The Business Strategy of Hollywood's Most Powerful Distributors : An Empirical Analysis

As many authors suggest, nowadays the distribution arms of the major info-entertainment conglomerates heavily invest in feature films that promote their own intellectual properties. As a result, the variety of features films that these companies contribute to produce increasignly depends on the revenues that the embedded intellectual properties can generate on secondary and ancillary markets, while the theatrical release is frequently an expensive loss leader mainly designed to create awareness of these properties. Using publicly available data from various internet databases, the present paper provides a contribution to the understanding of this trend by analyzing the portfolio of feature films released in 2007 and distributed by the mainstream and minor divisions of the six largest ‘Majors'. Specifically, the purpose of this analysis is to assess the use of three cardinal principals of this business strategy valorising intellectual properties: (1) ‘Strike while the iron is hot', (2) ‘Open Big', and (3) ‘Diversify your slate'. This analysis shows that in the year in question, about 60% of funding allocated to feature films was invested in ‘non-original' content and that the conglomerates that were the most efficient in applying these principles were also the best earners