The Digital Glocalization of Entertainment: New Paradigms in the 21st Century Global Mediascape

The Economics of Information, Communication, and Entertainment The Impacts of Digital Technology in the 21st Century

Series Editor Darcy Gerbarg President, DVI, Ltd. Senior Fellow Columbia Institute for Tele-Information (CITI) Columbia University Business School New York, NY, USA

For further volumes: http://www.springer.com/series/8276

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Paolo Sigismondi

The Digital Glocalization of Entertainment New Paradigms in the 21st Century Global Mediascape

Paolo Sigismondi Annenberg School for Communication & Journalism University of Southern California Los Angeles, CA, USA [email protected]

ISSN 1868-0453 e-ISSN 1868-0461 ISBN 978-1-4614-0907-6 e-ISBN 978-1-4614-0908-3 DOI 10.1007/978-1-4614-0908-3 Springer New York Dordrecht Heidelberg London Library of Congress Control Number: 2011934488 © Springer Science+Business Media, LLC 2011 All rights reserved. This work may not be translated or copied in whole or in part without the written permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed is forbidden. The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)

To Daphne and Eva

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Foreword

For those looking to understand how media entertainment has been changing, this book offers an insightful analysis. Employing a variety of techniques and processes, economic, academic, and journalistic, Sigismondi builds convincing arguments for the evolution of content programming and poses important questions about the worldwide hegemony of Hollywood’s media content. This book is both a synthesis of and a jumping off point for understanding the complexities of how digital technology and ICT impact high-production value content and the media companies that produce it. By providing a background of economic data and with a focus on evolving content genres, Sigismondi seeks to address both the business and the cultural impacts of media evolution. Sigismondi reviews for us the myriad ways in which the media entertainment establishment has fought change, from television through video standards to net neutrality, only to have been the beneficiaries of these technological innovations. He posits that the ICT revolution is a game changer in the evolution of the global entertainment landscape. All of us who enjoy media entertainment in one form or another, and who does not, are along for the ride. This book is full of insights and interesting tidbits of information. New York, NY

Darcy Gerbarg

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Acknowledgments

I would like to take the opportunity to thank the many individuals, whose contributions were key in the development of the book you are about to read. I am indebted to the ongoing academic conversations within the intellectual community of the Annenberg School for Communication & Journalism at the University of Southern California, and I am particularly grateful to the leadership of the school, the Dean Ernest J. Wilson III, and the Director of the School of Communication, Larry Gross for their support of this project. The book is based on research conducted for my Ph. D. dissertation at the University of Southern California, analyzing the global digital media landscape at the intersections of different strands of inquiry. I am deeply grateful to the committee chair Tom Goodnight and the other committee members, Sarah Banet-Weiser and Ellen Seiter, for their insightful comments and feedback in the different stages of the dissertation, to Rick Jewell of the School of Cinematic Arts for our conversations on the evolution of the Hollywood studio system over the years, and to Omar El Sawy of the Marshall School of Business for our discussions on the communication technologies evolutions and their impact on the entertainment industry. I presented ideas and preliminary research on the topic of the “Digital Glocalization of Entertainment” at the annual conferences of the International Communication Association and the National Communication Association, and in the courses I teach, in particular the undergraduate courses Global Entertainment, Global Strategy for the Communications Industry, and the graduate course Case Studies in Digital Entertainment. I am thankful to the participants, the chairs, and the respondents of these conferences, and to the students of these classes, as they helped me through their feedback to clarify, define, and explicate the concepts presented in this book, to Briana Lassig for her research assistance in the final revision of the manuscript, and to Sebastian Grubaugh for his assistance with the tables in the book. Also, I would like to thank the industry veterans with whom I had the pleasure to talk about this project, especially Larry Auerbach, Gaspare Benso, Marlise Malkames, James Person, Lisa Vebber, and David Weitzner, for their insights and perspectives. It was a real pleasure working with the professionals at Springer to turn this project into a book. I would like to thank Darcy Gerbarg, Editor of the series ix

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Acknowledgments

The Economics of Information, Communication, and Entertainment, for her support, suggestions, and feedback throughout the process, Nicholas Philipson, Editorial Director, Business/Economics, and his team, including Charlotte Cusumano, for their commitment to this project and their continuous professional support in all the phases of its development. We are living in transitional times, ushering in significant changes in the way we communicate with one another, access, and interact with information and media entertainment at a global level: This book offers a contribution to shed light on some of these changes, as they unfold. Los Angeles, CA

Paolo Sigismondi

Contents

  1 Introduction: The Evolving Twenty-First Century Global Mediascape................................................................................... 1.1 The Ecology and the Dimensions of the Global Mediascape........... 1.2 Theoretical Framework..................................................................... 1.3 A New Perspective on Global Entertainment................................... 1.4 Organization of the Book.................................................................. References..................................................................................................

1 1 3 5 9 12

Part I  Hollywood’s Global Primacy   2 Hollywood’s Global Economic Leadership............................................ 2.1 Hollywood, Defined.......................................................................... 2.2 Hollywood’s Economic Leadership.................................................. 2.3 Economic Analysis of the Hollywood System................................. References..................................................................................................

17 17 18 22 27

  3 The Drivers of Hollywood’s Competitive Advantage........................... 3.1 The Economic Drivers of Hollywood’s Global Competitive Advantage..................................................................... 3.1.1 Factor Conditions.................................................................. 3.1.2 Relating and Supporting Industries....................................... 3.1.3 Strategy, Structure, and Rivalry............................................ 3.1.4 Demand Conditions.............................................................. 3.2 Hollywood’s Global Primacy: An Interdisciplinary Analysis.......... 3.3 The Potential Threats to Hollywood’s Global Primacy in an Evolving Landscape................................................................. References..................................................................................................

29 29 29 30 30 31 34 37 40

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Part II  The Global Rise of Non-Scripted Entertainment   4 The New Wave of Non-Scripted Entertainment.................................... 4.1 A Twenty-First Century Global Media Success Story...................... 4.2 The Category of Non-Scripted Entertainment: A New Genre?................................................................................... 4.3 The Dark Side of “Reality TV”: Issues and Concerns Stemming from the Rise of Non-Scripted Entertainment................. References..................................................................................................   5 The Dynamics of Non-Scripted Entertainment: Formats and Local Adaptations............................................................. 5.1 A Global TV Commercial Success: The Big Brother Format.......... 5.2 Global, Local, and “Glocal” Factors................................................. 5.3 The Reality of Global TV Formats................................................... References..................................................................................................   6 The Stars in the Non-Scripted Entertainment Galaxy......................... 6.1 Endemol............................................................................................ 6.2 FremantleMedia................................................................................ 6.3 Other European Entities Operating in Non-Scripted Entertainment.................................................................................... 6.4 Hollywood and Non-Scripted Entertainment.................................... 6.5 Non-Scripted Entertainment as a Potential Threat to Hollywood’s Primacy................................................................... References..................................................................................................

45 45 48 53 55 57 57 60 62 66 67 67 70 72 74 75 76

Part III  The New, Digital Shelf Life of Entertainment   7 Technologies of Entertainment............................................................... 7.1 Technological Revolutions as Potentially Disruptive Changes in the Entertainment Landscape......................................... 7.2 Hollywood Meets Technology.......................................................... 7.3 The Regulatory Environment and Issues in the Digital Media and Entertainment Industry............................................................... 7.4 The Rise of Non-Authorized Diffusion of Entertainment Content in a Digital Environment..................................................... References..................................................................................................

81 81 83 86 88 90

  8 The Impact of the ICT Revolution on the Entertainment Industry..................................................................................................... 93 8.1 The Magnitude and the Areas of the ICT Impact............................. 93 8.2 Digital Content.................................................................................. 94 8.3 Conduits: Changes in the Delivery Platforms................................... 96 8.4 New Business Models....................................................................... 100 References.................................................................................................. 105

Contents

  9 New Pardigms in the Next-Generation Media: The Digital Glocalization of Entertainment..........................................   9.1 Digital Entertainment: Threat or Opportunity?..............................   9.2 The NBC 2008 Olympics Coverage as Digital Glocalization of Entertainment.......................................................   9.3 An Evolving Digital Entertainment Landscape..............................   9.4 The Contradictions and Complexity of the ICT Revolution in the Twenty-First Century Media Landscape............................... References.................................................................................................. 10 Conclusion: The Entertainment Industry at a Crossroads.................. 10.1 Does Hollywood Still Rule the World?........................................... 10.2 New Challenges and Opportunities Unfolding in the Global Entertainment Landscape.......................................... 10.3 A Path Toward Sustainable Innovation in Digital Media................ 10.4 From the Catalina Bison to the Digital Glocalization of Entertainment: A New Ecology of the Global Mediascape............ References..................................................................................................

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107 107 108 113 114 116 119 119 121 124 127 129

Index.................................................................................................................. 131

Chapter 1

Introduction: The Evolving Twenty-First Century Global Mediascape

1.1 The Ecology and the Dimensions of the Global Mediascape Santa Catalina is a rocky island 22 miles off the coast of Los Angeles, yet with its pristine landscape it is a world apart compared to the near megalopolis. Situated in Southern California, the island has been selected over the years as a location for various Hollywood movies, from Treasure Island to Mutiny on the Bounty, which won the Academy Award for best picture in 1935. In particular, it was chosen as a location by a Hollywood crew shooting the silent film version of Zane Grey’s Western tale The Vanishing American in 1924. Historians of the small island report (Overholt 1962) that the production crew, in need to recreate a Western feeling on the island, imported bison, a species foreign to the local fauna, with the sole purpose of utilizing them in the shooting of the movie. After the principal photography phase of the film was over, the crew left the island, while the bison were left behind. Over the decades, the bison herd descendent from the original “cast members” of the motion picture, which ironically never appeared in the final version of the movie, grew to as many as 600 units. As a result, the animals, not indigenous to that ecosystem, have been altering the existing flora and fauna of the island and its overall ecology ever since. In a similar way, the export of Hollywood’s entertainment products has been considered as a main element of the American cultural expansion internationally by an evolving body of scholarly literature across different disciplines. Within these frameworks, Hollywood’s cultural artifacts would alter the existing ecologies of local cultures through the successful global diffusion of entertainment and ideologies embedded within it, from the center of the empire to its periphery. The flow of entertainment would impact local cultures, ushering in American values and “way of life” at a global level, as the stories and characters proposed usually have little in common with the everyday lives of audiences having access to them around the globe (see for example Demers 2002; Galtung 1971; Herman and McChesney 1997; Mattelart 1979; Miller et  al. 2005; Ritzer 1993; Schiller 1992; Taylor 1997; Tomlinson 1991; Wasko 2003). P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3_1, © Springer Science+Business Media, LLC 2011

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There are substantial differences among these various theoretical approaches, involving their methodologies, research interests, and foci. The underlying theme uniting these scholarly conversations and debates, however, centers on the relevance of the analysis of American primacy in entertainment outlets globally. In general, this element raises concerns that the American economic leadership in the global entertainment landscape would stifle local creative industries on the one hand and negatively impact local cultures on the other. Hollywood’s popular culture artifacts would represent a key feature, economically and culturally, of the US presence around the world, as a result of Hollywood’s leadership in the global entertainment landscape. The global economic dimensions of the “cultural and creative” sectors are impressive: According to a study by UNESCO, “cultural and creative industries alone are estimated to account for over 7% of the world’s Gross Domestic Product” (UNESCO 2005, p. 9). Furthermore, the global flow of cultural goods is increasing and expanding, as an effect of and contributing to the phenomena of globalization: “Custom-based data show that the trade of cultural goods almost doubled during the last 10 years from US $38.3B in 1994 to 59.2B in 2002” (UNESCO 2005, p. 9). The entertainment industry plays a pivotal role in the global flow of content: UNESCO, assessing the trade flows of feature-length motion pictures within audiovisual content, estimates that “in 2003, the motion picture industry sold over 7.25 billion tickets in 145,598 theaters around the world and generated US $21.8B in revenue. Secondary exploitation of movie features in the form of different types of licensing, videos and DVD generated revenues of US $55B, giving a total market value close to US $75B” (UNESCO 2005, p. 47). Caveats related to these measurements notwithstanding, the American presence in the global entertainment landscape appears indeed predominant: UNESCO estimates for example that “the share of American movies was more than 50% on average between 2000 and 2002 for most of the counties” (UNESCO 2005, p. 47). The trade imbalance is not only between developed economies and third or fourth world countries (the West vs. “the rest” paradigm), but shows a significant imbalance within the Western world, with the US entertainment industry having a clear global leadership. Specifically, the same report estimates that in the time period 1995–2000, the trade in broadcasting programs between the United States and Europe is “far from balanced,” with EU countries “sustaining a trade deficit 15 times the total value of their export to North America”: In 2000, for example, the US export to the EU were approximately valued US $4.3B, while the EU export to the United States were valued US $275M (UNESCO 2005, p. 48). The entertainment sector constitutes a key industry in the postindustrial economy of the United States, an “entertainment economy” (Wolf 2003). This is becoming even more pervasive as new communication technologies are being made available, providing ubiquitous distribution of entertainment content. At a global level, the increase of economic and political linkages among nations and the development of new communication technologies have ushered in a new phase in the flow of international popular culture artifacts. In this scenario, global entertainment is a key feature of twenty-first century media landscapes and societies worldwide. Understanding how the industry operates and the evolutions of its economic drivers can contribute therefore to conversations above and beyond the field of economics for scholars focusing on

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the impact of the production and distribution of cultural artifacts on the societies as a whole. Specifically, the analysis of Hollywood’s global leadership and the potential threats to its global competitive advantage has relevance beyond its significant economic value, because the entertainment industry has cultural, political, and social impacts at a global level. The global entertainment landscape is undergoing major changes at the turn of the twenty-first century. The Information and Communication Technology (ICT) revolution is altering existing business models and practices that have regulated the industries for decades. The content and the delivery of entertainment products are being modified. New business models are called upon to generate, deliver, and capture value in the evolving entertainment industry.

1.2 Theoretical Framework This book analyzes the evolutions, collisions, challenges, and opportunities in global entertainment at the turn of the twenty-first century as the ICT revolution unfolds. The thesis is that the landscape’s paradigms are shifting, introducing what can be defined as the “digital glocalization of entertainment”: Successful media texts crossing national and cultural borders incorporate global, glocal, and local elements, enriched by customized elements made possible by the digital media environment. Furthermore, new global players, mainly from Europe, are emerging. These elements constitute challenges and potential threats to Hollywood’s global competitive advantage. Their analysis contributes to the evolving scholarly conversations on global entertainment and Hollywood’s primacy filling specific gaps in contemporary research. This book analyzes the unfolding shifts in the institutional logics of the industry, by focusing on two specific institutional trajectories challenging the existing Hollywood’s leadership: the global rise of the new wave of non-scripted programs, and select features shaping the boundaries and contours of the new, digital landscape of entertainment, ushered in by the ICT revolution. The analysis draws on Griffin’s (1984) work on trajectories, defined as material/ symbolic lines of development in a communication institution, and translates Griffin’s rhetorical trajectory to that of comparing institutional logics (Fligstein 1996; Thornton and Ocasio 1999). Global entertainment is identified as a contested media space with multiple institutional logics. Logic is a formatting formula embedded in organizational practice. Over time, the organizations become identified with this formula that connects an industry management and entertainment products. The Hollywood logic is defined as a formula for combining symbolic, material, and other resources in a range of narrative formats, distribution, spin offs, and development, while the European trajectory, among others, competes with Hollywood by introducing different narrative formats, non-scripted entertainment, as the “reality TV” programs. The dialectic tensions between novel vs. traditional trajectories determine the competition and the cooperation in confirming and altering the institutions. In so doing, the book follows similar endeavors in global entertainment scholarly conversations. The theoretical framework specifically draws on Bielby and Harrington’s

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approach in their analysis of Global TV: Exporting Television and Culture in the World Market (2008, pp. xi–xv). They identify different institutional logics in their quest to understand and explicate “the complexities of the industry’s organizational structure and dynamics, particularly when it crosses borders” (p. xiii), as organizational forms are deemed “economic indicators of an industry’s or field’s institutional logic.” Within this framework, this book specifically analyzes the two earlier mentioned institutional trajectories (the global rise of the new wave of non-scripted programs, and select features shaping the boundaries and contours of the new, digital landscape of entertainment, ushered in by the ICT revolution). We are witnessing at the turn of the twenty-first century, this study argues, a “cultural shift in the institutional logics of the industry” (p. xiv), not unlike the one pointed out by Thornton (2004) in her analysis of the higher education publishing industry. Additionally, the book follows a path echoing Straubhaar work in World Television: From Global to Local (2007, pp. 2–8): analyzing with a “systemic focus …the institutions of television” as “television creation, flow, and reception are bounded but not determined by political, economic, and institutional structures.” Also, “those structures, plus similar structures of technology, provide resources as well as constraints for cultural agents, such as television producers and consumers” and “rules and patterns grow within those boundaries but are shaped both by the institutions and those who work within them.” The book compares and contrasts the institutional trajectories that appear to govern production of entertainment narratives coupling interrelationships of competition within a “complexity theory” approach: There are “complex possibilities, hard to predict exactly, but bounded by certain factors, such as technology and economics, and patterned by others, such as cultural formations like genres that flow among television systems” (Straubhaar 2007, p. 8). Within this complex and multifaceted landscape, this book specifically analyzes two institutional trajectories (technological and genre changes) within an industrial economic framework. These two trajectories have the potential to modify the existing structures and paradigms of the global mediascape at the turn of the twenty-first century. These are significant because they represent a change in the existing political economy of global entertainment and they introduce more effectively different logics, as local adaptations of global formats. The Big Brother format and the NBC coverage of the 2008 Olympic Games provide examples of successful glocalization strategies within the evolving mediascape, as they represent bids to co-opt, blend, and outstrip competition. For the purpose of this book, the concept of glocalization is utilized following Straubhaar’s framework, who points out that “many national programs are based on global or regional models, so national television itself must be problematized and understood in new hybrid or glocal (local adaptations of global) forms” (2007, p. 3). As Straubhaar pointed out (p. 149), the term glocalization stems from a Japanese marketing strategy of “global-localization” or glocalization (Robertson 1995), the business practice to adapt cultural products to other cultures, “instead of pressing for a global standardization”: As a result, “glocalization is a blending of foreign and local” (p. 149), trying to cater to the entertainment needs of what Iwabuchi calls “glocal me” worldwide (2007, p. 70). In the complex and multilayered global television landscape, the TV format ­business has increasingly gained relevance (Moran 2004) and it represents a clear

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example of glocalization of entertainment content as global formats are presented locally in adapted versions to audiences usually unaware of their origin. As the book analyzes, this strategy has become institutionalized and systematically practiced by new entities, mainly outside the Hollywood system, competing in the global entertainment arena. The ICT revolution plays a relevant role in the evolution of global entertainment and adds a specific dimension to the ongoing process of glocalization of entertainment content. The theoretical position adopted in the book acknowledges the key relevance of technological evolutions in the production and distribution of entertainment content globally, yet it does not situate the analysis within a pure technological determinism framework, where technology, mysteriously developed in distant laboratories, somehow would find its way into society. At the intersection between new technologies, their appropriation by consumers, and business models utilized by profit-oriented entities to create, deliver, and capture value in the evolving landscape, lies the global media and entertainment industry at the turn of the twenty-first century, shaped also by the actions of governmental institutions (at federal and local level) and Non-Governmental Organizations (NGOs).

1.3 A New Perspective on Global Entertainment The book investigates the increasing global flow of entertainment content at the turn of the twenty-first century, as the ICT revolution unfolds. The thesis is that the global mediascape’s paradigms are shifting, unveiling signs of potential threats at the horizon for the existing Hollywood’s global competitive advantage. The goal of the study is to analyze on the one hand Hollywood’s global predominance and on the other two institutional trajectories with potential capability to alter the existing status quo. The analysis contributes to the understanding of: 1. Hollywood’s success in the global media landscape at the turn of the twenty-first century, identifying the drivers of its competitive advantages. 2. The global rise of the new wave of non-scripted programs, originated in large part outside the Hollywood system, as the emerging players in the global arena are European “reality TV” global format developers and distributors. 3. The new frontiers of digital entertainment, with the analysis of select features within the digital entertainment landscape, including delivery platforms allowing audiences to access and retrieve entertainment content available on demand globally. These analyses explicate to what extent Hollywood’s primacy is in jeopardy, as the changes in the industry unfold. The study explores these changes in the global entertainment landscape and Hollywood’s reactions within the evolving landscape, while connecting them to on going scholarly conversations. The research question and theses driving the analyses of the book are: Research question: How and to what extent is Hollywood’s competitive advantage threatened in the global entertainment landscape at the turn of the twenty-first century?

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Theses: Hollywood has an economic leadership in the global mediascape. Among the changes unfolding in the global landscape at the turn of the twenty-first century, two trajectories represent a potential threat to Hollywood’s global competitive advantage: –– The rise of non-scripted entertainment (as in “reality shows”) originating mainly from Europe is an example of contraflow of entertainment taking place within the West, impacting the trade of cultural products above and beyond the economically key Atlantic corridor. The phenomenon specifically threatens Hollywood studios’ global economic leadership, as the global TV formats have made inroads in prime time schedules around the world, including the United States. As the global TV formats are selected by broadcasters around the world, Hollywood’s global presence with its output (libraries and current productions, both feature-length motion pictures and TV content) faces new competitors in TV landscapes worldwide. The phenomenon of “reality TV” has been analyzed by critical studies scholars (see for example Andrejevic 2004; Bignell 2005), while its political economy aspects and its specific potential threat to the Hollywood system have not yet been fully explored. –– The ICT revolution is modifying the contours and boundaries of the global mediascape, affecting the content, the conduits, and the business models of the entertainment industry. Through the interplay among active audiences on the one hand and profit-oriented entities on the other, within national and international regulatory environments, the deployment of these communication technologies has the potential to alter the existing dynamics within the landscape. The entertainment landscape emerging, as the new technologies unfold, has also the potential to amplify the threats posed by the rise of non-scripted programs to Hollywood’s competitive advantage. Non-scripted programs oftentimes appear better positioned to capture the opportunities emerging in the new scenario, such as the new revenue streams generated by Short Message Services (SMSs), the potential of interactivity and mobile deployment, etc. For the purpose of the book, Hollywood is defined by the six major Hollywood studios, now all part of transnational media conglomerates, within the Motion Picture Association of America (MPAA), which have the leadership in producing and distributing entertainment content globally. It is useful, however, to also consider Hollywood in a broader sense as a system, including other sets of entities, such as the talent agencies and the creative communities, operating mainly in Southern California. They constitute, in fact, an intertwined set of different organisms whose dynamic contrapositions contribute to generate the current leadership in the global entertainment landscape. The existing scholarly conversations appear generally to concur that Hollywood’s predominance in the media and entertainment landscape will not be affected solely by the digital fallout, although it might, painfully for the specific individuals involved, change some of its internal dynamics and power relations (see for example Gomery 2000; Miller 2007). This book provides a new perspective by analyzing on the one hand the phenomenon of non-scripted entertainment and on the other the distinctive

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features of the new digital entertainment landscape ushering in a new, potentially disruptive, paradigm: the digital glocalization of entertainment. The new paradigm is analyzed through the examples of the global “reality TV” format Big Brother and the NBC 2008 Olympics coverage. The book analyzes the previously mentioned themes of the global rise of nonscripted entertainment and the impact of the ICT revolution as potential threats to Hollywood’s global competitive advantage. First, an economic and historical analysis of the phenomena is conducted within a competitive sector analysis framework to provide the preliminary evaluation of the global entertainment landscape, its features, leaders, contours, and boundaries. Specifically, the analysis utilizes tools from the field of industrial economics, drawing on the work of Michael E. Porter: The competitive “five forces” and “national diamond” (Porter 1980, 1990) theoretical frameworks assess the structure of industry landscape and specifically identify the drivers of Hollywood’s global competitive advantages. The analysis draws on primary and secondary sources by collecting, assembling, and analyzing relevant data. Financial data and reports of relevant transnational media corporations were sifted through, as well as all relevant available data to describe, quantify, and understand the unfolding phenomena. Specifically, audiences’ Nielsen data provided by the International TV & Video Almanac and trade journals, and audience data from the Fédération Internationale de Football Association (FIFA), the International Olympic Committee (IOC), and data provided by UNESCO were analyzed. With the same purposes of defining the magnitude and the evolution of the two themes investigated, data were analyzed drawing on existing research from the IBM institute for Business Value, Standard & Poor’s industry surveys of the different media, entertainment and telecom sectors, the Global Technology Center of PricewaterhouseCooper, and FTI Consulting. Furthermore, data from trade associations and US governmental agencies were analyzed and compared: from the MPAA, the Consumer Electronics Association (CEA), the Entertainment Software Association (ESA), the Distributed Computing Industry Association (DCIA), the US government’s Bureau of Economic Analysis, and the US Federal Communications Commission (FCC). In addition, existing research and data from the Institute for Communication Technology Management of the Marshall School of Business, and the Center for the Digital Future of the University of Southern California were useful for the analysis of the study. Also, relevant trade journals over the last 10 years were systematically analyzed to shed light on the developments of the evolving business practices. The first decade of the twenty-first century (2000–2010) has witnessed significant changes in the global entertainment landscape, specifically the increased relevance of both the flow of non-scripted entertainment globally and the unfolding impact of the ICT revolution on the industry. Trade journals are deemed central to announce innovations, anticipate change, create valuations for professionals, and participate in constructing the entertainment marketplace. Specifically, the two major trade journals covering the United States and global business of entertainment Variety and The Hollywood Reporter, which are on the desks of entertainment executives daily, were analyzed and explicated in their descriptions and assessments of the evolving scenario.

