that has a virtual monopoly over production resources of a specific region and charge whatever prices they want. Coca Cola Co. is ran in a beverage industry that is highly concentrated oligopolistic. They compete directly with another major company, Pepsi Co. These two companies hold over 98% of the beverage market in all of the United States. Both Coca Cola Co. and Pepsi Co. compete globally don’t have much competition knocking on either of their doors. Cadbury-Schwepps owns the remaining 2% of the US market share but it’s a struggle for them to try and expand share as well as getting more attention. Oligopolistic market structure is multiple companies that operate in a competitive environment having high influence over the pricing of each other. It’s made up of high barriers to entry, high price sensitivity, kinked demand curve, and cartels. It’s typical that capital-intensive industries will lean toward oligopoly. Being that there are multiple companies in an oligopolistic market structure, product...
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...is simply the area of the shaded rectangle. An oligopoly is a market dominated by a few producers. The market can be international, national, or local. The main characteristic of an oligopoly is that they have pricing power. However, unlike a monopoly that consists of a single firm dominating the market, an oligopolistic firm must take into consideration how the other producers will react to any changes in price. It is this mutual interdependence of the few firms producing the product that make an oligopoly different from a monopoly. Sometimes, an oligopoly will try to increase its market power by forming a cartel, which is a group of firms acting in unison. An oligopolistic firm is generally a large firm that had to invest a lot of capital to produce the product, such as aircraft, cars, and household appliances. This large initial investment of capital is often a major barrier to entry to oligopolistic markets. Other barriers to entry include patents, control of strategic resources, and the ability to engage in retaliatory pricing to prevent firms from entering the market. An oligopoly produces products that exhibit large economies of scale, where the cost of producing each unit declines with large quantities. Such economies of scale prevent other firms from entering the market, since there would be little market share that could be gained, and what could be gained would not be enough to be profitable. An oligopoly can produce either...
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...The vast significance of ethical investing has led to the creation of this report on Cineplex Incorporation. The key objectives of this report are (1) to briefly assess the environmental overview of Cineplex through political/legal, economic, social/cultural, and technological factors. Moreover, (2) the industry and competition overview, and the (3) financial analysis. With such turbulent times, Cineplex sees its annual quota change regularly, causing uncertainty for the profitability of the business. Due to the recent economic downturn, relationships between Cineplex and its suppliers could be strained, causing them to renegotiate its arrangements, thus harming Cineplex’s operations. Increasing unemployment and inflation has led to less revenue,...
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...yle Bowman MBA 651 6 March 2009 Memo 5: Strategic Analysis of Time Warner Background: Time Warner, Inc. was formed in 1990 through the merging of Time magazine publisher and Warner Communications. The merger of these two companies brought together different scopes of the media industry, and they hoped to capitalize on the brand equity and marketing aspects contained by each. The purpose for this memo is to look at the different business segments within Time Warner, the strengths and weaknesses of its operations, and a definitive long-term operating strategy that will position them for continued success. Time Warner is one of the largest media companies in the world, but faces tight competition from industry giants like Disney and Viacom. While the company is required to adhere to the restrictions by the Federal Communications Commission, the FCC has been loosening the reigns slightly with regards to the diversification and size of the main media players. The regulation goal of the FCC is to prevent one company from solely influencing the information passing through the airways and entertainment outlets into the mind of consumers. Porter’s Five Forces: In order to carefully formulate the strategies to be employed by Time Warner, a comprehensive examination of each of its business areas needs to be evaluated. Time Warner has five main business lines: AOL, film entertainment, publishing, programming networks and cable systems. We will begin the analysis of T.W. and...
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...Theater Industry: A Constant Evolution of Entertainment Matthew Richards BU224 Microeconomics Professor Biasca 29April2014 Introduction The lights go down. The screen illuminates. And the theatre comes alive. There's nothing quite like the feeling of watching a movie on the giant silver screen. But how has the entertainment industry continued to stay profitable despite changes in technology and attendance. The demand for entertainment will always be there. Creating a unique entertainment experience as well as a pleasurable one is now the focus of many theaters. Brief History North America 1905. Gathered outside the store front there is a group of people staring inside. This was the scene for the first type of indoor exhibition known as a movie theater. For the cost of a nickel you too could enjoy the scene. Nickelodeons were the first form of movie theaters here in North America. Their popularity ranged from 1905 until 1915. During these times there were approximately 8,000 nickelodeons. As of June 1, 2013 there are 23, 152 screens in over 1,848 sites. The top four leading companies today are Regal Cinemas, Cinemark, AMC, and Carmike Cinemas making up 78% of the market out of the top 10 companies. (Cororan, 2013) To figure out how one industry could change so much in just one century we look towards Adam Smith and his invisible hand metaphor. He states that through the self-regulating behavior of the marketplace, individuals can make profit and maximize their earnings...
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