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Media Studies www.curriculum-press.co.uk Number 061 Convergence & Synergy in the Industry

The aims of this Factsheet are to: Vertical and Horizontal Integration • help you understand what is meant by ‘convergence’ and The growth of media institutions is achieved by ‘synergy’ and horizontal integration. • illustrate how Corporation is an example of media convergence Vertical integration • show how the promotion of Avatar (2009 dir. Cameron) was Is the term used to describe a company owning more than one step reliant upon synergy in the supply process of a particular product. For example, the • help you understand the strengths and drawbacks of supply process of a film would include production (making), convergence and synergy for institutions and audiences distribution (marketing) and exhibition (showing the film). A media such as News Corporation is able to produce Introduction via 20th Century Fox and to distribute that film via advertising in the Before looking at convergence and synergy in detail, it is important Sun newspaper or via trailers on ITV. to understand the basic structure of most media institutions so it is clear how convergence and synergy are possible and why they are This shows they are covering two steps in the supply process, desirable. Many media institutions are conglomerates. A media namely production and distribution. They can even exhibit the film conglomerate is a large company that is comprised of several smaller after its cinema run by showing it on Sky Movie Channels. The fact companies (or ). These companies may be involved in that one company, News Corporation, can produce, distribute and very different areas but they are all under the ‘umbrella’ of the exhibit its own texts means it is vertically integrated. conglomerate. For example, News Corporation is a conglomerate that owns companies associated with film production, Vertical integration, to the extent where a company can make a film, production and broadcast, cable television provision, magazine, do all of its marketing and show it at a cinema chain owned by the newspaper and book , sites and professional conglomerate, is less common than it was in the past. sports teams. Competition laws regulate companies to ensure they are not creating a monopoly by controlling and dominating all steps in the supply process.

For example, during the time of the Hollywood Studio System (1920s until 1948) companies such as Paramount were able to produce, News Corporation is an example of a media conglomerate distribute and exhibit their own films since they owned a film studio (http://farm3.static.flickr.com/2221/2317967449_c48a7e2ba3.jpg?v=0) and a cinema chain. Controlling exhibition meant that the companies were guaranteed their films would be screened regardless of whether The creation of such conglomerates has led to a concentration of other film companies had produced films too. ownership in the media industry. As a result of smaller, individual companies merging with each other or being taken over by larger In 1948, the Paramount Decree forced the film studios to sell off companies, a small number of very large media institutions dominate their cinema chains so that independent film producers could access the industry. In 2010, the dominant media conglomerates include: screens too. Nowadays, conglomerates like News Corporation are , , News Corporation, Time reliant upon external cinema chains to exhibit their films. Warner, CBS Corporation, , and the Hearst Corporation. These companies control the majority of media production, Horizontal integration distribution and exhibition in Western societies. Is much more common than vertical integration and is when a conglomerate owns several companies at the same level in the supply Activity process (but not necessarily all connected with producing the same Use the corporate website for one type of product). Many of the major media institutions will own of the media conglomerates several companies that specialise in different types of media that listed to find out how many can all be used to distribute a single product. subsidiaries they have in different areas. For example, For example, News Corporation incorporates a range of daily and weekend newspapers including the Sun, the Times, the News of the The Walt Disney Company’s corporate website (http:// World and the London Paper. Though these are all examples of corporate.disney.go.com/) shows that the conglomerate owns print media and can all be used to market a film via adverts and television channels including ABC, Disney and ESPN. What reviews, they are targeted at different audiences so allow adverts in other media companies do they own? a marketing campaign to reach a much wider range of people.

(http://wearestjohns.com/wp-content/uploads/2009/08/walt-disney- company.png)

1 061. Convergence & Synergy in the Film Industry Media Studies www.curriculum-press.co.uk

Vertical and Horizontal Integration in News Corporation

Exam Hint:- Media conglomerates and their subsidiaries are constantly changing so it is important that you keep your research up to date. Every major conglomerate will have a corporate website which will have details of all its subsidiaries and any press releases about new acquisitions or companies which have been sold. Make sure you check the details of your case study to ensure the information you have for the exam is correct.

Convergence The fact that media institutions are vertically and / or horizontally integrated and the existence of digital media technologies mean that convergence is made possible. Convergence is the term used to describe how technology has brought together previously separate media channels. For example, a mobile telephone and a camera work independently from one another but since the early 2000s the two technologies have ‘converged’ and most mobile phones now include a camera.

Convergence can also be seen in the film industry. In the past, film-making involved images being recorded onto celluloid film that would then be physically cut and stuck together in the editing process. This happened separately from any other process. Nowadays, film- making can be entirely digital and images are captured on to a computer for editing. Digital recording and distribution methods mean that previously separate forms can be bought together, or ‘converged’. The digital content produced during film-making is compatible with other digital media so can be used on websites or in games. For example, the official website for Avatar (dir. Cameron 2009) includes footage from the film and the movie’s trailer.

Synergy The concept of synergy is closely linked to convergence as the ‘coming together’ of the separate companies associated with different technologies within a conglomerate allow for synergy to happen. Synergy is the process through which media products derived from the same text are promoted in and through each other and throughout the subsidiaries of a media conglomerate. Synergy works on two levels: • the main text is promoted using the many subsidiaries of the conglomerate • the individual products used to advertise the main text are linked to each other The following case study illustrates these two types of synergy.

2 061. Convergence & Synergy in the Film Industry Media Studies www.curriculum-press.co.uk

Synergy and Avatar Avatar was produced by 20th Century Fox, part of News Corporation, for an estimated budget of $237 million. This is high even for a Hollywood blockbuster film so the institution needed to try to save money when promoting the film whilst also aiming for the highest profit possible. The budget for promotion of Avatar was about $150 million. Again, this is high (the average for a Hollywood film being around $30 million) but necessary to ensure profit for such an expensive film. In order to keep marketing costs low where possible, News Corporation made use of its subsidiaries and this is where the benefit of convergence for a media institution can be seen.