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In addition to the domestic and international business sections of the two a­ forementioned trade journals, TV Buying International – TBI, C21’s Media ­journals, Broadcasting & Cable, Broadcasting Engineering, and Mediaweek were also analyzed, as they provide up to date information on the global dimensions and ­evolutions of the entertainment business. Finally, the analysis of Content Agenda, which more specifically addressed the issue of the technological developments affecting the entertainment industry, helped understand the interactions between evolving technologies and their impact on the entertainment business. The analysis of the last decade’s key articles within relevant industry publications is essential to capture the evolutions of the industry as they unfold at the turn of the new millennium. The temporal horizon of the last decade allows the study to capture the most relevant evolutions of the global entertainment industry more pertinent to the analysis, sometimes left out in academic literature. They describe and quantify the phenomena as they occur, while providing the reactions of the main players at a crucial intersection of the landscape, affected by both the rise of the new wave of non-scripted entertainment and the unfolding effects on the industry of the ICT revolution. The trade journals also provide the context and background for the interactions with industry professionals probing positions, assessing developments, and asking retrospective questions as to which judgments, anticipations, and values were confirmed, mistaken, and why, and what new interests are taking place. The continuous interaction with industry professionals throughout the research, made possible by the author’s attendance to diverse trade events and conventions in Los Angeles, furnishes another element to the analysis of the book. It provides insights on the issues and challenges the entertainment industry faces, as they are perceived by the industry executives, from Hollywood studios to emerging entertainment entities, telecom companies and trade associations, as the changes unfold and affect their daily professional activities. It constitutes the first test for the analyses and research foci of the study and the necessary further background for in-depth interviews with entertainment professionals. In addition to the participation in relevant events, personal, unstructured interviews with professionals operating in the relevant industries provided another dimension to the analysis of the study. The interviews addressed the issues of the emergence of non-scripted entertainment, and the challenges and opportunities provided by the ICT revolution in the creation, production, and delivery of entertainment content. The professionals interviewed ranged from current and former Hollywood executives and talent agents, telecom executives, TV network executives, and other professionals operating in the entertainment industry (producers, editors, etc.). The interviews’ goal was twofold: On the one hand to analyze the changes as they are perceived by the agents of the evolving industry, and on the other to verify to what extent existing academic theoretical frameworks and ongoing debates are capturing and explicating the unfolding issues within the global entertainment landscape. The data from the secondary sources, the analysis of the trade journals, the interactions with media and entertainment business executives and personal, unstructured interviews enabled this study to draw a picture of a contested space in the global entertainment landscape. The paradigms of this key industry appear to be shifting.

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The ways audiences access and retrieve entertainment content are changing, so are the prospects of individual successes or failures of the profit-oriented entities weighting their alternatives and options in their quest to create, deliver, and capture value in the evolving mediascape.

1.4 Organization of the Book Part I of the book defines Hollywood, identifies its existing global competitive advantage and its magnitude. The goal of this part is to sketch Hollywood’s global primacy within economic terms and theoretical frameworks. After quantifying Hollywood’s leadership in the global entertainment landscape, Chap. 2 specifically analyzes its business practices and the major historical evolutions within the US entertainment sector. Different strands of inquiry in scholarly conversations explicate Hollywood’s leadership differently: In Chap. 3, Porter’s five competitive forces and national diamond theoretical frameworks are initially utilized (Porter 1980, 1990), from the field of industrial economics. Furthermore, the analysis of Hollywood’s global competitive advantage is enriched by specific contributions within other scholarly conversations, focusing, for example, on the role of cultural proximity and linguistic affinity (Straubhaar 1991; Trepte 2003) in explicating the success of the diffusion of international entertainment content. After having analyzed the drivers of Hollywood’s leadership, the chapter explores the challenges in the evolving landscape of the last decade. The chapter sets the stage for the subsequent analyses of the competing institutional trajectories provided in the following chapters. Part II of the book focuses on the challenges to Hollywood’s global leadership arising originally within the “old media” landscape and specifically on the rise of non-scripted programs in the global TV marketplace. This theme is developed in Chap. 4 first through the analysis of the genre by defining its boundaries and contours, while tracing its historic roots in the twentieth century TV landscape. Subsequently, in Chap. 5, the analysis shifts its focus on a specific example of the new wave of successful global non-scripted programs: the Big Brother format. The program constitutes a successful example of glocalization of entertainment: A global format is distributed and adapted locally worldwide. The specific business practices associated with the development, distribution, and adaptation of the program are explicated, analyzing the differences with scripted entertainment, as feature-length motion pictures and TV series, drama or comedies. In Chap. 6, the analysis of the new wave of non-scripted entertainment is extended to its global leaders: the European non-scripted format developers and distributors. The analysis specifically focuses on the following entities: –– Endemol, developer and distributor of Big Brother and Deal or no deal, etc. –– FremantleMedia, developer and distributor of Pop Idol (American Idol in the United States), The Price is Right, etc.

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–– Other relevant entities operating within the non-scripted entertainment landscape, such as the “factual entertainment” divisions of the media entity Granada International (part of the UK-based conglomerate ITV plc), developer and ­distributor of shows like Nanny 911 and Hell’s Kitchen, and the BBC, developer and distributor of shows like Strictly Come Dancing (Dancing with the Stars in the United States). The aforementioned entities are headquartered in Europe, mainly in the United Kingdom, with the exception of Endemol, a Dutch production company evolved in the last decade into a transnational global format conglomerate, operating with subsidiaries and joint ventures in 25 countries in five continents including all major Western European and North American markets, as well as Latin America, India, South Africa, and Australia. The analysis explicates first to what extent the rise of these entities represents a challenge to Hollywood (and its system, including talent agencies for example), as they make inroads in primetime TV schedules around the world, replacing classic Hollywood productions, such as feature-length motion pictures, situation comedies, and drama series. Then, it focuses on Hollywood’s reactions to the phenomenon: the attempts to buy foreign developers of formats, or to enter the arena with specific productions, although these do not appear to be specifically part of their core competencies, which include for instance relationships with professional talent. These kinds of challenges for Hollywood regard mainly the content of entertainment. At the same time, however, the non-scripted entertainment leaders are exploring new ways to distribute their content globally, made available by the ICT revolution. The analysis then shifts to the new digital media landscape, illustrated by the subsequent chapters. Part III of the book focuses on select challenges arising within the “new media” landscape and specifically several disruptive elements ushered in by digital entertainment. These challenges are prompting the entities operating in the landscape to adopt mixed formulas, characterizing the efforts on their part to preserve their assets from the unfolding threats and at the same time to innovate. As the communication landscape is undergoing radical changes as a result of the ICT revolution, the entertainment industry as well is affected by the digitalization of content in different ways. The ICT revolution is the latest chapter of the history of the relationship between Hollywood and various technological revolutions affecting the creation, development, and distribution of entertainment. Historically, as analyzed in Chap. 7, Hollywood has adopted a complex, and to a certain extent, ambivalent attitude toward the emerging media and entertainment technologies, as they were made available in the twentieth century (as with sound, TV, Video Cassette Recording, Cable, Satellite, Digital Video Recording). Also, an analysis is conducted on the regulatory environment and technology in the media and entertainment industry and the issues unfolding in the new media environment, as the ongoing debate over net neutrality. Moreover, the issue of the rise of non-authorized diffusion of entertainment content, or “piracy” as indicated by law and industry organizations as the MPAA, is explored in the new environment. The impact of ICT as it unfolds at the turn of the twenty-first century on the media and entertainment industry has the potential to represent a disruptive technology

1.4  Organization of the Book

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(Christensen, 1997), altering market dynamics by modifying existing competitive advantages and influencing media conduits, content, and overall business models, while ushering in new competitors. From an analog world of scarcity, the ICT ­revolution has the potential to transition the media and entertainment landscape toward a scenario of “digital abundance where any maker of content (film, music, video games) could have access to the world’s audience through a server based on a demand media environment” (Taplin 2005, p. 1). Chapter 8 analyzes select challenges ushered in by digital entertainment: the changes and possibilities brought about by the new digital nature of entertainment, the rise of new distribution channels made available by digital technologies, and the necessity of new business models to create and capture value in the evolving landscape. Moreover, it specifically focuses on the new possible delivery options of non-scripted entertainment, analyzed in the previous chapters. A new, digital, shelf life of entertainment is unfolding, shaped by available technology, its appropriation and modification by audiences worldwide, and corporate strategies of media entertainment players. The digital entertainment environment can be assessed by the entities operating in the landscape as a threat or an opportunity: As a result of their assessment, they can implement defensive or offensive strategies (focusing respectively on the threats or on the opportunities) to successfully interact with the surrounding environment. In Chap. 9 the NBC 2008 Olympics coverage is analyzed as an example of an offensive strategy, trying to explore fully the possibilities offered by the digital environment in entertainment. It constitutes an example of digital glocalization of entertainment: A global entertainment event is adapted locally, taking full advantage of the new features of the digital landscape. The final portion, Chap. 10, draws the conclusions of the study: As the changes in the global entertainment landscape unfold, new challenges to Hollywood’s leadership emerge. In the current evolving technological scenario leading to an apparently seamless flow of transnational images, the two trajectories analyzed, the rise of nonscripted entertainment and the new digital entertainment environment, have the potential to alter the existing status quo within the sector. The global entertainment industry as a whole, and Hollywood in particular, are at crossroad at the end of the first decade of the twenty-first century, amidst a global economic recession. Challenges originating from the “old media” landscape, combined with other challenges arising in the new, digital landscape, are changing the paradigms of the twentieth century global mediascape, ushering in the potential digital glocalization of entertainment as the new successful paradigm to create, deliver, and capture value in the global digital entertainment landscape. The shift in paradigms is unfolding in the global media and entertainment landscape, and its magnitude and the extent of its reach remain to be seen, as Hollywood reacts modifying and adapting its strategies in the digital media and entertainment landscape, and the global economy struggles to recover from a recession. The resulting impact has the potential to change in the near future the existing dynamics of the global entertainment landscape, not unlike the paradigms shifts taking place as a result of major scientific revolutions (Kuhn 1962).

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References Andrejevic M (2004) Reality TV: the work of being watched. Rowman & Littlefield, Lanham Bielby DD, Harrington CL (2008) Global TV: exporting television and culture in the world market. New York University Press, New York Bignell J (2005) Big brother: reality TV in the twenty-first century. Palgrave MacMillan, New York Christensen CM (1997) The innovator’s dilemma: when new technologies cause great firms to fail. Harvard Business School Press, Boston Demers D (2002) Global media: menace of messiah? Hampton Press, Cresskill Fligstein N (1996) Markets as politics: a political-cultural approach to market institutions. Am Sociol Rev 61(4):656–673 Galtung J (1971) A structural theory of imperialism. J Peace Res 8(2):81–117 Gomery D (2000) The Hollywood film industry: theatrical exhibition, pay TV, and home video. In: Compaine BM, Gomery D (eds) Who owns the media? Competition and concentration in the mass media industry. Lawrence Erlbaum, Mahwah Griffin LM (1984) When dreams collide: rhetorical trajectories in the assassination of President Kennedy. Q J Speech 70(2):111–131 Herman E, McChesney R (1997) The global media: the new missionaries of corporate capitalism. Cassell, London Iwabuchi K (2007) Contra-flows or the cultural logic of an uneven globalization? Japanese media in the global agora. In: Thussu DK (ed) Media on the move: global flow and contra-flow. Routledge, London Kuhn TS (1962) The structure of scientific revolutions. University of Chicago Press, Chicago Mattelart A (1979) Multinational corporations and the control of culture: theideological apparatuses of imperialism. Harverster Press, Brighton Miller T (2007) Global Hollywood 2010. Int J Commun. http://ijoc.org/ojs/index.php/ijoc/article/ view/52/24. Accessed 1 Oct 2010 Miller T, Govin N, McMurria J, Maxwell R, Wang T (2005) Global Hollywood 2. British Film Institute, London Moran A (2004) Television formats in the world/the world of television formats. In: Moran A & Keene M (ed) Television across Asia: Television industries, programme formats, and globalization. RoutledgeCurzon, London Overholt A (1962) The Catalina story. Catalina Island Museum Society Inc., Avalon Porter ME (1980) Competitive strategy: techniques for analyzing industries and competitors. Free Press, New York Porter ME (1990) The competitive advantage of nations. Free Press, New York Ritzer G (1993) The McDonaldization of society. Sage, Thousand Oaks, CA Robertson R (1995) Glocalization: time-space and homogeneity-heterogeneity. In: Featherstone M, Lash S, Robertson R (eds) Global modernities. Sage, London Schiller HI (1992) Mass communication and American empire. Wesview Press, New York Straubhaar JD (1991) Beyond media imperialism: Asymmetrical and cultural proximity. Critical Studies in Mass Communication 8(1):39–59 Straubhaar JD (2007) World television: from global to local. Sage, Thousand Oaks Taplin J (2005) The IP TV revolution. Paper presented at the network society and the knowledge economy: portugal in the global context, Lisbon, Portugal. http://www-rcf.usc.edu/~jtaplin/ IPTV.pdf. Accessed 1 Oct 2010 Taylor PM (1997) Global communications, international affairs and the media since 1945. Routledge, New York Thornton PH (2004) Market from culture: institutional logic and organizational decision in higher education publishing. Stanford University Press, Stanford Thornton PH, Ocasio W (1999) Institutional logic and the historical contingency of power in organizations: executive succession in the higher education publishing industry, 1958–1990. Am J Sociol 105(3):801–843

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Tomlinson J (1991) Cultural imperialism. John Hopkins University Press, Baltimore Trepte S (2003) The intercultural perspective: cultural proximity as a key factor of television success. Paper presented at ICA conference, San Diego, CA, 23–27 June 2003. http://www. universität-hamburg.de/fachbereiche-einrichtungen/fb16/absozpsy/pdf_cultural_proximity.pdf. Accessed 1 Oct 2010 United Nations Educational, Scientific and Cultural Organization (UNESCO) (2005) International flow of selected cultural goods and services 1983-2003. United Nations Educational, Scientific and Cultural Organization, UNESCO Institute for Statistics, Paris Wasko J (2003) How Hollywood works. Sage, London Wolf M (2003) The entertainment economy: how mega-media forces are transforming our lives. Three Rivers Press, New York

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Part I

Hollywood’s Global Primacy

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Chapter 2

Hollywood’s Global Economic Leadership

2.1 Hollywood, Defined Hollywood is a physical place, a district of the city of Los Angeles, California. It is not a city, as oftentimes erroneously referred to by audiences around the world, whereas West Hollywood is, representing one of the administrative peculiarities of the county of Los Angeles where it is located. Besides being a physical place, Hollywood is a metaphor for the American entertainment industry operating in Southern California, not unlike Wall Street, which is considered a proxy for the US financial sector. Unlike Wall Street though, where the New York Stock Exchange is still located, Hollywood as a physical location has lost over time prominence within the entertainment industry operating in Southern California. There is still a particular geographic area known as the “studio zone” or Thirty Mile Zone (TMZ), with its center at the corner of La Cienega and Beverly boulevards in Los Angeles, where specific conditions for labor contracts in the entertainment business apply. Most of the “Hollywood productions,” however, take place outside this specific zone, taking advantage of economic incentives offered by locations around the world, generating the phenomenon of “runaway productions”: entertainment content financed and distributed by Hollywood studios, but physically produced somewhere else, oftentimes overseas. Of the original “Hollywood studios” of the first half of the twentieth century, only Paramount Pictures is still physically located in Hollywood at the turn of the twenty-first century. The other studios whether moved, as in the case of Warner Bros. to its current location in Burbank in the 1930s, or they were actually never there in the first place, but always scattered in the county of Los Angeles. Over the decades however, the name has become synonymous with the American entertainment industry: an icon for audiences around the world on the one hand, and a point of reference for all the entertainment industries worldwide on the other. As Powdermaker put it, “Hollywood is a unique American phenomenon with a symbolism not limited to this country. It means many things to many people” (1950, p. 16).

P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3_2, © Springer Science+Business Media, LLC 2011

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It is a “state of mind” occurring wherever people connected with the movies operate (1950, p. 18), whose goal is the “mass production of dreams” (1950, p. 39). For the purpose of this book, Hollywood is defined as the system of the US entertainment industry revolving around the following six major companies that are part of the Motion Picture Association of America (MPAA): Paramount Pictures, Sony Pictures Entertainment, Twentieth Century Fox Film Corporation, Walt Disney Studios Motion Pictures, Universal City Studios, and Warner Bros. Entertainment. All the studios, at the time of this writing, are units of large media conglomerates operating domestically and internationally in different segments of the entertainment industry. The MPAA was formed back in 1922, as a trade association, as a result of the concerns posed by the threat of government censorship, and was exempt from antitrust law (Epstein 2005, p. 93). Its function is now to “serve as the voice and advocate of the American motion picture, home video and television industries,” domestically through the MPAA and internationally through Motion Picture Association (MPA) (MPAA 2008a). It is useful to analyze the American entertainment industry located in Southern California as a system, whose center lies in the aforementioned Hollywood studios. A system can be defined as a “set of objects or entities that interrelate with one another to form a whole” (Hall and Fagan 1968). The distinctive characteristic of a system are: wholeness and interdependence, hierarchy, self-regulation and control, interchange with the environment, balance, change and adaptability, and equifinality (Littlejohn 2005). As a system, in addition to and dependent upon the six Hollywood studios, the following sets of entities also have to be factored in the analysis of the American entertainment industry as key elements: the talent agencies, the creative community (actors, directors, writers, independent producers, etc.) and their guilds, industry labor, the trade industry press, and specialized research firms. Their interrelations centered on the Hollywood studios determine the outcome of the industry both creatively and economically. They indeed are interdependent and constitute a whole, and historically they have proven to be able to self-regulate (as in the rating system established by the MPAA for example) maintaining a balance, while changing and adapting to the evolving landscape, as they ultimately share the common goal of creating and sustaining the artifacts of the American entertainment industry. These interactions among different entities within the Hollywood system do not take place without conflict, as, for example, the recurring negotiations between guilds and studios on contracts renewals have consistently shown.

2.2 Hollywood’s Economic Leadership The US entertainment industry, providing leisure time products and services for audiences around the globe, is the global leader in financing, producing, and distributing entertainment content (Amobi and Donald 2007a). According to data from the

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Export (USD Mil.)

16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

0

Year Fig. 2.1  USA film and television tape rentals – Export 1992–2009. Source: Bureau of Economic Analysis (2011)

US Department of Commerce’s Bureau of Economic Analysis, receipts for American film and television rentals abroad have increased steadily over the last 2 decades (see for example Koncz and Flatness (2007), p. 114), and in particular from US $2.5B in 1992 to more that US $13B in 2009 as shown in Fig. 2.1. Entertainment represents one of the most relevant exports for the US economy, and a significant item of American trade in virtually every corner of the world. The major corporations in this sector are headquartered in Los Angeles County in Southern California, with field offices handling their operations overseas managing the distribution of their intellectual properties under copyright internationally, and stem from the original Hollywood studios of the 1920s. Hollywood can therefore be defined as a “global industry geographically concentrated” (Véron 1999, p. 9), with its entities physically located in Southern California with a truly global reach. The core business of the Hollywood studios is to finance, produce, and distribute entertainment content ranging from feature-length motion pictures to TV programs, including animation and live action series. The entertainment products they produce are experience goods (Shapiro and Varian 1999, p. 5), whose value is determined by the individual experience they provide to their audiences, an entertainment experience. These products are also public goods non-excludable in consumption, in that one person’s consumption of an entertainment product does not affect its potential fruition from another person, unlike other products as physical goods for example (Wildman 1995). As a result, entertainment products usually are exploited through a carefully designed “shelf life” including theatrical release, home entertainment, Video on Demand (VOD) and Pay per View (PPV), Pay TV, Network TV, Cable TV, and ancillary markets domestically and internationally (Vogel 2004). The exclusivity and subsequence (in most cases) of each of these “windows” of exhibition allow

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Hollywood studios to practice price discrimination of their products and capture a larger share of the value generated by their artifacts. These products fall also into the category of “information goods,” expensive to produce and cheap to reproduce (Shapiro and Varian 1999, p. 3), with the average “negative costs” (the costs to produce the first copy, or “negative” of the film) for a feature-length motion picture constantly exceeding US $63M in the period 2003–2007 (MPAA 2008b, p. 6). In addition to the negative costs, the marketing costs associated with the theatrical release alone of a movie have constantly exceeded US $34M in the same period. As a result, the total costs incurred by MPAA members to release domestically in movie theaters a feature-length motion picture in the period 2003–2007 have on average exceeded US $100M (MPAA 2008b, p. 6). This “windowing model” developed in the industry is based on “contractually agreed-upon periods of time that permit the exhibition of films. Such release windows are based on revenue, and content moves from windows that draw higher revenue per viewer to those that draw lower revenue per viewer” (White 2003, p. 15). This release strategy in the distribution allows studios to capture larger and more diversified revenue streams (Blume 2004), as opposed to the risky business model utilized until the early 1950s, which included only revenues generated by theatrical exhibitions. Over time, the relevance of the revenue streams originated by the first “run,” the theatrical exhibition, has diminished as the home entertainment and television exploitation of the properties under copyright have increased their importance. The television market in fact has access to the advertising revenue, estimated in the United States at US $74B by Standard & Poor in 2007 (Amobi and Donald 2007b, p. 3), and subscription revenue streams, estimated at US $75B by Standard & Poor in 2007 (Amobi and Donald 2007b, p. 15). The sector could be defined as an oligopoly, with few (six at the present time) major players, all units of publicly traded media and entertainment conglomerates, accounting for the large majority of the product distributed in the United States and globally. The Hollywood studios, both domestically and internationally have a clear leadership at the box-office. Data from Box Office Mojo (http://www.box­officemojo. com) report that over the period 2001–2006, the market share of the six Hollywood studios (considered within their conglomerates) averaged approximately 80% or more in the US theatrical market (Amobi and Donald 2007a, p. 7). Also globally, the six Hollywood studios consistently rank at the top of worldwide charts in approximately the same period, as reported by Showbizdata (http:// www.showbizdata.com). In particular, Warner Bros. ranked first with 16.2% of the global theatrical gross in 2007, Sony/Columbia Tristar in 2006 with 16.4%, Warner Bros. in 2005 and 2004 with 15.7 and 14.2%, respectively, and Buena Vista International (the distribution arm of the conglomerate Disney) in 2003 with 18.1%. In the same 5 year period, only once was there a non-US or non-Hollywood affiliated distributor among the top 10 positions in the share of global gross theatrical revenue (the Japanese Toho ranking tenth in 2006). The international exploitation of entertainment products is an essential element in the development of Hollywood’s entertainment content, which is oftentimes produced

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and distributed domestically at a deficit. Foreign revenue streams are instrumental in the recouping of the initial investment necessary to produce high value entertainment products, which are experience, non-excludable public goods, and in reaching a profit, whenever possible (Weinberg 2005). In addition, while the domestic market shows signs of having reached a stage of maturity, Hollywood studios continue to explore new ways to expand internationally in their quest to increase their revenue streams, as they are under constant pressure of delivering profit increases on a quarterly basis. International distribution constitutes a pivotal aspect in Hollywood studios’ business practices, as it represents a key set of “windows” of exhibition to capture larger and more diversified revenue streams from the same properties under copyright, stemming from studios’ libraries and current productions. In general, the categories of foreign or international markets as a whole provide useful statistical data on the magnitude of the phenomenon, without however shedding light on specific real business practices. The general notion of foreign markets comprises vastly different specific local markets, and generally what is produced for the domestic US market is then distributed overseas, given the fractured nature and diversity of each market. The international distribution is handled by local field offices in the major markets. In so doing, studios are able to directly manage the release and distribution of their products (ranging from feature-length motion pictures to TV series, live action and animation, etc.) and their overall “shelf life” in the country they operate in. As a result, they can effectively practice cross promotions among divisions of the conglomerate and realize synergy among the various “windows” and revenue streams to capture the highest profit from their intellectual properties under copyright. A direct presence in relevant local markets, when allowed by local regulatory environments and economically viable for the relevance of the market, appears to be the preferred course of action for Hollywood studios, jointly or severally (Aft 2004). Historically, the foreign markets’ distribution of movies has been following, logically and chronologically, the US distribution, with adaptations to local cultures and languages when necessary and economically viable. Oftentimes the timing of the releases in different markets has not been simultaneous to better capture the different economic potential provided by specific seasons in different territories: For example, the US summer blockbusters have usually not been released overseas until the more lucrative winter holidays season. In recent years however, the international distribution strategies of feature-length motion pictures appear to follow the trend of “day and date” release: Studios organize the simultaneous theatrical release in various markets globally to coordinate worldwide marketing efforts on the one hand and to discourage the diffusion of unauthorized content on the other (Aft 2004). Entertainment content for TV, ranging from made-for-TV product to featurelength motion pictures, is handled through licensing agreements with local TV platforms (satellite, cable, broadcast or free TV, and increasingly with telecom and/or internet companies), establishing the number of runs per period, its exclusivity (or lack thereof) in the territory, usually within “package” deals including different products, which can be current ones and/or stemming from the studios’ libraries. Havens (2006) identifies three distinct phases in the development of the global television

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marketplace in the last 5 decades. The first wave, from 1957 to 1972, is considered a “formative moment” of the landscape (2006, p. 17), when most of the business practices of the marketplace were generated, with US content clearly leading the international flow of entertainment content. The second phase, from 1973 to 1985 showed signs of contraction of the global market for US producers, as local productions capacities increased (2006, p. 24). The third phase, from 1985 to present, has been witnessing a second wave of television globalization fostered by the rise of new platforms, made available globally by new communication technologies, mainly cable and satellite (2006, p. 27). Hollywood studios are interested in increasing their presence in relevant territories to capture a larger share of local entertainment consumption in various markets, both in the movie and the TV segments. As a result, they have started to engage in coproduction in foreign languages and with foreign entities: The end products adapt on the one hand to local cultures while on the other they rely on the existing global structures of distribution of entertainment content. This strategy of localization of entertainment (Chalaby 2006) appears to be effective to increase even more their presence in relevant foreign markets within local regulatory environments, while at the same time leveraging existing corporate structures and content under intellectual property rights.

2.3 Economic Analysis of the Hollywood System The Hollywood system comprises profit-oriented entities operating jointly and severally to reach a profit in the creation, production, and distribution of entertainment, domestically and internationally. It represents a relevant industry in economic terms, and specifically for the United States, a key export within its international trade balance. As such, it is useful to analyze it within theoretical frameworks drawn from the field of economics. In particular, the branch of industrial economics provides useful tools to analyze the entertainment sector and the cluster of the Hollywood studios within the sector, their competitive advantages and strategies, and the evolution of their strategies over time. To specifically analyze the structure of an industry, Porter proposes the “five forces of competition” theoretical framework (1980). Applying the framework to the American entertainment industry, they are: the competition and rivalry among the existing firms within the industry (the Hollywood studios), the bargaining power of the suppliers (the content creators), the bargaining power of the buyers (the media packagers), the threats posed by new entrants, and threats posed by potential substitutes, as illustrated in Fig. 2.2. Their analysis provides a useful starting point for subsequent evaluations on the nature of the industry. The magnitude and the interaction among these five forces determine the structure or the sector, its boundaries and dynamic evolutions, its players and their collaborative and competitive interactions, the existence of barriers to entry the sectors for newcomers, the degree of existing competition in the industry, as well as its attractiveness and its equilibrium overtime.

