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How Are the Major Streaming Services Reshaping the Film Industry

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How Are the Major Streaming Services Reshaping the Film Industry How Are the Major Streaming Services Reshaping the Film Industry Master Thesis MSc Strategy, Organization and Leadership Submission: May 9th, 2018 Normal pages: 106 (237.228 characters incl. spaces) Supervisor: Mehran Moghaddas (DVIP, INT) Students: Viktoria Vas & Gerda Binkyte Copenhagen Business School 2018 Abstract The paper examines the effects major streaming services, such as Netflix, Amazon, HBO have on the Danish film industry, and seeks to identify how individual producers and independent production companies in the country can exploit the rising opportunities. The research used a mix of deductive and inductive reasoning in the analysis, for which twelve semi-structured in-depth interviews were conducted with industry professionals from Denmark over the course of five weeks. This led to insightful findings that can be used for further researches for both academics and professionals. The analysis built on theories discussed in the literature review; Porter’s five forces (Porter, 1979), supply chain, emerging strategy (Mintzberg, 1987), marketing mix, four trajectories of change (McGahan, 2004). The findings include changes in certain links in the supply chain of film production, such as; affects on producers and film financing, changes in sales and distribution. While for producers SVOD services mainly bring additional financing opportunities, decreasing the power of DFI and the national broadcasters, sales agents and distribution is highly affected. Sales agents will need to adapt to the changing conditions, and transform themselves from traditional sales agents to agents who offer extra services for their clients. Distribution is affected in a way that its release windows system is disrupted and shortening some of these windows might not be avoided in the future. Additionally, the study, with the help of the model of marketing mix, identified that in the hypothetical case of Danish producers or production companies selling their projects for major streaming (Netflix, Amazon or HBO) services as original content, they need to face several challenges. Streaming services look for local, yet mainstream projects and in the last few years they were mainly interested in serialized content. As the SVOD platforms do not release any data regarding sales and audiences, they have an unfair advantage when negotiating for price. If a title is released on a major streaming platforms, it does not automatically mean it will reach a large audience, as mostly American and English language titles are highlighted on the platform, leaving foreign language products in the background. Furthermore, Danish producers, who are used to a system of subsidiaries as main source of financing, will have to adapt and use different promotion styles if they seek to sell their projects to a major platform. To understand the ongoing changes from a strategic point of view, the four trajectories of industry change model (McGahan, 2004) has been applied, stating that while at the moment the changes can be considered progressive for producers and production companies, the future is uncertain and as any other industry, it can catapult into radical or intermediating change. Conclusively, the above discussed findings are applicable to not only the film industry in Denmark, but all across Europe, as the Danish film industry in its structure resembles to most film industries in the continent. Table of Contents 1. Introduction ................................................................................................................... 3 1.1. Research Question and Delimitations .................................................................... 5 2. Methodology ................................................................................................................. 6 2.1. Research Philosophy .............................................................................................. 6 2.2. Research Method and Design ................................................................................ 7 2.2.1. Qualitative Research Design .......................................................................... 7 2.2.2. Operationalization of Theory ......................................................................... 8 2.3. Structure of the research ....................................................................................... 8 2.3.1. Literature review ............................................................................................ 8 2.3.2. Analysis .......................................................................................................... 9 2.3.3. Conclusion and discussion ........................................................................... 10 2.4. Data collection ..................................................................................................... 10 2.4.1. Primary data.................................................................................................. 10 2.4.2. Introductions of interviewees ....................................................................... 12 2.4.3. Secondary data.............................................................................................. 16 2.5. Evaluation of research process ............................................................................ 16 2.6. Limitations of research ........................................................................................ 18 3. Literature Review ........................................................................................................ 19 3.1. Industry Analysis ................................................................................................. 19 3.1.1. Five Forces ................................................................................................... 19 3.1.2. Four trajectories of industry change ............................................................. 20 3.1.3. Emerging strategy ............................................................................................ 21 3.1.4. Creative Industries: Film Industry ................................................................ 22 3.2. Supply Chain: Creating A Value ......................................................................... 23 3.2.1. Project ........................................................................................................... 25 Filmmaking as a project .......................................................................................... 28 Film.......................................................................................................................... 28 Creative Control ...................................................................................................... 29 3.2.2. Financing ...................................................................................................... 30 Financing methods................................................................................................... 31 Equity financing ...................................................................................................... 32 Institutional grants ................................................................................................... 32 Co-production .......................................................................................................... 33 Pre-sales ................................................................................................................... 33 Crowdsourcing ........................................................................................................ 34 3.2.3. Sales Agents ................................................................................................. 34 3.2.4. Distribution ................................................................................................... 35 Distribution Windows ............................................................................................. 37 VOD ........................................................................................................................ 40 Aggregation ............................................................................................................. 41 1 Viktoria Vas & Gerda Binkyte 3.3. Demand ................................................................................................................ 42 3.3.1. Market segmentation .................................................................................... 42 3.3.2. Demand in the film industry ......................................................................... 43 3.4. Marketing ............................................................................................................. 45 3.4.1. Marketing Mix .............................................................................................. 45 3.4.2. Relationship marketing ................................................................................. 46 3.4.3. Word of mouth ............................................................................................. 47 3.4.4. Film festivals ................................................................................................ 48 3.4.5. Pitching ......................................................................................................... 49 Visual aides for pitching .......................................................................................... 51 3.5. Conceptual framework ........................................................................................
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