The two types of synergy are evident in the distribution of Avatar. Firstly, the subsidiaries of News Corporation, across the three media platforms (broadcast, print and e-media), were used to market the film.

• broadcast subsidiaries (http://www.iwatchstuff.com/2009/ Like most films, Avatar was marketed using trailers shown at cinemas. However, News Corporation also 08/04/avatar-poster-neytiri.jpg) made use of its , the Fox Network, by showing a trailer for Avatar during the broadcast of the Dallas Cowboys American football game on November 1st 2009. TV spots continued to be shown throughout November 2009 on Fox in the commercial breaks of shows like Glee (made by 20th Century Fox Television, another subsidiary of News Corporation). In addition, the Fox Network also screened an episode of the TV drama Bones that featured actor Joel David Moore (who plays Dr. Norm Spellman in Avatar) eagerly awaiting the release of the film as part of the storyline. This shows how News Corporation exploited the convergence of a film (20th Century Fox) with a television broadcaster (Fox Network) to promote a product (Avatar). On British television, Stephen Lang (who plays Colonel Miles Quaritch in Avatar) appeared on Loose Women on ITV1 to talk about the film. ITV is owned by News Corporation as is ITV (http://www.itv.com/lifestyle/loosewomen/ Studios, which makes Loose Women. videos/s/celebrityguests/stephenlang/)

• print subsidiaries The newspapers owned by News Corporation were also used to create hype around the release of Avatar. In August 2009, a fifteen-minute preview of footage from Avatar was shown at the IMAX in London. Both the Sun and the Times featured reviews of this footage. The Scottish News of the World also offered readers a free Avatar gift set in April 2010 to coincide with the release of the film on Blu-ray and DVD. Similarly, Harper Collins, a publishing subsidiary of News Corporation, was used to release books related to Avatar. These included: Avatar – A Confidential Report on the Biological and Social History of (http://www.newsoftheworld.co.uk/scottish/ Pandora and James Cameron’s Avatar – The Reusable Scrapbook. scottish_showbiz/794009/Get-your-hands-on- some-sensational-goodies-from-the-best-movie- in-years.html) • e-media subsidiaries The online versions of the reviews in the Sun and the Times featured on the publications’ websites also included links to the Avatar trailer. In addition, MySpace Video (MySpace is also owned by News Corporation) hosted a teaser trailer for the film in High Definition and there was an official MySpace profile that included the trailer for Avatar’s theatrical run and later the TV spots promoting the Blu-ray and DVD release.

Secondly, as well as using its many subsidiaries to promote Avatar, News Corporation also made sure each element of the Avatar marketing campaign related to the other parts of the

campaign. For example, as the diagram below shows, Avatar was marketed using posters, (http://www.myspace.com/ trailers and a website and each was linked to the others: officialavatarmovie) • the poster featured the website address and was comprised of key images also seen in the trailer • the website allowed users to view the trailers and download the poster images • the trailer included the website address at the end and included images seen on the posters

Synergy involves media products derived from the same text being promoted in and through each other. In this case, products derived from Avatar (posters, website and trailers) were clearly linked to the film itself but were also linked to each other.

(all images from www.avatarmovie .com) 3 061. Convergence & Synergy in the Film Industry Media Studies www.curriculum-press.co.uk

Exam Hint:- Make sure you always give examples from your particular case study to support your points. If you are saying that synergy is evident in a marketing campaign make sure you state which marketing campaign you mean and exactly how it was done. For example, synergy is evident in the marketing campaign for Avatar as the website address appears on the posters and at the end of the trailer.

Activity News Corporation’s promotion of Avatar is just one example of convergence and synergy in the film industry. Use the Internet to complete the following table:

Film

(http://en.wikipedia.org/wiki/ (http://en.wikipedia.org/wiki/ Clash_of_the_Titans_(2010_film) Prince_of_Persia%3A_The_Sands_of_Time_(film)

Which studio made the film? Walt Disney Pictures

Which conglomerate is the studio part of? Time Warner

Which broadcast subsidiaries were used? Exclusive making of featurette shown on HBO.

Which print media subsidiaries were used?

Which e-media subsidiaries were used? Media Group included Prince of Persia content on the Disney

Benefits and Drawbacks of Convergence and Synergy for Audiences and Institutions

Benefits of convergence and synergy Drawbacks of convergence and synergy For The institution can control more of the production, Smaller institutions cannot compete with the larger media institutions distribution and exhibition cycle. conglomerates. The institution can save money by keeping production, A large financial loss in one area of a media conglomerate distribution and exhibition costs within one main could put other subsidiaries at risk. company. The institution can absorb financial losses in one subsidiary into the others. The institutions have the financial resources to invest and develop new technologies, such as 3D. For Large institutions with access to vast sums of money The audience has a limited choice in what they can consume audiences can make products that would otherwise be impossible as the large institutions are so concerned with making to make, such as films with a high budget like Avatar profits. They only make products that are guaranteed some and audiences get to experience these technological success. developments, such as 3D. The dominance of large media conglomerates means that smaller products made by smaller institutions, like independent films, are harder to get access to.

Acknowledgements: This Media Studies Factsheet was researched and written by Helen McDonald Curriculum Press. Bank House, 105 King Street, Wellington, TF1 1NU. Media Factsheets may be copied free of charge by teaching staff or students, provided that their school is a registered subscriber. No part of these Factsheets may be reproduced, stored in a retrieval system, or transmitted, in any other form or by any other means, without the prior permission of the publisher. ISSN 1351-5136 4