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Fig. 2.2  US entertainment industry structure: the five competitive forces (Porter 1980)

Utilizing this framework, the structure of the US entertainment industry is best described as a cluster of competitive industries: an oligopoly of six entities, the Hollywood studios, or “sexopoly,” as Epstein puts it (2005, p. 93), which solidly share the leadership in the competitive landscape. While intensely competing on certain aspects of the business, as access to talent, Hollywood studios cooperate in others, as in the activities supported by the MPAA, ranging from the rating system for the feature-length motion pictures released in theaters to the defense of the intellectual property rights of entertainment content against its unauthorized utilization. Their competition appears to be rarely based on cost advantage, resulting in the production of entertainment at the lowest possible cost, rather on differentiation advantage, producing the best possible entertainment content and recouping the investment on a global scale. As mentioned, they are also associated in the MPAA, domestically and internationally, to protect their interests. The competition among Hollywood studios appears to stimulate the production of entertainment artifacts in line with the demand of audiences worldwide: Their products have indeed the leadership in the US entertainment business and globally. In the process of creating and distributing entertainment content to different audiences, Hollywood studios have historically altered their strategic positioning, successfully adapting to the changing economic and political environment. Originally positioned as exhibitors at the beginning of the twentieth century, the founders of Hollywood studios strategically decided to enter the production side of the business to secure access to content (Gabler 1988). These entities also decided to move from the East coast to the West coast of the United States and to Hollywood in particular for two distinct sets of reasons. On the one hand, the mild, sunny climate and the diverse landscape lent itself to outdoor production throughout the year. On the other hand, setting their operations in Southern California helped the independent

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studios to effectively circumvent existing patents and the actions from patent holders operating from the East Coast (Lessig 2004, pp. 53–54). In 1915, US courts deemed the Motion Picture Patents Company (formed by the holders of the patents involved in the production and distribution of entertainment via movies, constituted mainly around the patents owned by the Edison company) an unacceptable monopoly and ordered it to be dissolved. This decision proved essential for the development of the then independent production studios, which eventually morphed into the Hollywood studios. A completely new and more diversified industry emerged as a result of this specific government intervention, and the independent studios generated what is usually referred to as the “golden age of Hollywood.” In the “golden age of Hollywood,” approximately from the 1920s to the 1940s (Jewell 2007), the studios coped with high levels of uncertainty and risk associated with the volatile demand and the difficulties intrinsic in the production of entertainment. They did so by completely controlling all the different aspects of the ­production of entertainment in their studio “back lots” with exclusive contracts with talent. Furthermore, they became fully vertically integrated entities, as producers, distributors and exhibitors of filmed entertainment. As early as 1921, however, business practices in the distribution of motion ­pictures combined with vertical integration with exhibitors determined a US Federal Trade Commission (FTC) complaint against Famous Players-Lasky Corporation regarding the practice of block booking (the bundling of films as a distribution strategy­ of the studios towards the independent exhibitors). The complaint originated a series of subsequent rulings and consent decrees and their enforcement eventually led to the Paramount consent decree in 1948, when Hollywood studios, then mostly vertically integrated, were obliged to divest their interests in the ­exhibition side of the business (their movie theaters operations). As a result, the industry became more competitive, not only in the exhibition segment increasing the number of independent theatrical exhibitors, but also in the production segment of the business (Burgelman and Meza 2003). Hollywood studios ceased to be organized as a dream factory, as they could not practice exclusive contracts any longer with exhibitors on the one hand and with talent on the other. Talent agencies’ relevance also increased significantly as a result and the competitive and operative landscape of the industry was modified ever since. In 1970 the Federal Communications Commission (FCC) adopted the “Financial Interest and Syndication rules” (FinSyn rules), prohibiting TV networks from owning a financial interest in the production or syndication of many shows that they aired, specifically during prime time (Burgelman and Meza 2003, p. 9). As a result, independent content creators flourished, so did independent TV stations. The result was more voices participating in the media arena across the country, both in the production and the distribution of entertainment. On the other hand, the Telecommunications Act of 1996 deregulated some of the restrictions operating in the media ownership and cross ownership among media outlets and allowed the FinSyn provisions to expire. Following the deregulation of the communications industry by the Telecommunication Act of 1996, the landscape

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Fig. 2.3  US entertainment business value chain

has been witnessing an acceleration of concentration in the media and entertainment industry across its different segments, leading to what has been defined “merger madness” (Litman and Hoag 1998), and the trend still continues. As a result of the changes in the landscape, and the reactions of Hollywood studios to gain and maintain their leadership in the US entertainment sector, these entities now focus on the distribution aspect of the business. They are, as an industry executive eloquently puts it, “basically distributors, banks, and owners of intellectual copyright” (Epstein 2005, p. 106). Their strategic role and overall positioning has clearly shifted from the golden age of the Hollywood system. While then most of the studios controlled all the different aspects of the business, from production to exhibition, in order to minimize the risks associated with their activities, they now utilize strategic leadership in the key aspect of the distribution of entertainment content, domestically and globally. Therefore, in the US entertainment business value chain, determining how value is created and delivered in the entertainment business, Hollywood studios are mainly positioned between the content creators and the packagers of entertainment, the media outlets, as shown in Fig. 2.3, explaining how value is generated in the US entertainment business and who the different players are, with their activities. In the twenty-first century’s Hollywood system, the studios focus on the financing and distribution of entertainment including the marketing and promotion activities. Their strategic positioning and key success factors appear to lie in their ownership of copyrighted entertainment in their libraries and their know-how to generate value through their exploitation in aforementioned “windows.” Also relevant is their access to finance on the one hand and packagers/media on the other, as they are part of large vertically integrated media conglomerates, and their established, longstanding relationships with talent and talent agencies.

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Another key element in Porter’s cluster analysis is represented by the potential threats from new entities attempting to enter the landscape and challenge Hollywood studios’ leadership. Historically, the threats posed by potential new entrants have been, in the last decades, low due to the existing barriers to entry for new comers determined by existing know-how and the capital intensive nature of the business, both in the filmed entertainment and TV content. Usually, new comers do not have the know-how to operate at a profit in this particular industry, nor can they rely on an established professional network, which calls for decades of working relations with the supporting and related industries, as talent agencies for example, even should they have access to the necessary financial resources. The economic barriers are specifically relevant: Currently the average cost per motion picture theatrical exceeds $100M, including “negative costs” and distribution costs (MPAA 2008b, p. 6). As mentioned earlier, movies rarely recoup its initial investment in the theatrical run; rather when they indeed do it is only after the exploitation of the property under copyright in the different windows of exhibition available. This is generally true also for TV content, usually produced at a deficit for its first TV run, which reaches break even and eventually profit only when it reaches a critical mass of episodes to be exploited in subsequent windows (as in syndication TV for example). Therefore, the inherently risky nature of producing and distributing entertainment in the US market can be best managed by diversifying the offer, and spreading the risk, among different films and TV series per year, and implementing the access to worldwide network for the distribution of their products along their value chain, through the different existing media, TV networks, broadcasters and pay TV services, cable channels, and syndicated stations. Virtually, all the Hollywood studios are part of publicly traded media conglomerates, which own diversified media assets in the United States, the only exception being Sony Picture Entertainment (foreign owned, and not allowed to own significant equity positions in the US broadcasting industry). The analysis of the US entertainment industry brings to the fore the intrinsic issues the industry faces in order to create and capture value from experience goods in a volatile and risky business through different “windows” of exhibition and licensing, leading to diversified revenue streams (Blume 2004). Hence, the necessity arises not to focus solely on the theatrical markets, but to analyze the entertainment industry as a whole, comprising TV and advertising, in a landscape where the ICT revolution is looming as the sword of Damocles for the Studios, their business models, and global leadership. The negotiation power of the distribution channels, ranging from movie theaters exhibitors to TV outlets is not particularly threatening for Hollywood studios, which own the entertainment content on the one hand and are part of media conglomerates on the other. Similarly, the suppliers, who contribute to create the content, do not have high bargaining power as an economic dimension (although it is worth noticing that “A list” top talent and their representatives have clear negotiation clout in ­specific deals). Therefore, the existing threats from suppliers (content creators) and buyers (media outlets) in the US media and entertainment landscape or substitutes of entertainment have been relatively low so far, leading through a virtuous circle to the existing prevalence of Hollywood in global entertainment.

References

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However, at the turn of the twenty-first century, as Hollywood studios are facing the challenges of stagnant revenue streams in the US domestic market, with the “DVD market showing signs of saturation,” they are bound to explore “alternative means of content exploitation” (Amobi and Donald 2007a, p. 1), as they are expected to deliver profit increases on a quarterly basis, and to devise new business models based on the technologically evolving competitive landscape. It becomes necessary then to specifically identify the existing drivers of Hollywood’s competitive advantage and analyze them in more detail.

References Aft R (2004) The global markets. In: Squire JE (ed) The movie business book. Fireside, New York Amobi TN, Donald W (2007a) Movies & home entertainment. Standard & poor’s industry surveys. McGraw-Hill, New York Amobi TN, Donald W (2007b) Broadcasting, cable and satellite. Standard & poor’s industry surveys. McGraw-Hill, New York Blume S (2004) The revenue streams: an overview. In: Squire JE (ed) The movie business book. Fireside, New York Bureau of Economic Analysis – US Department of Commerce. International economic accounts US International Services - Detailed statistics for cross-border trade - Trade in services 1992– 2009, Table 1. (2011). http://www.bea.gov/international/international_services.htm. Accessed 10 Jan 2011 Burgelman R, Meza P (2003) A look at three regulatory forces influencing content and distribution in the motion picture and television industry. Case study # SM-105: Stanford Graduate School of Business Chalaby JK (2006) American cultural primacy in a new media order: a European perspective. Int Commun Gaz 68(33):33–51 Epstein EJ (2005) The big picture: the new logic of money and power in Hollywood. Random House, New York Gabler N (1988) An empire of their own: How the Jews invented Hollywood. Crown Publishers, New York Hall AD, Fagan RE (1968) Definition of system. In: Buckley W (ed) Modern systems research for the behavioral science. Aldine, Chicago Havens T (2006) Global television marketplace. BFI Publishing, London Jewell RB (2007) The golden age of cinema: Hollywood 1929–1945. Blackwell, Malden Koncz J, Flatness A (2007) US International Services: cross-border trade 1986-2006, and sales through affiliates, 1986–2005. US Bureau of Economic Analysis, US Department of Commerce, US Government, Washington Lessig L (2004) Free culture: how big media uses technology and the law to lock down culture and control creativity. Penguin Press, New York Litman B, Hoag AM (1998) Merger madness. In: Litman B (ed) The motion picture mega industry. Allyn & Bacon, Needham Heights Littlejohn SW (2005) Theories of human communication. Wadsworth, Belmont Motion Picture Association of America (MPAA) (2008a) MPAA’s LA office finds new home in Sherman Oaks Galleria, press release. http://www.mpaa.org/press_releases/move%20 announcement%201.16.pdf. Accessed 25 Feb 2008 Motion Picture Association of America (MPAA) (2008b) Theatrical market statistics: 2007. http:// www.mpaa.org/2007-Theatrical-Market-Statistics.pdf. Accessed 17 June 2008 Porter ME (1980) Competitive strategy: techniques for analyzing industries and competitors. Free Press, New York

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Powdermaker H (1950) Hollywood: the dream factory. An anthropologist looks at the moviemaking. Little Brown, Boston Shapiro C, Varian HR (1999) Information rules: a strategic guide to the network economy. Harvard Business School Press, Boston Véron L (1999) The competitive advantage of Hollywood industry. Center for International Studies, University of Southern California, working paper. http://ciaonet.org/wps/vel01. Accessed 30 June 2007 Vogel HL (2004) Entertainment industry economics: a guide for financial analysis. Cambridge University Press, New York Weinberg CB (2005) Profits out of the picture: research issues and revenue sources beyond the North American box office. In: Moul CC (ed) A concise handbook of movie industry economics. Cambridge University Press, New York White B (2003) A new era for content: protection, potential, and profit in the digital world. PriceWaterhouseCooper report. http://www.pwc.com/images/e&m/a%20new%20era%20for% 20content% 202003.pdf. Accessed 17 Nov 2007 Wildman SS (1995) Trade liberation and policy for media industries: a theoretical examination of media flows. Can J Commun 20(3):367–388

Chapter 3

The Drivers of Hollywood’s Competitive Advantage

3.1 The Economic Drivers of Hollywood’s Global Competitive Advantage From an industrial economics standpoint, Hollywood’s drivers of the current worldwide competitive advantage can be explained utilizing Porter’s theoretical framework of the “national diamond” (Porter 1990). This theoretical framework explicates competitive landscapes and markets where an intense competition appears to be a positive factor in determining competitive advantage, especially if the competitors share geographical proximity. Under this framework, four conditions, the “determinants of national advantage” (p. 71), have to be considered, jointly and severally: factor conditions, demand conditions, strategy/structure/rivalry conditions, and relating/ supporting industry conditions. The combination of these elements contributes to the competitive advantage and generates a virtuous cycle where each element helps build and maintain the leadership of the industry vis-à-vis external competitive factors and entities. Other examples of these clusters of industries, geographically situated with global competitive advantages, are the Japanese consumer electronics industry and the Italian fashion industry. Similarly to Hollywood’s strategy, these clusters, although geographically situated in specific regions where they can benefit from “national diamond” conditions, operate globally taking advantage of opportunity arising in different parts of the globe.

3.1.1 Factor Conditions For the US entertainment industry geographically concentrated in Southern California, factor conditions refer to the existing established presence in the region of specific skilled labor, ranging from the “below the line” crews to the “above the line” talent operating in the industry, comprising veteran professionals in the different

P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3_3, © Springer Science+Business Media, LLC 2011

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activities needed in the creation, production, and distribution of entertainment. It also includes the role of prominent film schools, such as the ones at the University of Southern California (USC) and the University of California at Los Angeles (UCLA), and the American Film Institute (AFI). These institutions located in the region contribute to Hollywood’s leadership as they attract individuals with potential talent from all over the world, providing them with state of the art training and ultimately facilitating their entry into the industry. In addition, the mild and sunny climate of Southern California with its diverse landscape, ranging from deserts to mountains, valleys, and the Pacific Ocean, allows diverse outdoor scenes all year round. This element is considered one of the main drivers of the original moves from the East coast of the United States to the region for the producers/distributors which eventually formed Hollywood in the early twentieth century.

3.1.2 Relating and Supporting Industries Relating and supporting industries conditions refer to the existence of specific industries, also geographically concentrated in Southern California, whose knowhow help develop the industry’s competitive advantage. They are an integral part of the Hollywood system as previously defined: They are the talent agencies, the music and recording industries, the trade industry press and specialized research firms, and the entities comprising the creative community and the industry labor. Over time Hollywood studios have built long-term, established relations with all these entities, to the point where there seems to be a phenomenon of a certain degree of osmosis among different players operating in the entertainment industry in Southern California. It is not infrequent that talent agents become studios executives and vice versa, tightening the different professional backgrounds in the industry and the consequent relations. This complex system, with an impressive level of industry knowhow and talent developed over decades, is hardly replicable anywhere else in the world. The existence of this phenomenon in and of itself helps build and maintain the global competitive advantage of the Hollywood system as a whole.

3.1.3 Strategy, Structure, and Rivalry Strategy, structure, and rivalry conditions refer to the specific elements constituting the cluster of the US entertainment industry. These conditions of the cluster underline the competitive landscape of the US entertainment industry, analyzed previously in the chapter. Historically, as described by Gabler (1988), Hollywood studios have fiercely competed and rivaled one another on certain aspects of the business. At the same time, however, their competition did not constitute a destructive factor for the industry as a whole, as the major players would agree on key issues regarding the industry, such as the production codes, rating systems, and generally how the

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100%

Percent

80%

Latin America

60%

Asia-Pacific

40%

EMEA US and Canada

20% 0% 2005

2006

2007

2008

2009

Year 2005-2009

Fig. 3.1  International theatrical market 2005–2009. Source: MPAA (2011)

industry would operate and evaluate itself through entities like the MPAA and the Academy of Motion Picture Arts and Science (AMPAS), awarding the Oscars for excellence in the different facets of the creation of motion pictures. As a result, this particular kind of competition has been producing a global competitive advantage for the industry players, as opposed to “zero sum game” of other industries, where the competitive strategies of the industry players contribute to undermine the very existence of the industry itself by attempting to eliminate key players of the industry or undermine their long-term prosperity. Historically, the studios have prospered in the second half of the twentieth century expanding on the one hand the global market for their entertainment products, while at the same competing to increase their individual market share.

3.1.4 Demand Conditions Demand conditions refer to the size of the accessible domestic market available for the industry’s products. For the Hollywood studios it represents the demand for entertainment generated within the United States by customers willing and able to pay for media entertainment. The US domestic market (including Canada) is by far the largest in the world in economic terms, with on average more than 1.4 billion tickets sold per year and approximately US $9B generated at the box office per year in the period 2000–2009 from the theatrical release of feature-length motion pictures alone (MPAA 2010, pp. 5–6). In general, as shown in Fig. 3.1 for the period 2005–2009, in the worldwide theatrical market the United States represents the most significant revenue stream, followed by the EMEA region (Europe, Middle East and Africa). The evolution over time of revenues stemming from the other markets shows an evolving landscape. The percentage coming from the Asia-Pacific region has been increasing in the recent years (and it is estimated to increase further, as the huge markets of the

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Percent

80% 60% 40% 20% 0% 2003

2004

2005

2006

2007

2008

2009

2010

Years 2003-2010 Others Warner Bros Universal

Sony/Columbia Paramount Buena Vista

Miramax Dreamworks 20th Century Fox

MGM/UA New Line

Fig. 3.2  US domestic box-office 2003–2010. Source: Boxofficemojo (2011)

People’s Republic of China and India, with combined populations exceeding 2 billion individuals are slowly opening up to foreign-produced entertainment content). In contrast, Latin America represents a smaller percentage of the international theatrical market in economic terms. The most relevant market in terms of gross box office receipts (not in terms of admission tickets sold, however) is the US domestic market, and has been so in the past decades. This market has been clearly dominated by the oligopoly comprising the Hollywood studios (as shown in Fig. 3.2). Each studio has been providing over time a consistently successful offer to American movie goers, generating a diversified portfolio of feature-length motion pictures on an annual basis, where the loss of one product is compensated by success of another. In the period 2003–2010, Hollywood studios and other entities affiliated with them consistently exceeded 80% of the American domestic theatrical market. As a result, they can fund expensive projects, having the domestic market as the first target for recouping their investment. When they then compete internationally, very few other entities, if any, can afford similar budgets for entertainment products, due to the limited size of their domestic markets compared to the US domestic one. As a result, Hollywood products have high production value compared to other international entities, which cannot tap into entertainment markets with similar dimensions. This phenomenon helps create a virtuous cycle, where Hollywood’s artifacts have a higher production value since they have access to a large domestic market. This element increases their competitive advantage internationally increasing their global market share, which in turn further increases their competitive advantage. As a result of this international market dynamic, Hollywood studios have successful access to global markets and they can increase their investments in entertainment.

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Fig. 3.3  US entertainment market dynamics and competitive advantage: The “national diamond” (Porter 1990)

The end result of this mechanism is that Hollywood studios can afford to fund even larger projects, whose investment can be recouped internationally. The increased size of the investment raises the economic barriers for potential new entrants in the industry, which are already significant, as shown in the previous analysis of the “five forces,” making it extremely risky and difficult for foreign entities to compete at a global level. All these conditions operate to generate and maintain the global competitive advantage of the US entertainment industry, as shown in Fig. 3.3, where the “national diamond” is represented with its four determinants. This “diamond” is a “mutually reinforcing system” (Porter 1990, p. 72) where the different determinants, generated by diverse entities, work together in synergy to create and sustain the global competitive advantage of the specific industry cluster. Porter also points out that, in general, other elements have to be factored in when analyzing the competitive advantages of specific industry clusters: chance and governments. Historically, events out of the control of the entities operating in the industry have conditioned the path of the industry itself stemming out of uncontrollable or unpredictable sources. In addition, the governments of nation states still play a role in the diffusion of the flow of international entertainment, as national sovereignty remains through rules and regulations. In the age of globalization of markets driven by transnational corporations and international financial institutions, states still matter, as they ultimately “hold the power to pass legislation that affects domestic media industries” (Waisbord and Morris 2001, p. xi). Specifically, cultural policies can be enacted to protect indigenous media producers, through the imposition of “domestic content” quotas in different

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media, ranging from movie theaters to the different TV platforms, in order to develop the local cultural industries (as in the case of Brazil, Mexico, the EU for example). There can be also attempts to close off international entertainment flows altogether (as in the case of Iran and the People’s Republic of China for example). Generally, international trade policies are developed to promote cultural export of domestic products internationally (vs. trade liberalization) through fiscal incentives or financial support to stimulate or facilitate the production and distribution of entertainment, directly or indirectly (Gerse 2004). Domestic barriers created by local governments can therefore alter the flow of entertainment content from the large US market to small local markets internationally (Wildman 1995). Overall then, the combined action of the “diamond’s” determinants plus the roles of chance and government, utilizing this theoretical framework, play a pivotal role in explicating the current and longstanding leadership of Hollywood in the global entertainment landscape.

3.2 Hollywood’s Global Primacy: An Interdisciplinary Analysis The industrial economics analysis of the Hollywood system offers an interesting and useful approach to shed light on the nature of the industry comprising profitoriented entities, their relations, and evolutions over time in their domestic and international operations. As illustrated, the theoretical frameworks of the five forces in the industry sector analysis and national competitive advantage are utilized to explicate on the one hand the nature of the cluster comprising the US entertainment industry and on the other the specific drivers and the dimensions of its leadership, analyzing also the nature and the origins of potential threats at the horizon. A solely industrial economics approach however would not be exhaustive, as the entertainment sector in general, and Hollywood in particular, is deeply involved and plays a pivotal role in the way popular culture artifacts are generated, and as a consequence in the society as a whole. The cultural industries in general, and the entertainment industry in particular, do not represent sectors where the above-mentioned theoretical frameworks can provide a sufficiently complete analysis (as in many other manufacturing sectors for example). They reflect distinct and relevant cultural values and generate specific multifaceted impacts in the way popular cultural artifacts are produced and consumed by audiences globally, which are not specifically addressed in analyses that do not exceed the boundaries of the field of industrial economics. Therefore, the analysis of the global entertainment industry can benefit from insights and contributions stemming from an interdisciplinary analysis, utilizing and harmonizing theoretical tools from disciplines across different fields of study. As the entertainment industry’s output is generated by profit-oriented entities, theoretical frameworks drawn from industrial economics provide useful tools to analyze the sector and the cluster of the Hollywood studios in particular, their global competitive advantages and strategies. These theoretical frameworks, which help explicate the structure of an industry regardless of its output and the bases of the leadership of its

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players, offer tools for scholarly conversations outside the economic field interested in shedding light on the dynamics of the entertainment sector. On the other hand, relevant stands on the issues are also generated by approaches outside the field of industrial economics. These can enrich the economic analysis of the Hollywood system, expanding the theoretical boundaries of the analysis, as called for by the complex interplay, generated by the international flow of entertainment, among profit-oriented entities, nation states, international NGOs, and culturally situated audiences. Scholarly voices in different fields of studies over the years have provided contributions to the debate over the US primacy in the global entertainment landscape. Specifically, different efforts of inquiry provide insights in explicating the global superiority of American popular culture artifacts, above and beyond the economic factors and business practices of the entertainment industry. Katz and Liebes, in their work on the cross-cultural success of Dallas (1990, p. 5), explain the global success of American programs on the one hand through the “universality, or primordiality” of its themes, making them more “psychologically accessible” to different audiences and their intrinsic “polyvalent” nature of the stories proposed. On the other, they point out the “sheer availability” of American entertainment products in global entertainment marketplaces. Similarly, following and expanding on Hall’s (1980) notion of different potential readings of a media text from its decoders, beyond the original intent of the encoders, a successful piece of entertainment is explicated by Fiske (1987) through “polysemy,” in a situation of semiotic excess, where the same text generates different meanings for different audiences. Along similar lines and elaborating on the concept of polysemy, Olson (1999) introduces the concept of “narrative transparency” to explain the success of American productions overseas. The reason of the cultural success of Hollywood globally would lie in the intrinsic capacity of their texts to seem familiar to audiences globally, even if crafted somewhere else. While confronting imported entertainment content to locally produced fare, however, usually the preference for the latter is explicated by cultural proximity and linguistic affinity (Straubhaar 1991; Trepte 2003), the notion that local audiences seek after and respond better to more familiar images and overall values and beliefs embedded in the entertainment content proposed. More recent studies (Cohen 2008) suggest that other dimensions, such as national pride, could be involved in the selection of preferred forms of entertainment, and in this case locally produced content have a clear advantage. The notion of participatory and convergence culture (Jenkins 2006a, b) is also a useful analytical tool to show how new available technologies, and their appropriation and uses by the consumers globally, have changed the media landscape and contributed to social change. In the fruition of scripted entertainment, audiences are showing interest in deciding what to watch and when to watch it, regardless of the original schedule proposed by the creators or broadcasters (for example with the surge of Digital Video Discs and Digital Video Recording devices). The trade imbalance in cultural goods between the United States and the rest of the world has also engaged other relevant research efforts outside the field of indus-

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trial economics. Scholarly debates have raised concerns that the American popular culture dominance in the global mediascape would negatively impact local cultures, generating a modern version of imperialism, a cultural imperialism, as pointed out for example by Schiller (1992) and Tomlinson (1991). Through the export of popular culture artifacts, the American entertainment industry would impose dominant dynamics between the center and the periphery in the creation and distribution of popular culture artifacts by stifling local entertainment industries and impacting locally situated audiences. These analyses tend to focus on the political economy aspects of this industry and refer to Hollywood’s predominance as “Hollywood hegemony” in this pivotal sector, whose relevance exceeds its already relevant economic dimensions, as it permeates and impacts the receiving societies. In so doing, these theoretical approaches are inspired by Gramsci’s notion of hegemony of particular dominant societal groups and their strategies to maintain their predominance, and utilize this theoretical framework to best describe and analyze Hollywood’s positioning and competitive strategies within the global mediascape (see for example Miller et al. 2005; Thussu 2006). The US conglomerates are also deemed best positioned to capture the opportunities of the media landscape at a global level, due to Hollywood’s international business practices, and especially the role of key corporate executives in the international media entertainment marketplace, in shaping the flow of content and as a result the global popular cultural landscape (Havens 2006, pp. 46–52). Within these theoretical approaches, Hollywood’s global predominance would be the result of economic and political forces, amplified by the implementations of specific business practices. The theoretical position adopted in this book, acknowledging Hollywood’s dimension as an industry (albeit a very particular one for its key role in creating and distributing popular culture worldwide) comprising a specific cluster of firms, draws specifically on industrial economics to explicate the current market structure and its global competitive advantages. This framework enables us to analyze the sector, its players, dimensions, and evolutions over time on a global scale. However, it acknowledges also that the analysis can be enriched by insights and contributions from other theoretical frameworks within an interdisciplinary approach. Drawing on contributions from different fields of study analyzing Hollywood, a more revealing light can be shed on its practices, the impact, and consequences of the structure of this key industry and its output, above and beyond its economic relevance, albeit significant. The combination of these theoretical approaches sets the stage for the subsequent analysis of the evolutions of the global mediascape, and specifically of the potential threats to the current Hollywood’s global primacy. Signs of decline of US mass media have already been brought to the fore in the analysis of the global marketplace (see for example Tunstall 2008). By identifying specific emerging institutional trajectories challenging Hollywood on a global stage, this study contributes also to the evolving scholarly conversations on the global political economy of entertainment, as new entities outside of the Hollywood system have increased their global relevance. Utilizing contributions from research efforts in different fields of

3.3  The Potential Threats to Hollywood’s Global Primacy…

37

inquiry, the analysis of the competing institutional trajectories is enriched by multiple levels of inquiry, particularly useful as the entertainment sector lends itself to a multidimensional focus.

