Came across this brilliantly analysed article comparing Detroit & Hollywood.
- Commonalities : in Detroit - market share and miles per gallon. In Hollywood, they're box office takes and agents' percentages.
- In Detroit, silicon can be found in painstakingly engineered auto parts. In Hollywood, silicone can be found in painstakingly engineered body parts.
- Business Models : Both are discovering that the strategy and tactics that until recently brought them huge profits have led them to re-examine their business models.
- Big Threat : Hhealth insurance and pension costs while Hollywood studios are buffeted by rapidly changing technologies and consumer tastes.
- Competition : From upstarts - Japanese and Korean automakers for Detroit, television, video games and the Internet for Hollywood.
- Marketshare : The -Big Three control just 58.3 percent of the United States market. Last year, according to the Motion Picture Association of America, only about 10 percent of the population managed to make it to the multiplex each week, and the number of tickets sold slumped 2.4 percent to a little more than 1.5 billion. So far this year, according to Exhibitor Relations, attendance is down another 7.8 percent.
- Rising Costs: The auto industry, the price of hot-rolled steel increased from by two times in a gap of two years. For studios, the price of Hollywood prima donnas has been rising far more rapidly than the consumer price index. Last year, according to the M.P.A.A., the average cost of making and marketing a film was $98 million - up more than 10 percent from 2003. Surefire formulas to cope with burgeoning competition, globalization and technological change have failed to win the game for Hollywood. Moviegoers apparently are having a similar reaction to Hollywood's buffet of warmed-over dishes.
- Piracy :Hollywood frets over the quick availability of excellent copies of the latest "Star Wars" film; Detroit frets over the prospect of the Chinese car company Chery marketing its cheap QQ minicar, which GM contends is a brazen knockoff of the Chevrolet Spark.
- Profit Model : Both industries no longer depend on earning profits from selling the products they make through the established distribution channel (dealers for Detroit, theaters for Hollywood) but on related activities. GM and Ford routinely lose money on their United States automaking operations, but are bailed out by their finance arms. The studios are really merchants of DVD's, broadcast and pay-per-view rights attached to money-losing manufacturers of movies made to be screened in theaters. Thee Hollywood studios garner just 17 percent of their film-related revenues from theaters.
- Home Market Focus : While United States box office revenues stagnated, box office revenues outside the United States surged 47 percent in dollar terms. The number of international tickets sold rose 13 percent last year. Meanwhile, GM's sales in China have risen 19 percent so far this year, its market share in china has risen from about 8 percent in 2003 to 11 percent this year.
SFGate has an interesting analysis of the Hollywood economy.
Category : Detroit & Hollywood
|