3.3 The Potential Threats to Hollywood’s Global Primacy in an Evolving Landscape As Hollywood studios have long discovered, they do not operate and compete solely in the movie business, but in the larger entertainment business. When in the 1950s, the new medium of TV disrupted the media and entertainment landscape, focusing only on the movie side of the business represented a “marketing myopia” (Levitt 1975) for the Hollywood studios, as the industry and the competitive landscape had to be considered as a whole. The Hollywood studios initially missed the opportunity to expand their business by being too product-oriented (and considering themselves only as movies makers) as opposed to customer-oriented (and therefore position themselves as entertainment providers). As a result, Hollywood studios have been diversifying their investments in the entertainment industry since then, establishing a significant presence in the TV business in addition to their original core business: movies. Also, the international dimension of the entertainment business has been a key element in establishing and maintaining Hollywood studios’ leadership, as the revenue streams generated by foreign markets are oftentimes essential to recoup the original investment to create and produce content domestically. Historically, they have successfully adapted to the evolving global landscape, able to incorporate the new entertainment phenomena, as they arose, in new revenue streams, both in the creation and the distribution sides of the business. Similarly to the exploitation of entertainment content in the different “windows” of exhibition in the entertainment business, the Hollywood studios are organized to better capture the value created in the entertainment landscape and to effectively compete globally. As a result, they operate with different divisions, ranging from theatrical, television, home entertainment, animation, digital distribution, and ancillary revenues, including licensing to consumer products distributors, domestically and internationally. At the turn of the twenty-first century, however, they face new challenges with the potential of altering the existing status quo, and specifically the global primacy of the Hollywood system, whose center lies in the oligopoly comprising the studios. On the one hand, the rise of non-scripted entertainment in prime time schedules of broadcasters around the world has introduced new competitive entities in the global arena, with specific competences and know-how. On the other the ICT revolution, as it unfolds, is revealing its potentially disruptive force on the existing business practices in the creation and distribution of entertainment. Moreover, in the consumption of entertainment content, audiences also appear to be willing to have a say in its outcome. As shown in “reality TV” show votes, audiences appear to want to determine the outcome or modify existing content (through the

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3  The Drivers of Hollywood’s Competitive Advantage

Fig. 3.4  USA film and television tape rentals – Import 1992–2009. Source: Bureau of Economic Analysis (2011)

processes of remixing, YouTube videos and adaptations for example) or to plainly interact as they appropriate the entertainment content (as in video games). As a result, the combined action of these elements is affecting the entertainment landscape, with non-scripted entertainment appearing to lend itself to the digital landscape better than traditional scripted entertainment. There are signs of changes occurring in the US market. According to the US Department of Commerce’s Bureau of Economic Analysis (Koncz and Flatness 2007, p. 115), while receipts for film and television rentals generated from export still vastly exceed those generated from import, the latter have registered a much more significant increase in recent years. Figure 3.4 illustrates in particular that the import for the category has increased from US $76M in 1992 to US $1.9B in 2009. This shows that while the imbalance between US import and export for popular culture goods still remains, there are signs of contra-flows of entertainment in a more dynamic landscape (Thussu 2007). It is worth pointing out that the significant increase of imports commenced to take place in the year 2003, and it appears to be continuing to unfold at the time of this writing. In an evolving global entertainment landscape, new entities, mainly from Europe, as Endemol and FremantleMedia are successfully competing with Hollywood studios worldwide in providing prime time TV content to broadcasters, mainly non-scripted entertainment, as “reality TV” shows and game shows. These entities have been able to compete and make inroads also outside their original domestic markets, and specifically, to establish a significant presence in the United States, the largest entertainment market in the world, with all the existing barriers to entry notwithstanding.

3.3  The Potential Threats to Hollywood’s Global Primacy…

39

The rise of the new wave of non-scripted entertainment and of the European e­ ntities leaders in producing and distributing the genre has enormous implications above and beyond the flow of entertainment content within the Atlantic corridor between Europe and the United States. One of the determinants of Hollywood’s global competitive advantage in the “national diamond” framework analyzed in this chapter (the demand conditions) is being challenged by these European entities, able with this genre to successfully penetrate the American TV entertainment market. In so doing, they can effectively hamper the virtuous cycle originated by Hollywood’s predominance in its domestic, and world’s largest, market. Furthermore, the genre has successfully reached all the relevant domestic markets worldwide, introduced in the different territories with local adaptations of global formats. It is worth noticing that the revenue streams generated from television represent a significant aspect of the leading media and entertainment conglomerates’ operations. Analyzing the “sultans of the small screens” (the diversified conglomerates Time Warner, Viacom, Walt Disney and News Corp.), Thussu (2006, p. 16) points out for example that the percentage of total revenue generated by TV in 2004 ranged from 39 to 67%. As television is a relevant feature of the entertainment landscape, the global success of the aforementioned non-US entities has the potential to challenge Hollywood studios’ global leadership by competing in the increasingly relevant genre of nonscripted entertainment, both in the United States and internationally. Non-scripted entertainment appears to lend itself to local adaptations better than scripted entertainment by proposing a global format to local culturally situated audiences around the globe with local hosts, contestants, and situations, in a way not possible for example for TV comedies or drama series. Also, it can be argued, the narrative transparency is higher in non-scripted entertainment, as local audiences oftentimes are not even aware that these programs have been ideated elsewhere, rather they believe to be watching local fare. As a result, many of the elements utilized to explicate Hollywood’s global leadership with the previous interdisciplinary analysis, as narrative transparency, are clearly present on an even bigger scale in the local distribution of non-scripted entertainment global formats. In addition, cultural proximity, if not even national pride, can be triggered by these shows whose local adaptation are so central in the development of the program that they appear to be completely generated locally, as in the case for example of the currently most successful show in the US TV landscape, American Idol, which is a local adaptation of the global format Pop Idol, generated originally by FremantleMedia in the United Kingdom. The specific rise of non-scripted entertainment has then to be analyzed, with specific emphasis on the aforementioned European entities, their background and business practices, and the overall differences with scripted entertainment generated in the Hollywood system both in the creation and distribution processes and Hollywood’s reaction to the phenomenon. This analysis enables the study to explore an emerging institutional trajectory challenging Hollywood’s global predominance: the rise of non-scripted entertainment global leaders. These entities, mainly from Europe, have successfully made inroads in the US prime time schedules, somewhat reversing the

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3  The Drivers of Hollywood’s Competitive Advantage

unidirectional flow of entertainment, from the United States to Europe, within the Atlantic corridor and impacting Hollywood’s virtuous cycle described by Porter’s national diamond. In addition, these European entities operating with different business models and practices, as the local adaptations of global formats, have expanded their distribution globally, reaching all the relevant markets worldwide. Furthermore, as the ICT revolution unfolds, the global entertainment landscape is undergoing significant changes in the production, distribution of content and in its overall business practices. A new institutional trajectory is developing within the global mediascape. Digital distribution has the potential to eliminate or significantly reduce bottlenecks in the diffusion of entertainment, and in so doing, to alter existing competitive advantages. Large size distribution structures could not necessarily be the only approach to the new landscape, as the “long tail” theory suggests (Anderson 2004), and as a result the existing barriers to entry into the industry could be lowered. Digital distribution allows profitable release of few units of more titles by potentially new entities, as the costs associated with distribution diminish. In addition, the digital landscape increases the risks of unauthorized access to entertainment content under copyright, without any significant loss of quality, throughout the shelf life of entertainment products. As a result, the “windowing” model, which has been regulating the entertainment industry in the last decades, is under increased pressure, as digital distribution has the potential to replicate or amplify authorized and unauthorized access to entertainment content throughout its exploitation, ranging from theatrical to TV and home entertainment. Also, non-scripted entertainment appears to lend itself better to be consumed through these channels than scripted content (historically Hollywood’s forte). On the one hand it has potentially more interactive features (which can be exploited through SMS for example) and on the other its revenue streams are less threatened by piracy, as they are more based on their first exploitation (the TV presentation, oftentimes live) than on subsequent “windows” of exhibition, to be protected by unauthorized access. These two institutional trajectories within the global mediascape at the turn of the twenty-first century, the rise of non-scripted entertainment and the ICT revolution’s impact on the way entertainment is produced, distributed, and consumed globally by audiences have the potential to alter the existing virtuous cycle sustaining Hollywood’s global competitive advantage, analyzed in this chapter utilizing the theoretical framework combining industrial economics with insights drawn from an interdisciplinary analysis. Part II and III of the book focus the analysis on the emerging landscape, as it is being shaped by these institutional trajectories and by Hollywood’s reactions.

References Anderson C (2004) The long tail. Wired Magazine. http://www.wired.com/wired/archive/12.10/ tail.html. Accessed 1 Oct 2008 Boxofficemojo (2011) Indices - Studios - Studio Market Share 2003–2010. http://www.boxofficemojo. com/studio/. Accessed 10 Jan 2011

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Bureau of Economic Analysis – US Department of Commerce (2011). International economic accounts - US International Services - Detailed statistics for cross-border trade - Trade in services 1992–2009, Table 1. http://www.bea.gov/international/international_services.htm. Accessed 10 Jan 2011 Cohen J (2008) What I watch and who I am: national pride and the viewing of local and foreign television in Israel. J Commun 58(1):149–167 Fiske J (1987) Television culture. Routledge, London Gabler N (1988) An empire of their own: how the Jews invented Hollywood. Crown Publishers, New York Gerse S (2004) Overseas tax incentives and governments subsidies. In: Squire JE (ed) The movie business book. Fireside, New York Hall S (1980) Encoding/decoding. In: Hall S, Hobson D, Lowe A, Willis P (eds) Culture, media, language. Hutchinson, London Havens T (2006) Global television marketplace. BFI Publishing, London Jenkins H (2006a) Fans, bloggers, and gamers: exploring participatory culture. New York University Press, New York Jenkins H (2006b) Convergence culture: where old and new media collide. New York University Press, New York Katz E, Liebes T (1990) The export of meaning: cross-cultural readings of Dallas. Oxford University Press, New York Koncz J, Flatness A (2007) US International Services: cross-border trade 1986-2006, and sales through affiliates, 1986–2005. US Bureau of Economic Analysis, US Department of Commerce, US Government, Washington Levitt T (1975) Marketing myopia. Harv Bus Rev September-October:1–14 Miller T, Govin N, McMurria J, Maxwell R, Wang T (2005) Global Hollywood 2. British Film Institute, London Motion Picture Association of America (MPAA) (2010) Theatrical market statistics: 2009. http:// www.mpaa.org/Resources/091af5d6-faf7-4f58-9a8e-405466c1c5e5.pdf. Accessed 7 Jan 2011 MPAA (2011) Industry reports - Theatrical market statistics 2009. http://www.mpaa.org/policy/ industry. Accessed 10 Jan 2011 Olson SR (1999) Hollywood planet: global media and the competitive advantage of narrative transparency. In: Hill A, Allen RCH (eds) The television studies reader. Routledge, New York Porter ME (1990) The competitive advantage of nations. Free Press, New York Schiller HI (1992) Mass communication and American empire. Wesview Press, New York Straubaar JD (1991) Beyond media imperialism: Asymmetrical and cultural proximity. Critical Studies in Mass Communication 8(1):39–59 Thussu DK (2006) International communication: continuity and change. Oxford University Press, New York Thussu DK (ed) (2007) Media on the move: global flow and contra-flow. Routledge, London Tomlinson J (1991) Cultural imperialism. The John Hopkins University Press, Baltimore Trepte S (2003) The intercultural perspective: Cultural proximity as a key factor of television success. Paper presented at ICA Conference, San Diego, CA, 23-27 June 2003. http://www.universitäthamburg.de/fachbereiche-einrichtungen/fb16/absozpsy/pdf_cultural_proximity.pdf. Accessed 1 Oct 2010 Tunstall J (2008) The media were American: U. S. mass media in decline. Oxford University Press, New York Waisbord S, Morris N (eds) (2001) Media and globalization: why the state matters. Rowman & Littlefield, Lanham Wildman SS (1995) Trade liberation and policy for media industries: a theoretical examination of media flows. Can J Commun 20(3):367–388

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Part II

The Global Rise of Non-Scripted Entertainment

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Chapter 4

The New Wave of Non-Scripted Entertainment

4.1 A Twenty-First Century Global Media Success Story It is Tuesday night, April 15, 2008. As American audiences tune in to browse the available prime time shows between 8:00 and 10:00 pm on the commercial broadcasting TV networks, the offering of the leading channels include a variety of programs. These include American Idol on FOX, Big Brother on CBS (Columbia Broadcasting System), The Biggest Loser on NBC (National Broadcasting Channel), and Dancing with the Stars on ABC (American Broadcasting Company). As Nielsen would estimate the day after (Kissel 2008a), the majority of viewers opted to watch American Idol (23.6 million), while the second most watched program was Dancing with the Star (15.4 million). Also the most watched show of the night on cable TV channels was another non-scripted program, The Deadliest Catch on Discovery Channel, describing the harsh conditions of crab fishing in Alaska, attracting more than 3 million viewers, according to Nielsen (Kissel 2008a). What the above-mentioned programs have in common is that they are not taped shows following a precise script, rather they present their audiences with events whose outcomes are not predetermined and unfold before their eyes. This is not an isolated case in the US TV landscape, nor are the prime time schedules of this night particularly different from those available in other major TV markets internationally. The last 10 years have witnessed the rise of non-scripted entertainment in the prime time schedules of broadcasters worldwide. Since the year 2000 in the United States, the largest TV market in the world, foreign generated TV formats such as Big Brother, Survivor, and Who Wants to Be a Millionaire have successfully made inroads into national TV broadcasters’ schedules, attracting large audiences. Since then, the networks have been devoting significant prime time slots to non-scripted entertainment, a regular feature of their programming. Sifting through the Nielsen data of top prime time programs in the United States from 1998 to 2007, as provided by the annual publication International TV & Video Almanac, it clearly emerges that before the arrival of the non-scripted entertainment wave, scripted entertainment dominated the prime time of US national broadcasters. P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3_4, © Springer Science+Business Media, LLC 2011

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Prior to 2000, on average only one of the top ten ranked prime time programs could not be defined as typical, scripted, Hollywood entertainment content (usually sports events such as NFL Monday Night Football). Since the successful arrival of the aforementioned non-scripted shows, in the period 2000–2007, on average, half of the top ten prime time programs fell in the category of non-scripted entertainment, with new programs successfully replacing other “reality TV” shows as they decline or complementing the existing networks’ schedules, as American Idol and Dancing with the Stars. Commenting on the phenomenon, current and former US media and entertainment executives appear to concur that the rise of non-scripted entertainment brought to the fore a genre that will not disappear easily, rather they consider it a permanent feature of the landscape for the foreseeable future. The category is recognized as an established genre and it has gained its own relevance within the Emmy awards, created and administered by the Academy of Television Arts & Sciences. For example, the 61st Emmys Prime Time awards 2009 recognized excellence, within the main categories, for “outstanding host for reality or reality-competition program” (won by Jeff Probst, Survivor) and “outstanding reality-competition program” (won by The Amazing Race). The general consensus of industry executives is that non-scripted entertainment tends to be more flexible, generally cheaper than scripted entertainment and it lends itself better to integration with advertisers on the one hand and with network schedules and cross-promotions on the other. From a TV network point of view, Lisa Vebber, senior vice president of program planning and scheduling at NBC Entertainment, points out the adaptability to the evolving strategies of the network of these programs, which generally enjoy an abridged life cycle. Non-scripted entertainment can generally reach astonishing successes faster than regular scripted entertainment, rapidly becoming “a TV event you don’t want to miss in the age of TiVo” while at the same time it also tends to fade faster, with the exception of few hit shows (Vebber 2008). From an audience point of view, what is deemed attractive is the “unpredictable nature of these types of shows,” which are at the same time embedded in familiar mechanisms and environments repeated on a regular basis. They are like “a letter you get every week from someone you care about. It’s the same envelope, the same stationary, the same stamp, but inside you know that the letter will be very, very different” as Mark Burnett, top “reality TV” producer points out (Littleton 2004). Moreover, their global success and their capacity to cross national and cultural ­borders can be attributed to the fact that they are “multiepisode, easily repeatable, locally replicable and made for reasonable budgets…they can qualify for quotas [in local content] in those territories where there are quotas and hook the interest of local audiences” as Paul Jackson, director of international formats and entertainment, Granada, identifies (Moran and Malbon 2006, p. 9). In the 2007–2008 season, the prime time schedules devoted by national TV broadcaster to non-scripted entertainment was even more significant than the 34% in the time period 8:00–10:00 pm originally planned (as indicated by the trade journal

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Variety) due to the writers’ strike, as a result of the prolonged negotiations between the WGA (Writers Guild of America) and Hollywood producers affecting the production of scripted series. As the strike was being announced and enforced by the WGA, the broadcast networks strategically decided to rely significantly on non-scripted entertainment content also in their midseason schedules. The success of non-scripted entertainment has not been limited to national broadcast networks: Cable channels have also been profitably utilizing similar programs throughout their schedules. One of the first “reality TV” programs, The Real World, predates the “reality TV” wave in the schedules of US broadcast TV networks, as it was introduced in 1992 (and still running, in its 24th season in 2010) by the youthoriented music channel MTV, which has been inserting other non-scripted entertainment programs ever since. One of these programs, The Osbournes, chronicling the daily adventures of the aging rock music performer Ozzy Osbourne and his family, has been one of the biggest earning successes of the channel’s history. Originally intended to be a miniseries, it was prolonged to a 3 year production, due to its success (Bignell 2005, p. 34). Therefore, the achievements of non-scripted entertainment programs, in terms of audiences reached and consequently in terms of advertising revenues generated, are not unique to broadcast TV networks, but they encompass the whole TV landscape, including cable and satellite channels as well. Also, in addition to be a regular feature in the schedules of established network and cable channels, there are specific television channels solely devoted to non-scripted entertainment, as Fox Reality in the United States and the satellite channel Reality TV owned by Zone Vision Network in the United Kingdom (Havens 2006, pp. 142–144), showing that the genre is clearly becoming a staple of the twenty-first century television, in all its different segments. Furthermore, non-scripted entertainment has been consistently making inroads in prime time schedules of TV networks throughout the different TV seasons, irrespective of the size of the audiences and advertising markets associated with them. For example, in the 2008 US summer season a new “theme” of non-scripted shows has successfully entered the landscape, drawing on the tradition of Japanese TV, with the programs Wipeout and I Survived a Japanese Game Show aired in prime time by ABC (Kissel 2008b). The show Wipeout is produced by the American unit of the Dutch-based “reality TV” conglomerate Endemol with local US producers (Pulse: Creative), while I Survived a Japanese Game Show is produced by US producers (A. Smith & Co. Productions and Babyfoot). They are both inspired by the established Japanese tradition of TV contests comprising exaggerated stunts performed by the participants, usually presented multiple times to the audiences including slow motion replays. They both also add twists of conventional elimination “reality TV” programs. The boundaries of the genre keep evolving while still seemingly expanding and, as Hill (2007, p. 29) puts it “a picture emerges of a viewer navigating their way through a busy, noisy and constantly changing factual television environment.”

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4.2 The Category of Non-Scripted Entertainment: A New Genre? The category or “genre” of non-scripted entertainment comprises vastly different kinds of programs. The defining element uniting these programs into one category is that they document non-scripted events, usually without featuring professional actors, whose outcome has not been previously determined. When celebrities, including actors, do appear in these shows, they do not follow scripts, but instead insert themselves in the situations presented, as they unfold, as in the case of Dancing with the Stars or The Surreal Life for example. These programs can be presented live to an audience or they are previously recorded (in the latter case what is being presented to the audiences undergoes a significant process of editing and other postproduction techniques). There does not appear to be controversy in academic conversations on the topic that the term “reality TV,” widely utilized in trade journals and television jargon to describe and categorize the new wave of non-scripted entertainment, does not capture the essence of the phenomenon and actually tends to mislead as “it does not hold up to scrutiny” (Brenton and Cohen 2003, p. 8). The term “reality TV” is deemed a “misnomer, perhaps even an oxymoron” (Andrejevic 2004, p. 16), due to the “intrinsically selective nature of the editing process and the artificiality of the situations in which contestants are filmed” (Brenton and Cohen 2003, p. 8), ranging from being secluded in a house without any contact with the external world, as in the case of Big Brother, or marooned on a desert island or other remote and inaccessible locations, as in Survivor. Also some industry insiders appear to have agreed that the term “reality TV” is a misnomer since the beginning of the rise of the genre (Bart 2001). Another term “factual entertainment” is oftentimes utilized in corporate parlance and websites, especially in the United Kingdom, whereas the divisions responsible for this genre of programs within the US entertainment industry entities, from Hollywood studios to network TV and talent agencies, are usually defined as “alternative programming.” While there are different expressions to indicate this genre, “non-scripted entertainment” is the preferred term utilized throughout this book, as it is deemed more extensive and therefore more able to capture the evolving nature of the phenomenon. The genre, comprising diverse TV programs, inserts itself in a continuum of TV offerings having at the two extremes live events (similar to sports events) on one side and scripted content including professional talent employed behind and in front of a camera on the other. There have been attempts to categorize the different subgenres within non-scripted entertainment, identifying similarities and differences among programs. For example, Biressi and Nunn (2005) distinguish event TV programs (the “water cooler TV”), the must see shows, from the “group challenge” shows with a “Darwinian game show ethos,” and the ones devoted to a “therapeutic-domestic space” (2005, p. 13). The imagination and creativity of format developers on the one hand and the producers and broadcasters on the other have been devising and delivering new non-scripted entertainment content in different shapes and formats, since it became apparent that

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audiences worldwide were embracing the new genre. In this context, different facets of human life have been shown as a spectacle for audience consumption: from professional activities to job search, from elimination or game shows to dating-based competitions, from self-improvement to fear-centric activities. In general, what appears to attract audiences is the “spectacle of the real,” which has become a “powerful presence in many aspects of contemporary audio-visual media culture” in our postmodern society (King 2005, p. 21). Andrejevic, analyzing the show Big Brother, situates the phenomenon within broader “societal developments that are reorganizing the division between labor and leisure, consumption and production, shopping and watching TV” (2004, p. 8). He specifically points out the signs and anticipates the rise of “a world in which we will create value for advertisers and marketers by allowing ourselves to be watched as we go about our daily routines” (Andrejevic 2004, p. 8), raising concerns about the spectacle of “fun surveillance.” Furthermore, as the flow of entertainment crosses national and cultural borders, the end result can be defined as “the globalization of privacy publicized” (Bignell 2005. pp. 40–41). The top show in the United States in the first decade of the twenty-first century, American Idol, falls into the category of elimination shows, drawing on the tradition of talent shows ranging from Ted Mack’s Original Amateur Hour and Arthur Godfrey’s Talent Scout to Star Search. The show is the American adaptation of the format Pop Idol distributed by FremantleMedia, a United Kingdom unit of the German media conglomerate Bertelsmann. The different subgenres call for different sets of professional skills. Oftentimes they draw on existing and already established Hollywood professional figures, but they also generate the need for new ones. Some of the non-scripted entertainment shows rely on documentary style narratives and techniques within a cinéma vérité approach, filming events as if the cameras were invisible or not noticed by the participants. Examples are provided by shows as Survivor and The Real World, where participants are followed in their daily activities by cameras trying to capture the most salient or entertaining events as they unfold. Other programs replicate the dynamics, and the professional skills, of typical game show genres, as in the shows Deal or No Deal or Who Wants to Be a Millionaire?, where the actions takes place in a TV studio in front of live audiences. The resurgence of this technique in non-scripted entertainment has transcended the genre, appearing as a distinctive feature also of scripted entertainment as for example in the series The Office (a UK series adapted, with more success than the original, in the United States). Oftentimes the scale or the nature of some of these projects, as in the case of the aforementioned Survivor, which takes place in exotic and remote locations, call for specific professional skills, similar to large productions usually previously only associated to big budget feature-length motion pictures. Also, for all the programs that are not live or entirely live, the need of editing is clearly essential in the final outcome of the content proposed to the audiences. The rise of non-scripted entertainment does not appear to have significantly altered the professionals activities involved in the production of entertainment, especially for those involved in the “below the line” activities, as these shows

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need cameramen, set designers, editors, etc. already present in the Hollywood professional landscape. Also, established Hollywood professionals have joined the genre, as in the case of producer Jerry Bruckheimer, with a successful background in TV and films, producing the Emmy award winning non-scripted entertainment program The Amazing Race. New players have also emerged such as, for example, Mark Burnett, the producer of many shows including Survivor. However, the new genre has introduced in the United States and around the world new entities, the format developers and distributors, many of which are not part of the Hollywood system, as defined in the previous chapters: Many of the relevant players of the non-scripted global TV format landscape are part of European media and entertainment conglomerates. Interestingly enough, the US entertainment industry’s global leadership does not extend to the global sports arena: Typical US sports, as baseball or football or car racing competitions like NASCAR, do not travel well internationally as they are not practiced by global audiences (only basketball to a certain extent can be defined an American sport played and watched globally). Unlike these originated in the United States, other sports have a true global reach, such as the soccer FIFA World Cup or the Formula 1 racing competitions, which have a non-US origin and a global distribution. For example the Fédération Internationale de Football Association (FIFA) (2006) reports that the 2006 World Cup had an estimated cumulative television audience of 26.29 billion across 214 countries and territories, and that the final match alone attracted an estimated global audience of 715.1 million viewers, while Business Week (Ewing and Rossant 2004) estimates at US $1B globally the value of the business generated annually by the Formula 1 competitions, stemming from broadcast rights, merchandising, and track revenue. Sports could be categorized as the ultimate non-scripted entertainment programs, as they attract audiences interested in witnessing competitive events, as they unfold. Similarly to what takes place in the international media distribution of sport events, the US global entertainment advantage does not appear to include the non-scripted entertainment landscape, whereas it is still solid in the scripted entertainment, movies, or TV content, as analyzed in the previous chapters. Although, as mentioned earlier, there has been a dramatic surge of worldwide demand for non-scripted entertainment in the last decade, the genre per se is not entirely new. Non-scripted entertainment has always been a regular feature in broadcast TV schedules since the advent of the new medium in the late 1940s. It actually even predates the roll out of TV sets, as the radio show Candid Microphone inspired the TV program Candid Camera, originally aired in the United States in 1948 and considered one of the ancestors of the current “reality TV” phenomenon, as it depicted ordinary people being caught on camera reacting to practical jokes. An argument could be made that reality-based entertainment is as old as human society itself, and its roots could be traced to ancient spectacles provided by the Roman circus for example (Andrejevic 2004, p. 65). A specific relationship between films and notions of the “real” is also traceable back to the nineteenth century French National Assembly works, deeming cameras as “an instrument of objective knowledge,” just like thermometers, barometers, and microscopes, and in so doing claiming the

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object for scientific purposes, as argued by the radical deputy François Arago in 1839 (Brenton and Cohen 2003, pp. 13–14). Non-scripted entertainment programs like game shows quickly became a staple of the then new medium television in the 1950s, taking advantage of its revolutionary ability to broadcast live images across the nation and allow audiences to witness events as they unfolded. The genre’s popularity declined significantly and abruptly in the late 1950s as a result of the scandals stemming from the unraveling of disturbing details of the corruption cases which allegedly took place in the hugely popular game show Twenty-One, where selected contestants were found to be given the game show questions in advance. These episodes significantly undermined the major premise of these kinds of shows, their authenticity: “I have deceived my friends, and I had millions of them” confessed in a read statement the contestant Charles Van Doren before the US Houses of Representatives oversight subcommittee. As a result, big-prize quiz programs disappeared from the prime time networks’ schedules, replaced by scripted Hollywood series (Barnouw 1990). In the aftermath of the scandals surrounding the authenticity of game shows, the fall schedules of broadcast networks in 1959 featured more than 30 new Hollywood series, mainly westerns, and “prime-time television settled for a steady diet of telefilms” for years to come (Barnouw 1990, p. 248). In the following decades non-scripted entertainment survived in the schedules of broadcast TV networks, albeit on a minor scale, almost always relegated whether in day time (having left the more lucrative prime time) or on networks attracting smaller audiences. However, the relevance of these shows in the TV landscape goes beyond their success and popularity, or lack thereof, at the time of their airing, as they constituted a pool of creative ideas for non-scripted TV programs, which future creative endeavors in the landscape could draw upon. Some of these shows inspired the more successful new wave of non-scripted programs, as the aforementioned talent shows for examples, which the current most popular TV show in the United States, American Idol, clearly draws on. Also, for example, Jon Murray, the producer of the aforementioned non-scripted show The Real World, has stated to have been inspired for his show by the 1973 PBS series An American Family, which chronicled the daily non-scripted adventures of a family, and decided to produce a “remake for the MTV generation” (Andrejevic 2004, p. 71). The distinctive features of the new wave of non-scripted entertainment programs compared to their “forefathers” is that they are now a stable element of prime time schedules of TV broadcasters and they have access to and they generate significant economic resources, allowing these show to have higher production value, and consequently higher budgets. Shows like Big Brother or Survivor have production crews and resources unthinkable for similar productions only a decade ago, as they generate significant advertising revenue streams. Also game shows, as Deal or No Deal or Who Wants to Be a Millionaire have cash prices, whose value vastly exceeds those of previous similar shows. Their specific arrival at the turn of the twenty-first century in prime time schedules of TV networks worldwide stems from a combination of different and distinct elements. On the one hand, there was a surge in Europe of new entities generating successful

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TV formats, which quickly expanded their reach overseas, in a competitive environment where the ICT revolution was beginning to show its disruptive potential. On the other, in the United States there were also concerns originated by talent strikes, as a result of extended and difficult negotiations between the actors’ union SAG (Screen Actors Guild) and producers (McNary 2001). New formats coming from overseas, and not significantly affected by talent strikes, appeared oftentimes to provide an appropriate solution to the temporary problem. Their success, however, brought about the resurgence of the genre of nonscripted entertainment, previously deemed “not ready for prime time,” and established it as an essential component of entertainment content in the twenty-first century TV landscape. Also, evolving research in the field of cultural studies pointed out, by exploring the role of celebrities in the modern social realm, that the cultural milieu in Western societies was becoming more receptive in accepting the mediated interactions of ordinary people with hybrid media forms. The new “reality TV” formats rendered possible these interactions through “complex processes of identification and voyeurism” (Biressi and Nunn 2005, p. 144). In addition, audiences appeared willing and able to participate in the televised events, and to partake in determining their outcomes whenever possible. “Reality TV” could therefore be considered as a “changing vehicle for the representation of ordinary (that is nonelite) people and a platform for the projection of ordinary voices,” even though “the ‘politics’ of the more popular factual programming and reality TV in particular is quite differently articulated” (Biressi and Nunn 2005, p. 155). Moreover, other intellectual voices brought to the fore some problematic features of the phenomenon in the era of digital media, as the issue of surveillance, as a result of the loss of privacy, generated by shows like Big Brother, which thrives in the underlying premise to “collapse the distance that separates those on either side of the screen by cultivating the fantasy that ‘it could be you up there on that screen’” (Andrejevic 2004, p. 9). Overall, the rise of non-scripted entertainment appears to be an aspect of a larger trend affecting many consumer-oriented industries at the turn of the twenty-first century. More sophisticated and savvy consumers appear to be increasingly inclined toward and motivated by a quest for authenticity as they make their selection among different products to satisfy diverse needs. To try and capture this demand for authenticity arising from consumers, marketers are increasingly proposing products or services providing “real experiences,” made with “real fruit,” based on “real Italian recipes,” etc. The “commercially sold reality,” as this phenomenon unfolding in many consumers’ markets has been defined, is an attempt from profit-oriented entities to paradoxically render “commerce less commercial” (Gilmore and Pine 2007, pp. 10–12). The goal would be to attract audiences born and raised in a media environment characterized by aggressive and ubiquitous marketing campaigns, and therefore less receptive of or permeable by classical marketing communication techniques. The success of the diffusion of non-scripted entertainment therefore could represent another facet of consumers’ reactions to what is perceived to be commercial entertainment. The quest for authenticity appears to have extended also to the demand for entertainment, once mainly the destination landscape for fantasy, mood management,

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or escapism in our society. The narrative elements however appear to remain essential in non-scripted entertainment, albeit delivered differently through editing and a combination of formats, casting of nonprofessional individuals and local adaptations. This element is clearly perceived by industry professionals: As Lisa Vebber, senior vice president program planning and scheduling NBC Entertainment, puts it “people are interested in stories, scripted or non-scripted” (Vebber 2008). There is a specific Achilles’ heel for non-scripted entertainment however, as the scandals leading to the decline of game-shows in the 1950s in United States demonstrate: The cornerstone of the appeal of these productions lies in their perceived authenticity, which makes the unpredictability of the outcome of the events presented potentially riveting as in live sports event and the emotions and social interactions of the protagonists interesting. These shows generate a spectacle audiences can relate to and feel compelled to emotionally participate in. If this element is absent, there would be a diminished interest in watching nonprofessional individuals perform a badly conceived script.

4.3 The Dark Side of “Reality TV”: Issues and Concerns Stemming from the Rise of Non-Scripted Entertainment The worldwide success of non-scripted entertainment programs did not come without controversies. Concerns have been voiced on the “dark side” of “reality TV” shows like Big Brother, pointing out the potential negative effects on the contestants and the viewers of the show alike, in addition to lower aesthetic standards oftentimes associated with these programs. These concerns stem, in this case, from the experimentlike conditions of the program depriving the contestants of some basic elements of privacy while encouraging voyeuristic tendencies in the audiences who are watching the edited events on TV or the live feed through the Internet at home. Since the beginning of the new wave of non-scripted entertainment, cases of contestants negatively impacted after their participation with these programs abound, and do not appear to cease as the genre has reached an established popularity. For example, controversies surrounded the very first edition of Big Brother broadcast in the Netherlands, with the local Institute of Psychologists warning contestants not to take part as “the damage could be really serious” (Bazalgette 2005, p. 132). More recently, rumors regarding the alleged nervous breakdown of the runner up of the 2009 edition of Britain Got Talent circulated after the finale of the show, which reached almost 70% of the national audience in the United Kingdom (Clarke 2009). The sudden rise to mediatic fame appears to create an emotional imbalance and rollercoaster for the contestants of non-scripted entertainment, oftentimes catapulted unprepared into the lime light of multimedia platforms. Interestingly, an interdisciplinary research at the University of Southern California (Young and Pinsky 2006) has shown that contestants of reality TV shows tend to exhibit more narcissistic traits than the average population, and even more than the professionals working in the entertainment industry, such as actors, musicians, etc. They appear to be looking for the coveted celebrity status the show might provide,

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even if this is in most cases short lived. It is worth noticing, though, that after the novelty of the first seasons has passed, the individuals who voluntarily enter the show appear in general to be aware of the experience awaiting them in the contest (they are avid fans of the show and usually they have carefully watched the previous versions on DVD) and as a result are less vulnerable vis-à-vis the challenges they face. Studies on the phenomenon have pointed out the dangerous allure and risks of “reality,” as it is proposed by non-scripted entertainment to its audiences (see for example Murray and Ouellette 2009). Also, concerns have been raised by the consequences of the potentially interactivity nature of non-scripted entertainment shows under corporate control, “monetizing the public in its participatory tendencies” as in the example of American Idol (Kjus 2009), where audience participation through their votes is turned into another revenue stream for the producers and distributors of the show. Intellectual voices have brought to the fore concerns over labor issues specifically associated with the new genre. In general, the changing international division of labor (Mosco 2008, p. 110) involve the entertainment industry workers within the broader category of the “knowledge workers,” as pointed out for example by the work of Miller et al. (2005) specifically addressing the issue of global entertainment workers. In this framework, “reality TV” appears to propagate the international division of labor “within an increasingly deregulated and market-driven global television economy” (McMurria 2009, p. 196). The individuals involved in the production of non-scripted entertainment appear to have less leverage in the complex negotiations taking place within the entertainment industry, compared to professionals working in the scripted entertainment sector, usually associated in guilds, such as the aforementioned WGA and SAG. Also, the trade journals reveal signs of the malaise surrounding the business practices of non-scripted entertainment involving labor: allegations of “sweatshop” like conditions for workers involved in “reality TV” productions in the United States, with format owner holders violating wage and hour laws (Benzine 2009), and in general, weaker negotiation power compared to their unionized scripted entertainment counterparts. Within this theme of inquiry, other studies have also focused on the dynamics and contrasts between the representation of labor and labor behind the camera in “reality TV” shows as The Simple Life and Project Runway (Hendershot 2009). In general, the cost-cutting strategies of TV networks, which contributed to the rise of the genre in the TV landscape (Raphael 2009), also appear to involve labor associated with the productions. Programs such as Big Brother can be analyzed as a prime example of the strategy of minimizing costs of TV entertainment “through casting cheap labor in the form of D-list celebrities or ‘ordinary’ folks” (McMurria 2009, p. 180). To explore in more depth the phenomenon of the rise of this new wave of nonscripted entertainment, with its genesis, expansion, and ramifications, the following Chap. 5 specifically analyzes the show Big Brother, one of the most successful global “reality TV” formats, to shed light on the origins and business practices of this new wave of programs, their production and global distribution and adaptations.

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References Andrejevic M (2004) Reality TV: the work of being watched. Rowman & Littlefield, Lanham Barnouw E (1990) Tube of plenty: the evolution of American television. Oxford University Press, New York Bart P (2001) Media moments of 2000 worth forgetting. Variety. http://www.variety.com/article/ VR1117791851.html. Accessed 30 Nov 2007 Bazalgette P (2005) Billion dollar game: how three men risked it all and changed the face of television. Time Warner Books, London Benzine A (2009) Fremantle faces “sweatshop” claims. C21 Media. http://www.c21media.net/ news/detail.asp?area=1&article=48370. Accessed 2 April 2009 Bignell J (2005) Big brother: reality TV in the twenty-first century. Palgrave MacMillan, New York Biressi A, Nunn H (2005) Reality TV: realism and revelation. Wallflower Press, London Brenton S, Cohen R (2003) Shooting people: adventures in reality TV. Verso, London Clarke S (2009) ‘Talent’ gets 69% share for finale: Susan Boyle lose contest to dance troupe. Variety. http://www.variety.com/article/VR1118004364.html?categoryid=14&cs=1. Accessed 10 June 2009 Ewing J, Rossant J (2004) Will the big wheels walk away from Formula 1? Business Week. http://www. businessweek.com/magazine/content/04_27/b3890059_mz054.htm. Accessed 30 June 2008 Fédération Internationale de Football Association (FIFA) (2006). No. 1 sports event. http://www. fifa.com/mm/document/fifafacts/ffprojects/ip401_06e_tv_2658.pdf. Accessed 30 June 2008 Gilmore JH, Pine BJ II (2007) Authenticity: what consumers really want. Harvard Business School Press, Boston Havens T (2006) Global television marketplace. BFI Publishing, London Hendershot H (2009) Belabored reality: Making it work on The Simple Life and Project Runway. In: Murray S, Ouellette L (eds) Reality TV: remaking TV culture, 2nd edn. New York University Press, New York Hill A (2007) Restyling factual TV: audiences and news, documentary and reality genres. Routledge, New York King G (ed) (2005) The spectacle of the real: from Hollywood to reality TV and beyond. Intellect Books, Bristol Kissel R (2008a) “Loser” finale a winner for NBC. Variety. http://www.variety.com/article/ VR1117984116.html. Accessed 17 April 2008 Kissel R (2008b) “Wipeout” sweeps over competition: ABC show premieres to top numbers. Variety. http://www.variety.com/article/VR1117988061.html. Accessed 27 June 2008 Kjus I (2009) Idolizing and monetizing the public: the production of celebrity and fans, representatives and citizens in reality TV. Int J Commun 3(2009):277–300 Littleton C (2004) Dialogue with producer Mark Burnett. The Hollywood Reporter. http://www. hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000518943. Accessed 17 April 2008 McMurria J (2009) Global TV realities: international markets, geopolitics, and the transcultural contexts of reality TV. In: Murray S, Ouellette L (eds) Reality TV: remaking TV culture, 2nd edn. New York University Press, New York McNary D (2001) How SAG and producers got to this point. Variety. http://www.variety.com/ article/VR1117802125.html. Accessed 17 Nov 2007 Miller T, Govin N, McMurria J, Maxwell R, Wang T (2005) Global Hollywood 2. British Film Institute, London Moran A, Malbon J (2006) Understanding global TV format. Intellect Books, Bristol Mosco V (2008) Knowledge workers of the world! Unite? Communication. Cult Crit 1(1): 105–115 Murray S, Ouellette L (eds) (2009) Reality TV: remaking TV culture, 2nd edn. New York University Press, New York

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Raphael C (2009) The political economic origins of reali-TV. In: Murray S, Ouellette L (eds) Reality TV: remaking TV culture, 2nd edn. New York University Press, New York Vebber L (2008). Personal, unstructured interview conducted with Lisa Vebber, senior vice president program planning and scheduling at NBC Entertainment, on 11 April 2008 Young SM, Pinsky D (2006) Narcissism and celebrity. J Res Pers 40(5):463–471

Chapter 5

The Dynamics of Non-Scripted Entertainment: Formats and Local Adaptations

5.1 A Global TV Commercial Success: The Big Brother Format On September 17, 1999, surrounded by curious anticipation and growing concerns, a new show aired on the Dutch TV channel Veronica, owned by the European conglomerate RTL. A selected number of contestants agreed to spend a few weeks in a secluded house without any contact with the outside world, while constantly being watched and recorded by ubiquitous cameras and microphones following their every move during the entire experience. A process of elimination of the contestants on a regular basis, the “eviction,” created the central mechanism of the game until the last remaining participant won the final prize. As the winner of the show triumphantly exited from the secluded house more than 3 months later, at the turn of the new millennium, the success of the new program, providing the TV channel with ratings vastly superior to their regular average, had already attracted the attention of TV executives around the world. The show’s title was Big Brother, echoing Orwell’s novel 1984, and its commercial success prompted TV networks worldwide to adopt the format and air the locally adapted program in their primetime schedules. Already by the year 2000, broadcasters in major TV markets, including the United States, the United Kingdom, Germany, Italy, and Spain, had aired their first versions of Big Brother. The subsequent success of the localized versions of the program further expanded the appeal and demand for the show, which was adopted, and adapted, by broadcasters all around the world well beyond the first European and North American countries aforementioned. The program made inroads in TV landscapes in Latin America, Oceania, Africa, Middle East, and Asia: a true case of an unprecedented global TV phenomenon. Its success, combined with the spectacular contemporary commercial results of other two nonscripted entertainment programs, Survivor and Who Wants to Be a Millionaire?, spearheaded the new wave of “reality TV” shows, oftentimes based on the formula of TV formats developed globally and adapted locally, which is still unfolding.

P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3_5, © Springer Science+Business Media, LLC 2011

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The original idea of the show developed by the Dutch company Endemol, under the working title The Golden Cage, was to have contestants live in the secluded house of the game for an entire year, while they had to contribute to their selfsufficiency (by growing their own food for example). Only the abridged and modified version of the show, however, was ultimately accepted by broadcasters under the name Big Brother, even though, interestingly enough, Endemol’s chief John de Mol never properly read “nor would he ever” Orwell’s 1984 (Bazalgette 2005, p. 111). The program, as predicted on the eve of the premiere of the show by John de Mol addressing his team of collaborators, became for Endemol what “Mickey Mouse is for Disney,” as Peter Bazalgette, one of the former top executives of the company and responsible for its introduction in the United Kingdom, recalls (2005, p. 143). As the show successfully crossed national and cultural boundaries, it became a regular feature of primetime schedules of worldwide TV networks. The original format has been adapted in local languages, whether with the same title, utilizing specific local subtitles varying from country to country (and from season to season), or with a different one, as in cases in France with Loft Story and Secret Story. The specific subtitles’ name adapted by local versions also vary ranging for example from Zero Privacy (Belgium), to The Wall (Greece and Norway), The Battle (Germany), Project DNA – Do Not Assume and Summer of Secrets (USA), etc. Bignell (2005, pp. 53–59) specifically analyzes the comparative success of Big Brother in different countries, not only in terms of ratings and audience shares achieved by the program, but also in its role in defining the brand and profile of the hosting channel. The analysis of the results across the different territories (for example the disparity of success of Survivor and Big Brother in the United States and in  Europe) appears to point out that “rather than a homogeneous and monolithic notion of contemporary television, Reality TV … exists in a dynamic state where uneven and negotiated processes need to be recognized” (p. 59) and “forces of ­globalization and localization operate interdependently” (p. 58). While the central format of the show remained the same, with the elements of the contestants secluded in a house and competing to remain the last standing individual after subsequent rounds of eliminations, local adaptations have inserted all sorts of twists and variations to the original version. As subsequent seasons are being developed by local producers in combination with TV broadcasters, “all stars,” “VIP,” or teenager’s versions have been introduced, different housemates’ exchanges have been practiced, and differences in the eviction process have been utilized. Furthermore, attempts to increase its interactivity have been experimented with, as in one US edition where a contestant, “America’s player,” received directions directly from the audience on how to play, not unlike other non-scripted programs (as in Fremantle’s American Idol, where audiences vote for their favorite contestant, hence influencing the outcome of the competition as it unfolds). Additionally, there have been multiregional versions of Big Brother, where contestants came from different countries within the same regions: Africa, Balkans, Middle East, Latin American Pacific Rim, and Scandinavia. In these instances, ­contestants representing their countries enjoyed, in addition to their new found celebrity status, a special connection with the local national prides of their countries of origin.

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For example, in the case of the pan-African version, the winner from Zambia was dubbed the “African queen” (Bazalgette 2005, p. 267), not unlike a beauty ­pageant contest winner. These non-scripted events with participants from different countries of the same region appear to draw on former European Broadcasting Union (EBU) live shows as Jeux Sans Frontières, where teams coming from little European towns would compete in ability games representing their home countries, or the Eurofestival singing contest, where different pop singers, representing their respective European countries of origin, would sing and compete at a live event to be voted the winners by a pool of international judges. The relevance of these shows, which contributed for example to the rise of the Scandinavian pop group Abba, once very popular in the 1970s and broadcast in Eurovision, has declined significantly in the last decades. The local adaptation of the international format appears to be essential for the success of the program, as both the hosts and the contestants reproduce local cultural dimensions and the ambience also is structured to better resonate with local audiences. In Australia for example network executives carefully designed the environment to recreate the distinctive Australian lifestyle to make the dwelling of the contestants of the local version of Big Brother “a real Aussie home,” creating in the audience the feeling to be experiencing “a national thing” (Roscoe 2004, p. 312). The Hindi version aired by Sony’s satellite TV channels opted instead to include as participants D-list film actors, models, and TV personalities, choosing “those who had relationship histories in hope of sparkling interest in the house” (McMurria 2009, p. 188). Therefore, in addition to a format with proven track record, the success of the show is dependent upon the choices made by local producers and broadcasters. Local producers are in charge of crucial decisions affecting the final creative output: casting, editing, and the overall ambience of the show. In the words of a former Endemol top creative executive, the three crucial factors in the production process are “casting, casting, casting” (Bazalgette 2005, p. 152). The choice of the right contestants is deemed central to activate the mechanism of audience resonance with the program, by reproducing familiar local social dynamics, and to ­create entertaining events stemming from their interactions within the household. As the program shows “normal life” events as they unfold, the right mix of characters is essential to produce interactions worth watching for audiences at home. In addition, the editing process is a key element, as the final outcome of the program undergoes a postproduction process to entice the audiences. Only portions of the show are aired live and the majority of what is broadcasted is taped and edited. Postproduction techniques serve multiple purposes: They help, in addition to the predetermined format, to create stories out of the footage stemming from the different cameras, guiding the narratives of the event, not unlike scripted shows, with cliffhangers and drama building throughout the show. The postproduction processes also avoid on the one hand potential issues stemming from live incidents, and on the other they extract the most salient moments out of the lives of the contestants as they are being recorded without interruption for the entirety of their stay in the house. From the start, the show executives have considered Big Brother as an ideal multiplatform product for the twenty-first century media and entertainment landscape.

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In addition to the traditional free-to-air broadcast TV run of the show, supported by advertising revenues, other media venues have been utilized. Both television channels and the Internet, generating Pay TV or Pay Per View revenues, allow audiences to have access to the secluded house, where camera and microphones follow the contestants’ every move in real time and throughout the day (Adalian 2007). Another central distinctive aspect, compared to scripted entertainment, is the possibility of the show to better allow product placement (and as a result incremental advertising revenues) and cross-promotional activities for the local broadcaster, being live and potentially open to insert commercial messages. This is a specific potential of non-scripted entertainment, as scripted entertainment is generally produced well in advance and with a “closed” narrative, which prevents significant changes, interruptions, and modifications from outside entities once the final product is edited.

5.2 Global, Local, and “Glocal” Factors From a theoretical standpoint, analyzing the drivers of the global success of Who Wants to Be a Millionaire?, and drawing on uses and gratifications theory adapted for the twenty-first century globalized media landscape, Cooper-Chen provides a useful theoretical framework applicable for the analysis of the global success of Big Brother and the broader category of non-scripted entertainment, as they are distributed globally and adapted locally (Cooper-Chen 2005, pp. 238–248). She specifically identifies three levels of factors necessary for the successful adaptation of global shows: global, local, and “glocal.” Global factors refer to the cognitive, affective, personal integrative, social integrative, and tension release needs, which individuals seek to fulfill with mass media consumption: These factors tend to be universal. In Who Wants to Be a Millionaire?, cognitive needs are satisfied by the acquisition of knowledge from the show, affective needs by the pleasurable fun of playing a game, personal and social integrative needs by the familiarity of the situations proposed, and tension release needs by the relax provided by the dynamics of the show (Cooper-Chen 2005, pp. 238–242). Local factors relate to the specific differences in various cultures and they can be identified by Hofstede’s five main dimensions of cultural variability: power distance, individualism, masculinity, uncertainty avoidance, and long-term orientation. For example, applying these dimensions of cultural variability, Cooper-Chen identifies four distinct “Cultural Continents” sharing similar traits: Western, East Asian, Latin, and Equatorial (Cooper-Chen 2005 p. 243). “Glocal” factors refer to the local adaptation of the show. They take place in different dimensions of the program: content, personnel, production/scheduling, audience, critical reaction, and convergence with new technologies. These dimensions are essential in reproducing familiar dynamics to the local audiences in terms of gender, age, and ethnicity/nationality for example (Cooper-Chen 2005, p. 244). The combined harmonic action of these three factors is activated by successful global shows, providing an example of the rising phenomenon of “glocalization” of entertainment, also identified by Kraidy (2003) and Straubhaar (2007) as a key framework

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within the evolving flow of entertainment in the international communication landscape, that “will likely characterize the global TV scene for years to come” (Cooper-Chen 2005, p. 250). The global success of Big Brother, as described in its launch and global diffusion, can be explicated by this framework, as the program activates and integrates global, local, and “glocal” factors. By contrast, scripted entertainment does not usually lend itself to successful adaptations to local markets and cultures, as its capacity to replicate local and “glocal” factors is intrinsically more limited than non-scripted entertainment (the script has a closed structure, whereas non-scripted entertainment is by nature flexible and it is shaped by local adaptations). The acceleration of the phenomena of globalization is impacting business practices worldwide across different sectors in all the phases of the value chain. Markets are becoming more and more intertwined and it has become imperative for all entities operating in the twenty-first century to analyze their consumers and their competitive landscape in global terms. The ability to effectively do so provides a key competitive advantage in order to create, capture, and deliver value in an evolving global landscape. Consequently, marketers of various categories of products distributed internationally by transnational corporations have to make marketing decisions within the global–local dilemma on a regular basis as they approach different local markets and culturally situated consumers (see for example Keegan and Green 2008; de Mooij 2010). Non-scripted shows, while developed for a global distribution, are extremely adaptable locally, and they appear to constitute an effective answer to the global–local dilemma, and an implementation in the media and entertainment sector of the approach “think globally, act locally.” In addition, the increased interconnectedness of the contemporary world also contributes to create “local-to-local” connections in local adaptations of global formats, as pointed out by Kraidy and Murphy (2008) in analyzing the adaptation of another Endemol format, Fame Academy by the Lebanese Broadcasting Corporation, mediated by the French adaptation of the same format. The increasingly complex and multifaceted connections between local and global dimensions fostered by the business practices of global television formats adapted locally prompted the above mentioned scholars to specifically focus on the phenomena of translocalism in global communication studies, paying attention to local-to-local connections in the global context, above and beyond the global–local dynamics. Moreover, the differences in success in varying territories can be explicated similarly, as differences in local/“glocal” factors or lack of harmonization among global and local elements. There have been instances where the adaptations of the global format failed to meet the local cultural standards, with all the efforts of local producers notwithstanding. For example, in 2004, the Middle East version of Big Brother, broadcast by the Middle East Broadcasting Company from the Persian Gulf island of Bahrain, was forced to close down the production after only 8 days as a result of the growing concerns and open protests of local audiences irritated by what they deemed indecent and sinful behaviors of the contestants in the show. This extreme measure was decided even though specific adjustments had been put in place to adapt the program to local mores, as the house was carefully designed to have for instance separate sleeping quarters and prayer rooms for male and female contestants (Bazalgette 2005, pp. 252–259).

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In addition, the local adaptations of the global format Big Brother lend themselves to be delivered via multiple, digital platforms. For example, the 2008 tenth edition of the program broadcast in the United States by CBS was made available across the CBS audience networks, comprising the broadcast TV network CBS, the Pay TV channel Showtime, online platforms such as the website CBS.com and others in partnerships with online players (AOL, Microsoft, CNET Networks, Yahoo, Comcast, Joost, Bebo, and Veho among others), social application partners (Automatic, Brightcove, MeeVee, and vSocial among others), and the CBS Mobile Network (presented on MediaFloTV’s mobile TV service) (Consoli 2008). The content proposed varied from the original edited episodes to live uncensored feeds, “after dark” editions, photos, video clips, and other materials from the program (ringtones, wallpapers, live “house alerts” etc.). Audiences could participate also in interactive activities connected with the program: They could for example incorporate clips into their blogs, and interact on the message board of the program. CBS partnered also with AirPlay to create a live interactive mobile Big Brother game, where fans could participate in the “live TV challenge” associated with the show to win a trip and participate in the live season finale of the program in Los Angeles (Consoli 2008). The multiple platforms utilized by CBS are able to attract and retain younger audiences, usually more looked after by advertisers. As viewers of network TV tend to grow older (in the United States the average age has reached 50 years), Big Brother is still able to capture on average a younger audience: Specifically, while the median age of CBS viewers in 2008 was 54, the Tuesday edition of Big Brother’s was 45 (being the program reaching the youngest audience for the network, tied with How I met your mother and Kid Nation) (Schneider 2008). The commercial success of Big Brother did not come without incidents, as the intrinsic nature of the show, depicting the lives of contestants without privacy and under stressful situations, generated negative reactions throughout its run by a growing number of detractors, who pointed out its distasteful or eerie aspects. In addition, specific incidents taking place in many local versions of the show prompted different reactions, and contestants had been asked to leave the show as a result of their behavior, whenever this was deemed inappropriate by the local broadcaster. In general, as illustrated in the previous chapter, the phenomenon of the new wave of nonscripted entertainment has generated in the last decade successful programs attracting large audiences worldwide, but also criticisms from different voices globally ­questioning the nature of this genre and the dangers associated with its increasing mediatic presence.

5.3 The Reality of Global TV Formats In part I of the book, an analysis has been conducted on the best business practices regulating the entertainment business, domestically and internationally, adopted by the global leaders of the industry: the Hollywood studios. Through a carefully

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designed shelf life including subsequent and oftentimes exclusive “windows” of exhibition domestically and internationally, scripted entertainment is exploited with the goal of capturing the highest value from the intellectual properties under copyright, recouping the initial investment and eventually reaching a profit, when they are successful. The distinct intrinsic nature of non-scripted entertainment products calls for and lends itself to different business exploitations in the global entertainment landscape, some of which are shared with already established genres, but oftentimes with distinct features, especially when they are distributed internationally. The cornerstone of non-scripted entertainment shows lies in the “format” of the programs. This term, with its origin traceable back to the Latin term liber formatus (a book printed in a specific way), can be defined as “the total package of information and know-how that increases the adaptability of a program in another place and time” (Moran and Malbon 2006, p. 7). When probed about the topic and the term, different industry executives appear to focus on different aspects. For example, the format is deemed “a unique combination of elements that makes the end product sufficiently different to any earlier program” by Charlie Parsons, the creator of Survive!, adapted internationally as Survivor (Brenton and Cohen 2003, p. 63). By contrast, a former “reality TV” executive from Endemol, Peter Bazalgette, identifies the following conditions for the existence of a format: “if I can persuade someone in the United States or Australia to buy a license to produce it as a format and to pay me a consultancy fee to advise them on how to make it, then it is one” (Brenton and Cohen 2003, p. 63). In a global environment where “the legal status of the format as a unit of intellectual property is vague in the extreme” (Brenton and Cohen 2003, p. 63), the emphasis of the issue varies and it can be focused on innovation and differentiations, as Parsons does, or in its business potential with specific accent on its international saleability, as Bazalgette puts it. It is also worth noticing that the term “format” has been also utilized in the scripted entertainment genre, when the original script of a series is licensed internationally and adapted locally with local actors, producers, etc., as in the aforementioned series The Office, originally from the United Kingdom. Generally, when a new idea for a non-scripted TV program is generated, it takes place in the form of a format paper, including the most relevant aspects of the show and identifying its main parts, the connections between the different parts, the structure of the different episodes, and the principal on-screen figures (Moran and Malbon 2006, p. 38). In addition, the original format has to be developed adding to the previous stage specific elements, as its title, the intended target audience, suggested timeslot in the schedule, and its length. Usually, a pilot is produced to give prospective buyers a more precise idea of the structure and the potential of the show. Until the production of a pilot, the procedure of creating non-scripted entertainment does not differentiate significantly with scripted entertainment where a similar process is put in place, with differences clearly regarding the structurally different elements of the genres (for example scripts as opposed to situations devised to generate entertainment out of non-scripted occurrences). Also, various intermediaries help connect the owners of formats with potential buyers. Talent agents operating in

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established agencies, such as William Morris and Creative Artists Agency (CAA), or independent professionals with a specific expertise in the genre, who might act as pure intermediaries, receive a fee for their services once the deal is made, or assume the risks by buying the licensing rights of a format for a specific territory, benefiting from subsequent license fees in the territory from local broadcasters. Once the format is sold, specific different business practices take place compared to the scripted entertainment landscape. The deals usually include, in addition to the licensing fees to broadcast, the fees to adapt the program locally. To facilitate the adaptation of the format in the country, usually the licensor offers to the licensee what industry practitioners refer to as the “format bible.” This document includes all available and relevant information and instructions regarding the program and the possibilities of adaptation of the format (it represents in a nut shell the know-how of the owner regarding the format and its best practices to date). The document evolves over time with the development of the program internationally to include all successful local adaptations. As a result, a new licensee can draw on an evolving database within the global TV landscape as the information provided by the licensor constitutes a clear point of reference for the local adaptations of the program. Non-scripted entertainment calls for a more defined “two-step creative process” in the creation, distribution, and production of the program. On the one hand, it is clearly important for the success of the program that it could rely on an innovative, solid, and well-structured format, which constitutes the skeleton of the program. On the other hand, the success also stems from the local productions and adaptations of the show. These are two separate and necessary steps for its success in the local territories, as adaptation and the physical production are essential for the creation of the final program, so is as a result the role of non-scripted entertainment producers. Producers in conjunction with local broadcasters manage some of the critical success factors of these shows based on universal themes, locally adapted through the crucial role of casting and editing to “create” entertainment out of ordinary lives under extraordinary circumstances, trapped in predetermined TV formats. As mentioned for the Big Brother format, in the editing room the entertainment “magic” of a story is enhanced or created involving “creative” processes similar to scripted entertainment, especially if the majority or the entire show is taped and does not take place live, while through casting it is possible to create the preexisting conditions for entertainment (ranging from drama, romance, etc.), enhancing the potential narrative structure of the formats. Also, the agreements between the owner of the format or the local producers and the broadcaster usually detail the specific medium of the license (free-to-air, pay TV, or both) and the future partition of the revenues generated by the exploitation of ancillary rights, as merchandising, Short Message Services (SMS), or other revenues as those generated by phone votes from the audiences for example. These revenue streams can be significant and its prospective value is an important element which buyers factor in when deciding on the potential success of a non-scripted entertainment program in their schedules. Typically, ancillary revenues are split between the licensor, the format owner, and the licensee. Also, other revenues might be generated depending on the specific nature of the program. For example, in the case of the American Idol show other revenues streams stem from the sale of records released by the contestants of the

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program, and a percentage of the winner’s earnings goes contractually to the creators and owners of the format (Moran and Malbon 2006, p. 67). Non-scripted entertainment has usually a limited shelf-life compared to scripted entertainment programs, comedy and drama series, as they are generally exploited through fewer subsequent windows, if any. Due to their narrative structure, where oftentimes the central element of the show is based on the result of the events unfolding before the audiences’ eyes, once the outcome is known, most of its appeal ceases to exist and only die-hard fans of the show appear to be interested in watching the same events again. A similar occurrence takes place in other live shows, such as sports events, where reruns do not appear to capture a similar interest from the audiences of the first run once the final outcome is already known. The global TV landscape format has witness numerous litigations over the rights of the shows and revenues generated by non-scripted entertainment, especially after the impressive recent rise of popularity of the genre across the globe. The main issue appears to lie in the fact that “the law does not recognize a format as a distinct entity entitled in itself to legal protection” (Moran and Malbon 2006, p. 129). Also, as previously mentioned, a common, agreed upon, single definition of the term “format” does not exist neither in legal nor in business and practitioners’ terms, and in broader terms, the trading of formats “can be described as the selling of remake rights which enable buyers to produce a local remake of the original program tailored to suit their domestic television market” (European Broadcasting Union EBU 2008, p. 3). Not surprisingly, therefore, the rise of the new genre and its success also generated many lawsuits, as the sector was creating and delineating the contours and boundaries of the “reality TV” landscape. For example, in the late 1990s, Pearson and Endemol engaged in one of the most significant “format wars” as similarities were noticed between Survive! (the format behind the programs Expedition Robinson first and Survivor subsequently) and Big Brother (Brenton and Cohen 2003, pp. 60–61). Many other litigations followed suit in the last decade, as non-scripted entertainment shows have been proliferating at an astonishing rate worldwide, as a result of the commercial success of the aforementioned programs and the structure of the industry in its infancy, with many new, relatively small players appearing and competing in the arena. As mentioned, the somewhat elusiveness, in international legal terms, of the very nature of the formats has generated countless legal disputes across the global TV landscape, with different grounds, findings, and final court decisions, as a study of European Broadcasting Union (EBU) reports (European Broadcasting Union EBU 2008, pp. 83–159), illustrating the decisions reached in different judicial systems. However, the process of generating and developing formats from ideas is getting more and more consolidated, and big players attempt to provide more “lawsuitproof” packages to their clients on the one hand and know-how on how to adapt them on the other, with tools as the aforementioned “bibles” of the formats. While the format itself is generally not protected by law, there are other legal protections available and applicable in case of litigations by the creators and owners of TV formats, as “copyright, confidentiality, passing off, trademarks and design protection” (Brenton and Cohen 2003, p. 111). Nowadays, the global TV format landscape appears to be in the process of consolidation as few established players have built over time a competitive advantage,

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including specific know-how and legal entry barriers to the industry. The European media and entertainment landscape has been generating original non-scripted entertainment for decades. In the last decade, however, the dimensions and global reach of its distribution have reached unprecedented levels, representing a significant international contra-flow of media content, taking place within the Western world on the one hand and at a global level on the other. New entities have joined the landscape, competing with already established media players, as the new wave of nonscripted entertainment has been making inroads in the primetime schedules of European broadcasters first and worldwide TV networks following suit, including the United States. The next chapter focuses on the global leaders of the new wave of non-scripted entertainment: First on Endemol, the creators and distributors of the previously analyzed successful global TV format Big Brother, to then encompass their main European competitors in the non-scripted entertainment landscape. The global competitive landscape is illustrated through the analysis of the leaders in the sector, their genesis, evolutions, and competitive strategies domestically and internationally.

References Adalian J (2007) “Brother” bigger than ever. Variety. http://www.variety.com/article/VR1117967489. html. Accessed 18 April 2008 Bazalgette P (2005) Billion dollar game: how three men risked it all and changed the face of television. Time Warner Books, London Bignell J (2005) Big brother: reality TV in the twenty-first century. Palgrave MacMillan, New York Brenton S, Cohen R (2003) Shooting people: adventures in reality TV. Verso, London Consoli J (2008) CBS offers multiple platforms for Big Brother. Mediaweek. http://www.mediaweek. com/mw/content_display/news/digital-downloads/broadband/e3i3a02b4b8960ca28aa8e8dd9f 31000bac. Accessed 10 Aug 2008 Cooper-Chen A (2005) A world of “millionaires”: global, local, and “glocal” TV game shows. In: Cooper-Chen A (ed) Global entertainment media. Lawrence Erlbaum, Mahwah de Mooij M (2010) Global marketing and advertising: understanding cultural paradoxes. Sage, Thousand Oaks European Broadcasting Union (EBU) (2008) Trading TV formats: the EBU guide to the international television format trade. Eurovision TV, Grand-Saconnex Keegan WJ, Green MC (2008) Global marketing. Prentice Hall, Upper Saddle River Kraidy MM (2003) Glocalization as an international communication framework? J Int Commun 3(3):29–49 Kraidy MM, Murphy PD (2008) Shifting Geertz: toward a theory of translocalism in global communication studies. Commun Theory 18(3):335–355 McMurria J (2009) Global TV realities: International markets, geopolitics, and the transcultural contexts of reality TV. In: Murray S, Ouellette L (eds) Reality TV: remaking TV culture, 2nd edn. New York University Press, New York Moran A, Malbon J (2006) Understanding global TV format. Intellect Books, Bristol Roscoe J (2004) Big Brother Australia: performing the “real” twenty-four-seven. In: Allen RCH, Hill A (eds) The Television Studies reader. Routledge, New York Schneider M (2008) TV viewers’ average age hits 50. Variety. http://www.variety.com/article/ VR1117988273.html. Accessed 10 July 2008 Straubhaar JD (2007) World television: from global to local. Sage, Thousand Oaks

Chapter 6

The Stars in the Non-Scripted Entertainment Galaxy

6.1 Endemol Endemol is a relatively new player in the global entertainment arena, yet has rapidly gained global leadership in the genre of non-scripted entertainment. It is headquartered in the Netherlands, with subsidiaries and/or joint ventures in 25 countries in five continents, including all major Western European and North American markets, as well as Latin America, India, South Africa, and Australia (Endemol 2007, p. 11). Moreover, it sells directly also to countries where they do not have a permanent presence: As a result, their most successful shows, such as Big Brother and Deal or No Deal, are distributed and can be watched by local audiences in over 40 countries worldwide (Endemol 2007, p. 9). It was founded in 1994, when the production companies of two Dutch television producers, Joop van den Ende and John de Mol, merged to found a new entity which would have aggregated the assets of the respective companies and the names of the founders: Endemol. The merger triggered its international development and since then the company has rapidly expanded outside its national boundaries to become a global leader in the TV formats creation, production, and distribution. The convergence of media content and new distribution channels made available by the ICT revolution constituted, as it was deemed by investors and professionals alike, the essential crossroads in the new digital media and entertainment landscape at the turn of the twenty-first century. The specific adaptability and potential commercial exploitations across different platforms provided by non-scripted entertainment in the new environment did not go unnoticed as financial professionals were estimating the value of media and entertainment companies in the new landscape. In this milieu, in 2000 the Spanish telecommunications conglomerate Telefónica bought Endemol for an estimated 5.5B€ (De Pablos and Hopewell 2007) at the peak of what would have been referred to only a few months later as the global “dot-com bubble” of the technology stock markets originated within the US NASDAQ. During the “dot-com bubble” stock prices rose at astonishing rate, in the United States and globally, driven by what turned out to be unrealistic expectations regarding future P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3_6, © Springer Science+Business Media, LLC 2011

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revenue steams for companies operating in or connected to the Internet landscape, under the assumption that a significant part of the “old” business sectors would migrate toward the “new” Internet economy. The rhetoric accompanying and fueling expectations of extraordinary economic returns from new technologies (Goodnight and Green 2010), combined with methodologies of evaluation of companies based on net present values of future revenue streams, contributed to or lead to these inflated, and unrealistic, stock prices. Following the Telefónica–Endemol deal, one of the founders, John de Mol, agreed to remain on board to provide continuity with the previous entity, but the company witnessed a series of corporate restructuring processes in the subsequent years, deciding also to float a minority stake of the company at the Euronext Amsterdam Exchange in 2005 (Edmunds 2005) and eventually deciding to sell the company outright in 2007. Many different suitors in the global entertainment landscape lined up once the intention of Telefónica to dismiss what was no longer deemed a core asset in the conglomerate became apparent, as reported by trade journals (Goodfellow 2007). On July 2007, the Spanish telecom conglomerate finalized the sale of the control (75%) of the publicly traded company at the Amsterdam stock exchange to a consortium of investors including Cyrte Investments (featuring one of its original founders, John de Mol), Mediacinco (a Spanish/Italian joint venture of the media and entertainment conglomerates Mediaset and Telecinco), and GS Sachs Capital Partners (financed by the investment bank Goldman Sachs) for an estimated 2.63B€ (De Pablos and Hopewell 2007). The transaction took place at a significantly lower amount than the original price of purchase in year 2000, while the takeover group made a public offer to purchase the outstanding shares of Endemol and eventually delisted the company from the Euronext Amsterdam Exchange (Schreiber 2007). As a result of the changes in ownership, changes in management followed suit, bringing back as Chief Executive Officer a former Dutch top executive of the first phase of Endemol, ousted by Telefónica in 2003, with the founder de Mol (Barraclough 2007). Since the new ownership has finalized the acquisition, the company appears to have been expanding its managerial team and its international operations, increasing their presence in the digital media landscape (see for example Endemol 2008a; Woodson 2008) and also expanding through acquisitions of other non-scripted entertainment entities (see for example Endemol 2008b; Grant 2007). Analyzing the company’s annual report and financial statements made available by the company while it was publicly traded, the contours of a diversified global media and entertainment conglomerate of the twenty-first century emerge. Endemol’s annual turnover exceeded 1B€ in 2006, originated globally from three main revenue streams: 75% stemming from non-scripted programs, 12.5% from scripted programs, and the remaining 12.5% from digital media. The revenue streams generated from scripted entertainment are especially significant in the Netherlands, Italy, and Spain, where the company has established a particularly strong presence (Endemol 2007, p. 11). Non-scripted entertainment is the core business segment of the company, and comprises “reality TV” shows, game and talent shows, while scripted entertainment

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comprises classic TV fare, as drama and comedy series. Revenues are typically generated through fees from broadcasters, advertisers, telecom, and Internet companies. As new brands are created, mainly in non-scripted entertainment as Big Brother and Deal or No Deal, they are exploited also in the new media realm, providing a significant revenue stream. The company does so through brand exploitation, leveraging TV and other brands through participation TV, ring tones, broadband streaming of programs over the Internet and mobile phones, and interactive participation of audiences with SMS. The top countries by revenue are United Kingdom, United States, Spain, The Netherlands, Italy, Germany, as reported by the company’s Annual Report 2006 (Endemol 2007, pp. 18–19). Endemol’s competitive advantage is generated by the creation of TV formats and the exploitation of its library of new (as Wipeout), classic (as Big Brother), or recently developed (such as Deal or No Deal) TV formats globally. Big Brother, in its twelfth season in the United States in 2010, was launched in 1999 in the Netherlands and it is now produced in 36 different countries worldwide. Deal or No Deal was created by the central creative unit in the Netherlands and introduced globally in 2005 and by 2007 distributed in more than 40 countries. In the United States it was adapted and broadcasted for English speaking audiences by NBC and for Spanish speaking audiences, with the title Vas o No Vas, by Telemundo (not unlike Canada, where the format generated two different shows, one for French speaking audiences and another for English speaking audiences). Other formats are originated directly in the foreign territories where they operate, with subsidiaries or through joint ventures, and then distributed globally, as in the case of Star Academy in France. The Chief Operating Officer of the company identifies, as reported by the Italian trade journal Prima Comunicazione, the key success factors to compete globally the flexibility and creativity of the media conglomerate, having corporate offices at the headquarters in the Netherlands working constantly with field offices in a continuous flux of creative ideas from and to the center of the company, adapted then locally with local partners (Rotili 2008, pp. 46–57). The global structure of Endemol, and its continuous string of successful non-scripted entertainment shows, made it in the last decade an ideal acquisition target for large media conglomerates, willing and able to diversify their assets and expand their global reach. As mentioned, Endemol is currently partially owned by the Italian-based media and entertainment conglomerate Mediaset S.p.A. Similar in structure is the other major competitor in the non-scripted entertainment arena, FremantleMedia, as they both can be deemed examples of “vertically integrated transnational groups” (Moran and Malbon 2006, p. 85) operating in the global non-scripted entertainment arena within large and diversified European media and entertainment conglomerates. These entities have ownership of libraries of formats they distribute globally, working oftentimes in joint ventures with local entities in the different territories, as for example in the case of Endemol Globo in Brazil a joint venture with the national media conglomerate Globo, and with local broadcasters to adapt their programs locally.

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6.2 FremantleMedia From the early 1990s FremantleMedia has grown significantly in the UK media landscape, eventually expanding internationally to become one of the most relevant global media entities, especially in the non-scripted entertainment sector. The growth has followed the path of aggressive acquisitions within the industry on the one hand and development of original entertainment content on the other. The company stems from the entity Pearson Television, originally a unit within the UK media and publishing group Pearson Plc., established in 1995 as the conglomerate was strategically expanding internationally through acquisitions in the TV production sector. Pearson Plc. first acquired Thames Television in the United Kingdom (in 1993), then Grundy World Wide in Australia (in 1995), and All American Television in the United States (in 1997) (Moran and Malbon 2006, p. 94). Consequently, following these acquisitions, the conglomerate established a solid presence in the international TV production business with relevant assets within its catalogue, including the classic game shows The Price is Right and Family Feud, which were licensed globally to local broadcasters. In 2000 Pearson Television was itself taken over by the European media company CLT-UFA, which eventually became part of the RTL group, within the German conglomerate Bertelsmann, one of the world’s largest media companies, with annual consolidated revenues in 2006 exceeding 19B€ (Bertelsmann 2007, p. 94). Bertelsmann group comprises the following divisions: RTL group, Europe’s leading broadcasting and production company (which includes FremantleMedia) providing in 2006 28.3% of the conglomerate revenues; Random House, the world’s largest trade book publishing group with 9.8%; Gruner + Jahr, a printing and publishing company, with 14.2%; BMG, which operates in the music business with labels such as Arista, Columbia Records, Epic Records, with 10.1%; Arvato, a media and communication services providers, with 24%; and Direct Group, a content distribution division, with 13.4% (Bertelsmann 2007, pp. 98–99). Interestingly enough, the relevance of the RTL division increases from 28.3 to 42.9%, hence becoming the first division in the overall conglomerate financial results, if the Earning Before Interests and Taxes (EBIT) measure, a more specific measure of profitability, is considered instead of the revenues generated. As a result of the change in ownership, and with the intention to sever the ties to the previous conglomerate, the company eventually dropped the Pearson Television name and adopted the current name, FremantleMedia, originally the name of a US distribution company purchased by Pearson Television through the All American Television acquisition (Moran and Malbon 2006, p. 94). The company, now part of a large European conglomerate, is still headquartered in London and owns a large catalogue of scripted and non-scripted entertainment shows. The company, not unlike Endemol, also explores opportunities in the realm of more traditional scripted entertainment (Ewing 2008), as a 360 degrees global entertainment entity. It is present in 22 countries, with the larger subsidiaries (utilizing also the creative labels UFA, Grundy, Blue, and Blue Circle) operating in Australia, France, Germany,

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Hong Kong, and the United States (Bertelsmann 2007, p. 142). Also, FremantleMedia operates through the divisions Creative Networks, comprising the entertainment and drama departments and coordinating local production operations, and FremantleMedia Enterprises, which handles the exploitation of the catalogue through distribution and licensing. FremantleMedia’s overall strategic positioning appears to be driven by six priorities as reported in their “purpose and strategy” section of their website (FremantleMedia 2008a): maintain and expand their competitive position in their largest media markets, become a significant player in all major global entertainment markets wherever they do not already own a significant presence, focus on rights retention of programs, maintain a balanced asset portfolio by developing new formats while nurturing the existing brands, attract entertainment talent through becoming the employer and partner of choice for professionals, both creative and executive, and grow new business and new platform activities taking advantage of the technological evolution in the marketplace as they unfold. The company reported in 2006 and 2007 revenues exceeding 1.1B€ “driven by a strong performance from FremantleMedia North America, the global roll-out of new formats and the ongoing worldwide popularity of existing program brands” (FremantleMedia 2008b). The non-scripted shows of FremantleMedia include the property Pop Idol, the TV talent show successfully adapted worldwide, and the entity is clearly an integral part of the success of the new wave of non-scripted entertainment globally, exploited in the twenty-first century media and entertainment landscape. A particularly significant example of the changes in the landscape is provided by the successful introduction and adaptation of this property in the American TV market, the largest in the world. The format Pop Idol was introduced in 2002 in the United States as a local adaptation under the name American Idol on the Fox broadcast TV network with the talent agency CAA packaging the deal with FremantleMedia and the co-owner of the show 19 Television, owned by its producer, Simon Fuller (Adalian 2002). The success of the show vastly exceeded the original expectations of the broadcasters and producers, becoming the top prime time program in the United States (as reported by the International TV & Video Almanac 2007), and a generator of multiple revenue streams in addition to the usual advertising revenues generated by a free-to-air program on network TV. Sponsors like Coca-Cola, Ford, and ATT, in exchange of investments reportedly exceeding US $20M per season (McClellan 2004), participated throughout the seasons inserting promotional messages directly in the program as corporate sponsors of the show (Schneider 2008). In addition to the main sponsors and the classic advertising air time, also product placement deals, on an episode per episode basis, were established. In general, consumer-oriented companies are eager to activate integrated marketing strategies in an evolving digital communication environment marked by the increasing diffusion of digital video recording (DVR) devices as TiVo, which allow audiences to record and watch at a time of their choosing the show, potentially skipping the commercial breaks that typically fund the program. The franchise has proven particularly profitable and able to generate multiple revenue streams in the evolving

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twenty-first century media landscape. They range from telephone calls or SMS from the audiences eager to vote their favorite contestants participating in the final outcome of the show to multiple brand exploitations, including even a new theme park attraction (Schiller 2008). The exploitation across different platforms of the properties in their catalogue is not limited to the most successful prime time shows, but involves a diversified range of programs, including older shows such as The Price is Right and Family Feud, which have been adapted as mobile game shows for example, as reported by the industry trade journal C21 Media (Anonymous 2008). Taking advantage of the evolving digital landscape, FremantleMedia also explores diversified distribution channels and new online platforms, such as BlinkBox, allowing users to buy, rent, and edit TV shows (cutting scenes from the shows, adding messages, and sending the final output to friends’ PCs or mobile phones) (Benzine 2008).

6.3 Other European Entities Operating in Non-Scripted Entertainment There are other leading entities operating in the non-scripted entertainment European landscape, whose distribution and impact is increasingly global. Some are units of established media conglomerates, as Independent Television (ITV) and British Broadcasting Corporation (BBC), while others are emerging players in the landscape, which is still evolving. Both headquartered in the United Kingdom, the media and entertainment companies Granada and Carlton communications agreed to merge their activities in 2002 creating, after the approval of the local regulatory commissions was finalized in 2004, the media conglomerate ITV. The new entity operates in different segments of the media landscape, most notably in broadcasting through all the different available platforms mainly in the United Kingdom, and in content creation and distribution, domestically and globally, generating in 2006 more than £2B revenues (ITV plc 2007, p. 51). ITV comprises all the structures of the previous companies, some of which trace back their origins to the beginnings of commercial TV broadcasting in the United Kingdom in 1955. Specifically relevant to the non-scripted entertainment landscape, the new entity also includes Granada International, the commercial arm of the Granada media group which has been operating in the global TV market with non-scripted entertainment programs as Hell’s Kitchen and Nanny 911. The unit at the time of this writing is in the process of winding up as a separate entity to be folded into the conglomerate as ITV Global (Clarke 2008). The BBC, the UK public television broadcaster, is a relevant player in the global TV landscape, as they produce and distribute content offered in different platforms to audiences in the United Kingdom and abroad. In the production side of the business they utilize both their in-house structures and independent producers. In the distribution side they tend to rely on their corporate structures, domestically and globally. They operate globally through the international division BBC Worldwide, which

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has established a global presence in the media landscape through the activities of licensing of the content of their TV library and managing international channels under the BBC umbrella brands. Their financial report for the years 2006/2007 indicates for the international division of the company income of £249M stemming from TV sales and £118M from their channels (BBC 2007, p. 96). BBC is further expanding its international presence launching more channels internationally, as well as high-definition outlets and on-demand services, utilizing four thematic brands: BBC Entertainment, BBC Knowledge, BBC Lifestyle, and CBeebies, dedicated to children (Holmwood and Gibson 2007). Their vast catalogue includes also relevant non-scripted entertainment fare distributed globally as the programs Strictly Come Dancing (adapted in the United States as Dancing With the Stars) and The Weakest Link. Another emerging, yet relevant, player in the European non-scripted entertainment landscape is Zodiak Entertainment, operating with multiple production companies and offering more than 200 shows to global audiences and generating sales exceeding 500M€, as reported by the company website (http://www.zodiakentertainment.com/company.php), following the acquisition of the RDF media group in 2010 (Zodiak Entertainment 2010). The company, headquartered in London and Paris, is part of the family-owned private Italian conglomerate De Agostini S.p.A., whose interests in the media and communication sector are managed by its subsidiary De Agostini Communication, active internationally in content production and broadcasting. The conglomerate has strategically invested in the non-scripted entertainment arena through the acquisitions of leading European independent companies since 2008, including Magnolia (Italy), Marathon (France), and RDF Media Group (United Kingdom), and it has carved out a significant space in this competitive arena in Europe and worldwide as a result. All the aforementioned entities are therefore part of large European media conglomerates, which have identified non-scripted entertainment as a key strategic element in their media assets portfolios in the twenty-first century. The sector is still evolving, with new entities appearing in the competitive landscape, although at a somewhat slower pace compared to the beginning of the rise of the new wave of non-scripted entertainment a decade ago. Among other relevant European entities operating in the non-scripted entertainment landscape, Castaway Productions owns the right of the TV format Survivor. The company was formed in the United Kingdom by Charlie Parsons, the original creator of the show, with his business partners Waheed Alli and Bob Geldof, when they sold their company Planet 24 operating in the “reality TV” sector to the aforementioned Carlton Communications. In the transaction they retained the rights of the format, which they keep licensing globally (Clarke 2001). Also in the United Kingdom, Celador International is the creator of the aforementioned format Who Wants to Be a Millionaire?, one of the successful game shows part of the new wave of non-scripted programs licensed globally. The company sold in 2006 part of their assets to the Dutch company 2waytraffic, which was itself acquired by Sony Pictures Entertainment for a reported US $223.5M in June 2008 (Levine and Schreiber 2008). The deal increases the presence of the Hollywood

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studio in the non-scripted entertainment sector, adding the format to their library, which already includes game shows as Jeopardy! and Power of 10, signaling Hollywood’s attention to the phenomenon and its presence in the non-scripted landscape.

6.4 Hollywood and Non-Scripted Entertainment For most of the twentieth century Hollywood has represented, geographically and ideally, in the global entertainment landscape the locus where “reality ends” and the “dream factory” thrives, echoing the University of Southern California’s School of Cinematic Arts unofficial motto (“Reality ends here!”) and the anthropologist Hortense Powdermaker’s take on Hollywood (“The dream factory”) (Powdermaker 1950), as these expressions capture the essence of Hollywood productions: providing dreams for worldwide audiences. Since the new wave of non-scripted entertainment originating mainly from Europe (and specifically created and distributed by the above-mentioned European entities) disrupted the global TV landscape at the turn of the twenty-first century, Hollywood has been reacting and adapting to the evolving scenario. As the new formats and entities started to appear in the global entertainment landscape about a decade ago, the Hollywood studios initially did not seem to be too interested in expanding activities to include a relevant presence of non-scripted entertainment in their portfolios. In 1999, the then emerging entity Endemol, as reported by a former executive, initiated contacts with the international divisions of all the Hollywood studios to explore potential buyers: Some studios showed more interest than others, but ultimately no deal was made as the asking price (about US $1B) was deemed too high for a company whose major formats at the time had still to prove their success (Bazalgette 2005, pp. 119–120). However, the following global success of the genre did not go unnoticed for long and the studios gradually have been involved in non-scripted entertainment ever since. Their approach to this sector appears to have followed two paths: establishing new divisions in their conglomerates devoted to this particular genre, as Warner Bros. with its division Warner Horizon (Schneider 2006), or through acquisitions of existing foreign non-scripted entertainment entities, as Sony Pictures buying both established formats as Who Wants to Be a Millionaire through the aforementioned acquisition of the Dutch company 2waytraffic (Levine and Schreiber 2008), and start-up companies such as the UK Gogglebox (Turner 2008). Also, the sector’s boundaries do not end at the major Hollywood studios’ gates, as smaller US entertainment entities specialized in non-scripted entertainment are also active in the landscape, such as GRB Entertainment for example. The role of talent agencies, key intermediaries in the production of scripted entertainment in Hollywood as talent representatives, appears to be less central in the non-scripted world where the majority of the characters are not professionals and not represented, at least initially. Their role as intermediaries, however, is still relevant in many transactions generated in the non-scripted entertainment business environment,

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as in the case of the talent agency CAA in the above mentioned introduction into the United States of the show American Idol (Adalian 2002). Furthermore some talent agencies have created specific units, domestically and internationally, to explore opportunities in non-scripted entertainment, as in the case of ICM, with its international television and media division including overseas offices (Adalian 2007). Moreover, as the genre appears to be an established component of the US TV offerings, the production of non-scripted entertainment programs involves on a regular basis many Hollywood above or below the line professionals. This includes directors, cameramen, editors, screenwriters, casting agents, etc. in their professional capacities, oftentimes developed in the scripted entertainment or documentary genres, adapted to the particular necessities of non-scripted entertainment and it constitutes a relevant component of work generated in the US entertainment business sector.

6.5 Non-Scripted Entertainment as a Potential Threat to Hollywood’s Primacy The rise of non-scripted entertainment in the global media landscape as an institutional trajectory developed mainly in the last decade. The analysis of the phenomenon in part II of this book has illustrated its origin, the business practices vis-à-vis scripted entertainment, the major players in the sector (mostly part of European media conglomerates), and Hollywood’s reactions. This institutional trajectory has the potential to alter Hollywood’s existing global competitive advantage, as analyzed in the previous chapters. Within Porter’s “five forces” theoretical framework (illustrated in Fig. 2.2), the rise of the new wave of non-scripted entertainment constitutes two specific threats to Hollywood’s oligopoly: the arrival of “substitute” products catering to the same demand of entertainment historically satisfied by Hollywood content, and the appearance in the landscape of “new entrants.” TV formats generated by European entities have successfully made inroads, adapted locally, in the major TV markets, including the United States, with all the existing barriers notwithstanding. As a result, some of the determinants generating Hollywood’s economic leadership in Porter’s “national diamond” framework (illustrated in Fig. 3.1) are being undermined and jeopardized by the phenomenon. For example, the demand conditions, the size of the US domestic market able to generate the demand for high value productions subsequently exported overseas, is being affected. European-generated non-scripted entertainment formats have successfully entered the market and carved out a significant presence in the US landscape, satisfying a sizeable portion of the US demand for entertainment. Therefore, Hollywood’s virtuous cycle of high investments targeting the large US entertainment market first and then competing internationally with local productions, which cannot afford similar budgets, is being impacted and altered in the global TV landscape by the surge of European nonscripted entertainment. The superior local adaptability of non-scripted entertainment programs makes them more appealing in foreign TV markets than regular Hollywood productions,

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which cannot practice “glocalization” of entertainment as effectively. As previously analyzed with the successes of the program Big Brother, non-scripted entertainment effectively incorporates local, global, and “glocal” elements being the result of global formats adapted locally (Cooper-Chen 2005). In their global elements, nonscripted entertainment can utilize “universality” of themes and are also available globally (Katz and Liebes 1990), as they are distributed by transnational entities, as Endemol and FremantleMedia, with field offices around the globe. Furthermore, non-scripted entertainment appears to lend itself to “participatory culture” tendencies (Jenkins 2006), when they occur, better than scripted entertainment. The previous analysis of the financial results of the global leaders shows that they in fact constitute a relevant revenue stream in their business models (the “brand exploitation”: SMS, votes, etc.). The phenomenon of “glocalization” of non-scripted entertainment appears also to satisfy many of the criteria identified by media scholars analyzed in Chap. 3 with an interdisciplinary focus to explicate the success of entertainment within various national and cultural landscapes, based on the narratives proposed. “Narrative transparency” (Olson 1999), proximity and linguistic affinity (Straubhaar 1991; Trepte 2003), “sheer availability” while being “psychologically accessible” (Katz and Liebes 1990), and even national pride (Cohen 2008) are features present in global formats of non-scripted entertainment adapted locally, and more significant than in scripted Hollywood fare, as they specifically include local features. After the analysis of the institutional trajectory represented by the rise of the new wave of non-scripted entertainment worldwide driven by transnational media and entertainment conglomerates outside the Hollywood system, mainly from Europe, part III of this book focuses on another institutional trajectory proving further potential disruptive elements for Hollywood’s existing global competitive advantage: select features within the analysis of the impact of the ICT revolution on the global entertainment landscape, with the potential to alter the existing status quo of the industry.

References Adalian J (2002) Next thing for Fox: “Pop Idol” from Blighty. Variety. http://www.variety.com/ article/VR1117864206.html. Accessed 16 April 2008 Adalian J (2007) ICM creates new overseas unit. Variety. http://www.variety.com/article/ VR1117958838.html. Accessed 30 July 2008 Anonymous (2008) The price is right for Glu Mobile. C21 Media. http://www.c21media.net/ resources/detail.asp?area=89&article=40838. Accessed 20 April 2008 Barraclough L (2007) Schouwenaar returns as Endemol CEO. Variety. http://www.variety.com/ article/VR1117968999.html. Accessed 14 April 2008 Bazalgette P (2005) Billion dollar game: how three men risked it all and changed the face of television. Time Warner Books, London Benzine A (2008) Fremantle downloads with BlinkBox. C21 Media. http://www.c21media.net/ resources/detail.asp?area=89&article=40683. Accessed 14 May 2008 Bertelsmann AG (2007) Annual report 2006. from:http://www.bertelsmann.de/bertelsmann_corp/ wms41//customer/bmcorp/pdf/GB_english.pdf. Accessed 15 Feb 2008

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British Broadcasting Corporation (BBC) (2007) Annual reports and accounts 2006/2007-Part I and II. http://www.bbc.co.uk/annualreport. Accessed 30 June 2008 Clarke S (2001) Parsons is reality TV’s original survivor. Variety. http://www.variety.com/article/ VR1117802626.html. Accessed 8 March 2008 Clarke S (2008) ITV winds up Granada. Variety. http://www.variety.com/article/VR1117982203. html. Accessed 25 April 2008 Cohen J (2008) What I watch and who I am: national pride and the viewing of local and foreign television in Israel. J Commun 58(1):149–167 Cooper-Chen A (2005) A world of “millionaires”: global, local, and “glocal” TV game shows. In: Cooper-Chen A (ed) Global entertainment media. Lawrence Erlbaum, Mahwah De Pablos E, Hopewell J (2007) De Mol, Berlusconi buy Endemol. Variety. http://www.variety. com/article/VR1117964866.html. Accessed 14 April 2008 Edmunds M (2005) Telefonica to float Endemol. Variety. http://www.variety.com/article/ VR1117932757.html. Accessed 14 April 2008 Endemol NV (2007) Annual report 2006. http://www.endemol.com/Uploads_com/def-endemol%20 -compleet.pdf. Accessed 7 Feb 2008 Endemol NV (2008a) Endemol UK acquires stake in Pure Glass films. http://www.endemol.com/ Press%20center/Default.aspx?fID=7107. Accessed 14 April 2008 Endemol NV (2008b) Endemol acquires controlling share of 51 Minds Entertainment. http://www. endemol.com/Press%20center/Default.aspx?fID=7107. Accessed 14 April 2008 Ewing J (2008) From reality TV to big-screen dreams. Business Week, pp 64–65 FremantleMedia (2008a) Our purpose and strategy. http://www.fremantlemedia.com/about-us/ purpose--strategy. Accessed 16 April 2008 FremantleMedia (2008b) Willing to travel: new global formats boost FremantleMedia’s financial performance, press release. http://www.fremantlemedia.com/virtual-press-office/press-releases/ page/4. Accessed 16 April 2008 Goodfellow M (2007) Telefonica readies Endemol for sale. Variety. http://www.variety.com/article/ VR1117959470.html. Accessed 14 April 2008 Goodnight GT, Green SE Jr (2010) Rhetoric, risk, and markets: the dot-com bubble. Q J Speech 29(2):115–140 Grant J (2007) Endemol moves into movies, scripted. C21 Media. http://c21media.net/detail. asp?area=1&article=38599. Accessed 14 April 2008 Holmwood L, Gibson O (2007) New channels galore as BBC aims to rule the world – with help from doctor who and teletubbies. The Guardian. http://www.guardian.co.uk/media/2007/ oct/29/uknews.bbc. Accessed 30 June 2008 International TV & Video Almanac – Quigley ES et al. (ed) (1998–2007). Quigley Publishing, Groton ITV plc (2007) ITV plc reports and accounts 2006. http://www.itvplc.com/itv/fininfo/reports. Accessed 7 Feb 2008 Jenkins H (2006) Fans, bloggers, and gamers: exploring participatory culture. New York University Press, New York Katz E, Liebes T (1990) The export of meaning: cross-cultural readings of Dallas. Oxford University Press, New York Levine S, Schreiber D (2008) Sony Pictures acquires 2waytraffic: Dutch co. to offer studio gameshows, reality TV. Variety. http://www.variety.com/article/VR1117986861.html. Accessed 30 June 2008 McClellan S (2004) Idol moments ahead for advertisers. Broadcasting & cable. http://www.broadcastingcable.com/article/CA372643.html. Accessed 20 April 2008 Moran A, Malbon J (2006) Understanding global TV format. Intellect Books, Bristol Olson SR (1999) Hollywood planet: global media and the competitive advantage of narrative transparency. In: Allen RCH, Hill A (eds) The Television Studies reader. Routledge, New York Powdermaker H (1950) Hollywood: the dream factory. An anthropologist looks at the moviemaking. Little Brown, Boston Rotili A (2008) La casa del “Grande fratello”. Prima Comunicazione 36(1):46–57

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Schiller G (2008) Disney getting “Idol” theme park. The Hollywood Reporter. http:// hollywoodreporter.com/hr/content_display/news/e3i61954dcc5d766db3cd0cd3a57a48b47d. Accessed 20 April 2008 Schneider M (2006) Dose of reality: low-cost fare on Warner TV horizon. Variety. http://www. variety.com/article/VR1117942132.html. Accessed 31 March 2008 Schneider M (2008) Sponsors return to “American Idol”. Variety. http://www.variety.com/article/ VR1117978968.html. Accessed 20 April 2008 Schreiber D (2007) Intrigue for Endemol in Amsterdam: takeover group makes offer for remaining shares. Variety. http://www.variety.com/article/VR1117969824.html. Accessed 14 April 2008 Staubhaar JD (1991) Beyond media imperialism: Asymmetrical and cultural proximity. Critical Studies in Mass Communication 8(1):39–59 Trepte S (2003) The intercultural perspective: cultural proximity as a key factor of television success. Paper presented at ICA Conference, San Diego, CA, 23–27 June 2003. http://www.universitäthamburg.de/fachbereiche-einrichtungen/fb16/absozpsy/pdf_cultural_proximity.pdf. Accessed 1 Oct 2010 Turner M (2008) SPTI invests in start-up UK indie. The Hollywood Reporter. http:// hollywoodreporter.com/hr/content_display/news/e3i9f1cd7c086ac4e842767713d8ccde664. Accessed 30 June 2008 Woodson A (2008) Endemol grows stake in Pure Glass. The Hollywood Reporter. http://www. hollywoodreporter.com/hr/content_display/news/e3ifff588c2bae9eaff14ea6da473c23398. Accessed 14 April 2008 Zodiak Entertainment (2010) Zodiak Entertainment acquires RDF Media Group and appoints new Chief Executive, press release. http://www.zodiakmedia.com/uploads/020610_rdf.pdf. Accessed 5 July 2010

Part III

The New, Digital Shelf Life of Entertainment

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Chapter 7

Technologies of Entertainment

7.1 Technological Revolutions as Potentially Disruptive Changes in the Entertainment Landscape Hollywood is geographically located in proximity of the San Andreas fault, an unstable geological boundary dividing the Pacific and North American tectonic plates. As a result, it is periodically impacted by seismic activities shaking and disrupting the existing landscape. Researchers monitor the fault and its potential disruptive impact on the highly populated surrounding area on a regular basis. A study by Yuri Fialko of the Scripps Institution of Oceanography at the University of California, San Diego in 2006 revealed that “the fault has been stressed to a level sufficient for the next ‘big one’ – an earthquake of magnitude seven or greater – and the risk of a large earthquake in this region may be increasing faster than researchers had believed” (Scripps Institution of Oceanography 2006). Technological revolutions also periodically shake and alter Hollywood’s entertainment industry, modifying the existing status quo and established market dynamics while introducing new players and ultimately changing the competitive landscape, not unlike earthquakes. As the ICT revolution unfolds in society as a whole, its impact on the entertainment industry landscape in general and on the Hollywood system in particular is still unclear: Is this revolution the industry equivalent of the long overdue “big one”? As Williams pointed out in his analysis of television as technology and cultural form (1975), the end result of the impact of every new communication technology, applicable also in this particular case of ICT revolution, will depend on how it is adopted, modified, and ultimately accepted by the different social players involved. In this evolving environment, it is central to analyze the actions of profit-oriented entities, whose goal is to create, deliver, and capture economic value in a digital media and entertainment landscape. Among the latter ones, the Hollywood studios, who are the global leaders in the sector in the last decades, play a pivotal role: As they analyze the evolving landscape, they can adopt defensive or offensive strategies

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vis-à-vis the challenges and opportunities ushered in by the new technology as they unfold and affect the entertainment landscape. Part III of the book analyzes the institutional trajectory of the ICT revolution as it is impacting the evolving global mediascape, and specifically posing threats to Hollywood’s existing primacy. It first provides an historical background on how Hollywood studios have reacted to the major technological changes of the twentieth century, then focuses on select unique features of the new, digital landscape and their specific impact on three key dimensions within the media and entertainment industry: content, conduits, and business models. Hollywood’s unfolding reactions to the threats and opportunities provided by new technology are therefore analyzed, as they are an essential component of the evolving landscape, drawing on theoretical tools from the field of corporate strategy, such as the SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). Specific examples of defensive and offensive strategies adopted in the landscape are illustrated, among the different potential strategic courses of action available for old and new players in the media and entertainment industry within the evolving regulatory environment. These examples help to shed light on the unfolding changes within the industry, as it is shaped by the technological evolutions and the actions of key players, the profit-oriented media and entertainment entities. Diverse groups, and their interactions, affect the diffusion of the new technology, from the consumers/citizens by virtue of the authorized or the rising non-authorized appropriation and consumption of entertainment, to the nation states at local and federal level, and nongovernmental organizations (NGOs). The interplay among these entities determines the contours of the evolving regulatory environments at national and global level on different facets of the entertainment landscape, including the definition and protection of the Intellectual Property Rights (IPR), whose impact contributes to define the boundaries of the field. The changes in available communication technologies have historically produced a significant impact on the ways audiences worldwide access and consume mediated entertainment on the one hand and on the industries providing entertainment content and distribution on the other, within complex and oftentimes contradictory dynamics. The intersection of Hollywood and the ICT represents the latest chapter of the history of a complicated, and oftentimes antagonistic, relationship between the global entertainment industry leaders and the changes ushered in by new available communication technologies such as sound, TV, Video Cassette Recording (VCR), Cable, Satellite, Digital Video Recording (DVR), and ultimately, the Internet. Historically, Hollywood has adopted a complex, and to a certain extent, ambivalent attitude toward the emerging media and entertainment technologies, as they were made available. This convoluted relationship, with sudden twists and turns, has little to envy to the classic Hollywood “boy meets girl” genre, in which after the first occasional encounter between the protagonists, the boy usually loses the girl only to find her later in the third act of the script, leaving audiences guessing along the way.

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7.2 Hollywood Meets Technology In October 1927, Warner Bros. released the feature-length motion picture The Jazz Singer, which featured for the first time, albeit briefly, sound in its musical sequences and in some dialogs, as it chronicled the story of an American Jazz musician in the 1920s. The Hollywood studio had been working with Western Electric to add sound to films for more than a year, creating a joint venture named Vitaphone, and it was ready to capture the wave of success stemming from the “talking picture,” releasing within the following 3 months the “all talking” short film My Wife’s Gone, and the feature-length motion picture The Lights of New York, the first true “talkie,” in 1928 (Jewell 2007, pp. 91–93). The reactions of the Hollywood system to the sound revolution of the 1920s were mixed, with some entities embracing the new technology (as Warner Bros.), while others dismissing it as a fad that wouldn’t last. As the first “talkies” were released, accepted with enthusiasm by the public, Joseph Schenck, then president of United Artists, declared that its company would not produce “talking pictures,” deeming them “not more than public curiosity in a novelty” and predicting they wouldn’t “last more than four or five months” (Jewell 2007, p. 93). Much to Mr. Schenck’s chagrin though, the sound revolution proved to provide a long-lasting impact on the industry, modifying its existing dynamics for decades to come. Some players of the silent movie era declined, while others took advantage of the disruptive element of the introduction of sound in order to enter the market or to expand their competitive advantage. As a result, a new landscape emerged after the reequipping costs of the technology were absorbed and new professionals, whose technical skills were needed in the medium, permanently entered the industry. The introduction of other new technologies, specifically the introduction of color, special effects, and experiments with wide screens for features, also produced different impacts on the motion picture industry, then the central element of the entertainment sector, in the golden age of Hollywood from the 1920s to the 1940s. The rise of television in the late-1940s media landscape also disrupted the existing dynamics of the industry, with its then revolutionary capacity to broadcast live images across the nation, providing news, information, and entertainment. The advent and success of the new medium was initially received with mixed reactions by Hollywood, and oftentimes with antagonism if not open hostility. Some of the top Hollywood moguls went so far as to even advise their producers not to include images of TV sets, the adverse medium, in their movies (Anderson 1994, p. 2). From their perspective, there were reasons to be concerned about: As a result of the arrival of television sets in American households, movie attendances in theaters showed the first signs of a significant and irreversible decline. At the same time, new regulations enacted by the Paramount consent decree in 1948 were forcing the studios to dismiss their interests in the exhibition business, preventing them from taking advantage of the synergies provided by vertically integrated structures as in the golden era of the 2 preceding decades. Hollywood studios’ concerns proved correct

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and foresighted: Between 1946 and 1962 attendances in movie theaters dropped indeed a staggering 73.4% (Balio 1990, p. 24). Once the relevance and permanence of television in the entertainment landscape became apparent, however, the studios actively pursued different strategies. For example, in the 1950s Paramount attempted to appropriate the new medium, or in alternative, develop non-broadcast uses of television as theater television, and originated the first pay TV experiments (White 1990). Ultimately though, and not without hesitations, Hollywood studios decided to establish specific divisions to produce original television programming, as in the case of Warner Bros. in 1955 (Anderson 1994, p. 157), and eventually licensed their feature-length motion picture libraries to the TV networks (Balio 1990). The slow adoption from the Hollywood studios of the new medium TV has been identified by Levitt (1975, p. 3) as a classic example of “marketing myopia” on Hollywood studios’ part, as they did not fully understand the specific business they were in. Their fundamental misunderstandings of the competitive landscape were based on wrong perceptions of the needs of the entertainment market, and the specific resources and know-how they had already developed over the years in the motion picture business, and their applicability in the new medium environment. In other words Hollywood studios were too product-oriented, considering themselves only as movies makers, as opposed to being customer-oriented. They failed to immediately realize, as a result, that TV was poised to offer similar entertainment products to the same audiences and therefore positioning themselves as 360 degrees entertainment providers would have better captured the value generated by the emerging technology. Other significant changes occurred 2 decades later, when the new technologies of cable antenna TV and satellite platforms started to show their potential in the entertainment landscape. New TV channels as Home Box Office (HBO) were made available through these platforms in the mid 1970s. Their initial success signaled the existence of specific interest for TV programming beyond the offerings of general broadcast networks. Consequently, the studios entered the arena, albeit a few years later in the early 1980s, establishing a direct presence in the new medium forming a new pay TV service, Premiere (Hilmes 1990). Furthermore, when video recording devices became available for entertainment consumption in the late 1970s, Hollywood studios initially deemed the device dangerous and responsible for copyright infringement of their intellectual properties. In 1984, Universal, acting on behalf of all the Hollywood studios against the producer of Betamax, sued Sony Corporation, the consumer electronics conglomerate (the Sony vs. Universal case). The studios alleged that the practice violated existing copyright and would severely damage the entertainment industry, and as a result, VCR devices could not be allowed to operate in the home entertainment market. Also, the MPAA presented arguments against the new technology and its negative impact, on the industry and society at large, in the public arena. MPAA’s president Jack Valenti told US Congress that this phenomenon would “adversely impact on the creative community in this country,” pointing out “the devastation on the after-marketplace caused by the hundreds of millions of tapings” and calling the video recording industry “the Boston strangler of the American film industry” (US Senate 1982, pp. 459–485).

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The legal battle lasted 8 years and was finally resolved by the Supreme Court. The prior decision from the Ninth Circuit Court of Appeal was reversed, and the consumer electronics companies were declared not liable for the potential copyright infringement made possible by their products (Lessig 2004, pp. 76–77). This judiciary decision had an impact on the media and entertainment industry. More than 20 years after the verdict allowing the devices to be sold and utilized in the entertainment industry, the revenue streams generated by the home entertainment divisions of the Hollywood studios are among the largest and more profitable within their existing business models. The impact of this intervention had other repercussions: On the one hand, it regulated and legitimized the videocassette market Hollywood studios appeared to have wanted to stifle in its infancy, while on the other, it made the battle for the standards a crucial issue. It is worth noticing that in a competitive landscape with increasing returns, the “tendency for that which is ahead to get further ahead, for that which loses advantages to lose further advantages” (Arthur 1996, p. 100), the early gains of the standard Video Home System (VHS) created the phenomenon of path dependence (David 1985). Usually, once a standard is set and locked in, barriers to change automatically arise in a competitive landscape as a result of the inherent switching costs associated with eventual modifications of existing standards, even if new competing ones would deliver better products, services of performances. Consequently, the standard VHS, not necessarily the better one compared to the rival Betamax, became the only standard, not unlikely the QWERTY keyboard (from the first letters at the upper left hand side of the keyboard) surviving from typewriters to computer terminals. This keyboard layout was originated and designed with mechanical typewriters in mind (involving a set of raised types which would strike a piece of paper through an inked ribbon). Once the layout became the standard, it remained the standard as a result of the phenomenon of path dependence, regardless of its effectiveness compared to other competing possible standards (in fact the following Dvorak Simplified Keyboard or DSK proved to be faster and more accurate). Also, the QWERTY standard still remains today, irrespective of all the new technological advances which took place in the meantime, leading to computer terminals as opposed to mechanical typewriters. A similar standard battle has been unfolding at the turn of the twenty-first century in the high definition Digital Video Disc (DVD) market, with two competing and incompatible standards, Blu-Ray from Sony and High Definition DVD (HD DVD) from Toshiba. Sony, which lost the previous home entertainment standard battle with its Betamax format, now owns the Hollywood studio Sony Pictures (which includes Columbia Pictures), and in 2008 has officially “won” the high ­definition standard competition with the Blu-Ray format this time, having Toshiba decided to withdraw its HD DVD format, after the majority of the Hollywood ­studios decided to opt for the competing standard (Frankel 2008). This represents a major strategic achievement for the Japanese consumer electronics conglomerate Sony (Fritz 2008), which decided to enter the entertainment business in 1989 through the acquisition of the Hollywood studio Columbia Pictures with the intent to leverage digital media content and electronic devices as the first signs of convergence were appearing at the horizon of the global media and entertainment landscape.

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The historical analysis of the relationship between Hollywood and the evolving communication technologies in the twentieth century also provides useful insights for the entertainment industry landscape affected by the ICT revolution at the turn of the twenty-first century. Among the different potential strategic courses of action available, Hollywood studios appear to have adopted historically mixed strategies, and modified them over time vis-á-vis evolving new communication technologies, as their effects were unfolding in the media and entertainment landscape as a result also of regulatory forces, or lack thereof. In general, the past technological advances applicable to communication and entertainment in particular have ultimately proven beneficial for Hollywood, albeit not without lengthy, painful, and costly reorganizations and adjustments on their part and oftentimes with delayed effects, due to Hollywood’s initial resistances, when adopting defensive strategies, to the new technologies as they were unfolding. Ironically, the revenue streams generated by home entertainment and television stem from technologies forcibly opposed by the studios as they were appearing at the horizon of the landscape. Presently these revenue streams are essential for their profitability and cornerstones of their business models on the one hand, and their strategic global positioning on the other. Each entertainment product is exploited through a carefully designed shelf-life, including specific “windows” of exhibition, domestically and internationally, generating a variety of revenue streams from the same property under copyright, recouping the initial investment and eventually reaching profits, when successful (Blume 2004). For feature-length motion pictures, for example, research has shown (Weinberg 2005) that the subsequent “windows” of exhibition are essential in generating profits out of the pictures, as they account for more revenues than the theatrical release (with generally less costs associated with them).

7.3 The Regulatory Environment and Issues in the Digital Media and Entertainment Industry The regulatory environment and its evolutions over time play a pivotal role in the media and entertainment landscape. An analysis of relevant historical laws, regulations, and deregulations enacted by US administrations in the sector has helped us identify, in Chap. 2, the impact and the consequences of media policies on the entertainment industry in the largest world market. Historically, regulations of the industry, as the Paramount consent decree and the Financial Interest and Syndication Rules (FinSyn rules), appear to have helped shape the industry usually increasing competition and the diversity and variety in the production and distribution of entertainment, whereas deregulations (as the abolition of FinSyn rules and the Telecommunication Act of 1996) seem to have had the opposite consequences of reducing competition in the relevant markets and voices in the arena. As a result of changes within the regulatory environment, Hollywood’s landscape has evolved from the studio system of the 1920s to the “merger mania” of media and entertainment conglomerates at the turn of the twenty-first century. In the current

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landscape, the ICT revolution’s impact on the industry is still unfolding: affecting the content, the delivery, and the business models in entertainment. The issue of net neutrality represents a new frontier in the regulatory environment. The roll out of broadband is a key feature in transforming the media industry from an analog scenario to the digital world. It becomes therefore even more relevant the way our society is structuring the new, key, delivery channels, in what could be defined a “constitutive moment” (Starr 2004, p. 1). As the telecommunications industry is experiencing consolidation (Rosenbluth 2007, p. 1), intellectual voices coming from different sectors of the society are entering the US public discourse pointing out the importance of the issue, and the risks associated with a private, corporate, profit-oriented approach to the phenomenon, which could prove painfully shortsighted for the society as a whole (Peha et al. 2007). Faulhaber (2007, p. 683) specifically identities three components in the network neutrality debate: The first is the argument that all Internet “pipes” should transmit all the bits transiting through their delivery systems “without discrimination or management,” the second involves the application providers, which should not have to pay broadband Internet Service Providers (ISP) to deliver their services to the ISP’s customers, and finally the “vertical foreclosure,” that is the magnitude of the power in the hands of the “broadband ISP incumbents (telcos and cable)” potentially harming “customers, application providers and innovators” (Faulhaber 2007, p. 683). The main issue arising within the debate on “net neutrality” appears to be the concern that the owners of the delivery pipes might decide not to maintain a neutral approach when dealing with different customers and different content. The issue becomes a central aspect to guarantee that the public interest dictates the future path of this key industry for the twenty-first century economy and society at this crucial juncture, brought about by technological change. Furthermore, the processes of deregulation and privatization in the international telecommunications sectors, as illustrated for example by Thussu in his analysis of the global satellite industry (2006, pp. 81–92), have raised the dimension of the issue to a planetary scale, with potential significant impacts on the whole international communication landscape. The regulatory environment on net neutrality has been developing in recent years: On August 1, 2008 the Federal Communications Commission (FCC) in the United States ordered that the cable operator Comcast end what have been ruled “discriminatory network management practices” (FCC 2008). In a written statement, Chairman Kevin J. Martin explained the rationale of the ruling in the following way: “Would you be OK with the post office opening your mail, deciding they didn’t want to bother delivering it, and hiding that fact by sending it back to you stamped ‘address unknown – return to sender’? Or if they opened letters mailed to you, decided that because the mail truck is full sometimes, letters to you could wait, and then hid both that they read your letters and delayed them? Unfortunately, that is exactly what Comcast was doing with their subscribers’ Internet traffic” (FCC 2008). The relevance of this ruling and its consequences, potentially on a global level, have not gone unnoticed: As the FCC commissioner Michael J. Copps put it “This is a landmark decision for the FCC – a meaningful stride forward on the road to guaranteed openness of the Internet.” At the same time the ruling reinstated that it is in

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FCC’s interest to protect consumers’ access to lawful content, and “blocking unlawful content such as child pornography or pirated music or video would be consistent with federal Internet policy” (FCC 2008, p. 3). It is worth noticing that in this ruling the FCC was sharply divided (three commissioners in favor and two against, providing opposite arguments in their written statements following the ruling), that Comcast appealed the ruling (Triplett 2008b), and that the United States Court of Appeals for the District of Columbia Circuit in April 2010 has questioned the agency’s authority on this matter (Comcast Corporation v. Federal Communications Commission and United States of America, No. 08-1291, April 6, 2010). The debate on net neutrality is far from over, and the regulatory environment is still evolving at the time of this writing. The latest ruling by the FCC (also sharply divided) on December 21, 2010 introduces three rules as guidelines to “preserve Internet freedom and openness”: transparency, no blocking, and no unreasonable discrimination. The ruling recognizes the centrality of freedom and openness for the development of the Internet as we know it, a level playing field, and that “the openness of the Internet cannot be taken for granted, and that if faces real threats.” At the same time, the rapidly growing wireless broadband segment is considered differently when it comes to net neutrality, as differences with fixed broadband are brought to the fore technically, historically, and in the distinctive competitive landscapes. As a result, the FCC ruled “measured steps” for mobile broadband (FCC 2010). While court cases and FCC rulings have been responses to domestic uses of technology, the stakes are much bigger and the issue involves Hollywood as well. Interestingly, the Hollywood system does not appear to have a unified front on the issue. Entertainment labor representatives as the Writers Guild of America publicly supported net neutrality before the US Senate Commerce Committee, arguing that Internet represents a key market for independent creators and it should remain as such. On the other hand the MPAA on behalf of the Hollywood studios appears to have adopted a defensive strategy on the issue, as they oppose attempts to enforce net neutrality, raising concerns that it might encourage or foster the unauthorized diffusion of their entertainment content under copyright (Triplett 2008a). In fact, the phenomenon of non-authorized diffusion of content is on the rise in the twenty-first century entertainment environment, rendered more effective and pervasive by digital technology, which not only vastly improves the production and global reach of entertainment content but also facilitates its ubiquitous diffusion even when the distribution is not authorized by its IPR holders.

7.4 The Rise of Non-Authorized Diffusion of Entertainment Content in a Digital Environment The defense of intellectual property is a major concern for Hollywood studios, whose business models are based upon the systematic exploitation over time of entertainment products under copyright. The MPAA, the advocate of the major Hollywood studios, claims that each infringement constitutes a direct loss of revenues for these

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units of profit-oriented and publicly traded conglomerates. As a consequence, the defense of copyright is a cornerstone of the entertainment industry and in their view of legitimate global trade in general, with every breach encouraging illegal entities and businesses, while jeopardizing authorized and legal future revenue streams (Sigismondi 2009). Their basic arguments in their “who piracy hurts” analysis are that entertainment content is similar to any other manufactured product, and as such, the owners should be protected accordingly (MPAA 2006a). The issue becomes more relevant in today’s digital world, which allows significant improvement in the quality and the speed of the distribution of a copy of entertainment content, as opposed to previous technologies (from used books to recorded materials on tape). MPAA claims that the economic losses incurred by Hollywood studios as a result of this practice are significant, and social consequences of these illegal activities are also significant. Their arguments go on pointing out that “piracy,” as they define each unauthorized copy of entertainment content under copyright, hurts the society as a whole, whereas, it is suggested, a strong protection of IPR will encourage innovation and develop better technologies for the society as a whole (MPAA 2006b). The US administration has been, so far, responsive to the requests of the media and entertainment sectors in general and the MPAA in particular. Domestically, more stringent laws have been passed in defining unauthorized copies as piracy and as federal offenses, in establishing the extension of the length of the existing copyright protections, and in their enforcement. Internationally also, the US administration has not taken the issue lightly: A comprehensive set of actions under the Strategic Targeting Organized Piracy (STOP!) have been taken to prevent counterfeit and pirated goods from circulating, regardless of their country of origin. It is also a major point in international, and bilateral, treaties for the US administrations in their foreign trade policies and agreements (Sigismondi 2009). MPAA points out that piracy takes place in the different stages of the distribution of an entertainment product under copyright, as a result of the new digital landscape: When the movie is released in theaters, it can immediately illegally be recorded there with regular camcorders (in what is defined as “camcorder piracy”). Later in the exploitation chain of the movie, it can be illegally copied and distributed while it enters the Home Video or DVD “windows” of distribution through optical disc piracy. Furthermore, when the beginning of the television distribution takes place (typically through the Video on Demand or Pay Per View format) a satellite theft might occur (MPAA 2004, p. 1). Significant efforts are being put in place by MPAA, on behalf of its members, to prevent this practice, by investing in security throughout the process of production and distribution of entertainment, by fostering public education and training, and by establishing a hotline for the US and Canada, and to press legislators to act decisively against it. The increased awareness of the phenomenon eventually led to the Family Entertainment and Copyright Act of 2005, which made recording with a camcorder in a theater a federal offense. The increased diffusion of non-authorized entertainment content by virtue of the new digital environment in the global entertainment landscape is deemed a major threat for the leaders of the industry and their overall competitive advantage.

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It is worth noticing that the issue of IPR and their protection in the creation and distribution of entertainment is also at the center of ongoing debates in academia and beyond regarding the role, the limits, and reach of these rights, and vastly different approaches have been proposed (see for example Lessig 2004). From a business point of view, the new digital technology, its diffusion and appropriation by the different societal elements, is ushering in new challenges and opportunities for the profit-oriented entities involved in the creation, production, and distribution of entertainment. As the historical analysis of the development and diffusion of the different communication technologies of the twentieth century has illustrated, within the evolving regulatory environments, Hollywood can decide its course of action vis-à-vis the emerging technologies and adopt defensive or offensive strategies. In a similar way, digital entertainment is posing the same question to the entities, new and old, operating in the landscape and facing the specific threats and opportunities generated in a digital entertainment environment, so far illustrated. The ICT revolution is unfolding globally in the twenty-first century society as a whole, and also specifically in the media and entertainment landscape. How will its disruptive impact affect the landscape, and what is distinctive in this new technology, compared to the previous technological evolutions?

References Anderson C (1994) Hollywood TV: the studio system in the fifties. University of Texas Press, Austin Arthur WB (1996) Increasing returns and the new world of business. Harv Bus Rev 74(4):100–110 Balio T (ed) (1990) Hollywood in the age of television. Unwin Hyman, Boston Blume S (2004) The revenue streams: an overview. In: Squire JE (ed) The movie business book. Fireside, New York David PA (1985) Clio and the economics of QWERTY. Am Econ Rev 75(2):332–338 Faulhaber GR (2007) Network neutrality: the debate evolves. Int J Commun 1:680–700 Federal Communications Commission (FCC) (2008) Commission orders Comcast to end discriminatory network management practices [News release]. http://www.fcc.gov. Accessed 5 Aug 2008 Federal Communications Commission (FCC) (2010) FCC acts to preserve Internet freedom and openness: action helps ensure robust Internet for consumers, innovation, investment, economic prosperity [News release]. http://www.fcc.gov. Accessed 6 Jan 2011 Frankel D (2008) Home video format war just beginning: blue-ray’s next battle is against standard DVDs. Variety. http://www.variety.com/article/VR1117981786.html. Accessed 14 April 2008 Fritz B (2008) Sony’s Blu-Ray gamble pays off: Conglom is united behind hi-def DVD format. Variety. http://www.variety.com/article/VR1117981781.html. Accessed 14 April 2008 Hilmes M (1990) Pay television: breaking the broadcast bottleneck. In: Balio T (ed) Hollywood in the age of television. Unwin Hyman, Boston Jewell RB (2007) The golden age of cinema: Hollywood 1929–1945. Blackwell, Malden Lessig L (2004) Free culture: how big media uses technology and the law to lock down culture and control creativity. The Penguin Press, New York Levitt T (1975) Marketing myopia. Harv Bus Rev September-October:1–14 Motion Picture Association of America (MPAA) (2004) Piracy fact sheet, US overview. http://www.mpaa.org/USPiracyFactsheet/pdf. Accessed 10 June 2006 Motion Picture Association of America (MPAA) (2006a) Who piracy hurts. http://www.mpaa.org/ piracy.asp. Accessed 30 Nov 2006

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Motion Picture Association of America (MPAA) (2006b) MPAA says strong content protection will lead to more innovation in movie delivery, press release. http://www.mpaa.org/press_ releases/2006_03_29_jf.pdf. Accessed 30 Nov 2006 Peha JM, Lehr WH, Wilkie S (2007) The state of the debate on net neutrality. Int J Commun 1:709–716 Rosenbluth T (2007) Telecommunications: wireline. Standard & Poors Industry Surveys. McGraw-Hill, New York Scripps Institution of Oceanography (2006) New Scripps Study reveals San Andreas fault set for the ‘Big One’. Scripps News. University of California, San Diego. http://scrippsnews.ucsd.edu/ Releases/?releaseID=736. Accessed 30 June 2008 US Senate (1982) Copyright infringements (audio and video recorders): hearing on S. 1758 before the US Senate Committee on the Judiciary, 97th Congress, 1st and 2nd session – testimony of Jack Valenti, president, Motion Picture Association of America, pp 459–485 Sigismondi P (2009) Hollywood piracy in China: an accidental case of US public diplomacy in the globalization age? Chin J Commun 2(3):273–287 Starr P (2004) The creation of media: political origins of modern communication. Basic Books, New York Thussu DK (2006) International communication: continuity and change. Oxford University Press, New York Triplett W (2008a) Hollywood split on net neutrality. Variety. http://www.variety.com/article/ VR1117984426.html. Accessed 5 Aug 2008 Triplett W (2008b) FCC votes against Comcast policy: corp under fire in net neutrality case. Variety. http://www.variety.com/article/VR1117989968.html. Accessed 5 Aug 2008 Weinberg CB (2005) Profits out of the picture: research issues and revenue sources beyond the North American box office. In: Moul CC (ed) A concise handbook of movie industry economics. Cambridge University Press, New York White TR (1990) Hollywood’s attempt at appropriating television: the case of Paramount Pictures. In: Balio T (ed) Hollywood in the age of television. Unwin Hyman, Boston Williams R (1975) Television: technology and cultural form. Routledge, London

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Chapter 8

The Impact of the ICT Revolution on the Entertainment Industry

8.1 The Magnitude and the Areas of the ICT Impact The ICT revolution’s impact on our society is still unfolding. The Center for the Digital Future at the Annenberg School for Communication & Journalism of the University of Southern California is at the forefront in the analysis of the different issues associated with Internet use, monitoring the activities on the Internet, and publishes an annual report, in 2008 in its seventh year. The longitudinal study surveys and explores the different trends of this communication revolution as it unfolds in the United States. The findings of their 2008 report indicate that the number of hours online per week spent by Internet users in 2007 is still rising (on average 15.3 h per week) and this represents the highest level registered in the research up to that point (Center for the Digital Future 2008, pp. 24, 30). Many of the activities on the Internet can be categorized as entertainment (pp. 27–29). When probed on how frequently Internet users were involved at least weekly in different activities, they provided the following results for the following categories, which could be broadly defined as “entertainment”: playing online games 35%, downloading music or listening to online music 31%, searching for humorous content 25%, and overall Internet surfing without a specific destination 71% (pp. 27–29). Overall Internet is deemed the most important media source of information, compared to the other principal media (p. 52). Also, the access to the Internet occurs increasingly through broadband (p. 36) and wireless connections, through both computers and mobile phones (p. 41). The repercussions on the entertainment industry are also unfolding. In an analog world, content producers, distributors, and owners of intellectual property rights have a clear competitive advantage in determining the timing, and to a certain extent, the nature of the entertainment content proposed to audiences worldwide, as shown in the analysis of the global competitive advantages, domestically and globally, of the Hollywood studios in Part II of the book. In the current scenario, as a result of the ICT revolution, the media landscape is undergoing significant changes as it is poised to become a world of “digital abundance P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3_8, © Springer Science+Business Media, LLC 2011

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where any maker of content (films, music, video games) could have access to the world’s audience through a server based on demand media environment” (Taplin 2005, p. 1), showing increasing signs of potential disruptive changes to the existing dynamics of the landscape, which have been regulating the industry in the last decades, affecting key aspects and dimensions of the entertainment sector (Benson 2007; Berman et al. 2006; Eliashberg 2005; El Sawy 2005; Ravid 2005). The ICT revolution is facilitating the creation of a landscape where the role of distribution intermediaries could be lessened and at the same time global distribution is available to entertainment content producers worldwide. This ongoing revolution is beginning to show its impact on the entertainment industry in different and distinct ways, and calls for an analysis comprising the different facets of the landscape, jointly and severally. Specifically, the changes in the industry ushered in by this new technology can be analyzed in three key distinct areas of the entertainment industry: content, conduits, and business models. These areas represent the cornerstone of the entertainment industry, situated at the intersection between art and commerce, as they involve the production and distribution of content by profit-oriented entities in a competitive market. The following analysis will focus on these three aspects, exploring on the one hand the evolutions of the technology and on the other its specific impact on the entertainment landscape, with the challenges and opportunities stemming from the unfolding changes.

8.2 Digital Content The ICT revolution has specifically impacted the entertainment landscape, by making it possible to produce and reproduce content digitally. In digital format, the entertainment experience can be enhanced through sound and visual effects in ways virtually impossible in an analog world (Ochiva 2004). For example, the 3D technology (the possibility to show three-dimensional images), although not new per se, is experiencing a renaissance in the current digital landscape. The success of the feature Avatar, the highest-grossing film of all time worldwide released theatrically in 2009, showed the potential of the 3D technology to enrich the theatrical entertainment experience of movie goers and its commercial consequences. Also, the possibility to create Computer Generated Images (CGI), with their enhanced visual impact, has proven instrumental in the rise in popularity of feature-length animation pictures, as shown by the success of Pixar. Pixar Animation Studios was founded in 1986 by Steve Jobs and has been at the forefront of the wave of the commercial and critical success of CGI animated feature films worldwide in the last decade. Their movies have won both Academy awards and topped worldwide box office charts, as estimated by the trade journal Variety, with movies like Finding Nemo (US $864M gross revenue worldwide and Academy award winner for best animated feature in 2003) and The Incredibles (US $631M gross revenue worldwide and Academy award winner for best animated feature in 2004).

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Also, a specific unique feature of digital content is its capability to be interactive, allowing therefore an active audience to engage in the creation of the piece of entertainment being generated, unlike traditional, analog transmission from one-to-many. Specifically, within the entertainment industry, interactive entertainment is gaining importance: US computer and video game software sales grew to a record US $7.3B in 2004, more than double their sales since 1996 (The Entertainment Software Association ESA 2005), while a similar amount of revenues is generated by theatrical exploitation of feature-length motion pictures on an annual basis, but without the dramatic increase in the last decade. Also, the same report of the ESA sheds light on the phenomenon and its potential future developments: 75% of heads of households play computer or video games, the average game player age is 30, 43% of the players are women, 47% of Americans have purchased or plan to purchase one or more games in 2005, 53% of game players expect to be playing as much or more 10 years from now as they do today. In addition to enhancing the entertainment value of the content proposed by established profit-oriented media and entertainment entities, digital technology lends itself to different and alternative uses. For example, the rise of user-generated content is also traceable to the availability of new digital technologies. The phenomenon can be linked to the what has been defined the rise of a convergence and participatory culture on a global scale, where fans, bloggers, and gamers meet, generate, modify, and appropriate content to share (Jenkins 2006). The 2006 acquisition of YouTube by Google, and the magnitude of the price paid for the transaction (US $1.67B for a corporation of 67 employees founded from scratch only 1 year earlier), brought to the fore the relevance of this phenomenon in today’s media landscape (La Monica 2006). The interaction of fans via YouTube identifies and amplifies the diffusion of content that matters to specific audiences, who render it more visible in the process. Phenomena like YouTube appear to bridge the gap between local and global fans, effectively allowing creative interactions among individuals from different cultures within an environment of evolving hybridity (Kraidy 2005). There are a multitude of different players involved in the process of aggregating content in the user-generated arena, beyond YouTube, with their specific and distinct features and competitive positioning. Blinkx (www.blinkx.com) for example is a San Francisco-based company, whose goal is to become the world’s most comprehensive video search engine, including user-generated content. Another San Francisco based company, Your Truman Show (www.yourtrumanshow.com), attracts personal stories and content from its users. Other companies, as blip.tv (www.blip.tv) encourage audiences to create their own shows, providing distribution via Internet, while other entertainment entities are entering the arena, as in the example of the Canadian Zip.tv (www.zip.tv), originally an internet distributor of copyrighted entertainment, whose offerings now also include “members’ videos.” As this phenomenon unfolds, its repercussions on the twenty-first century societies globally are being analyzed. Specifically, Jenkins identifies the rise of pop cosmopolitanism, which he defines as “the ways that the transcultural flows of popular culture inspires the forms of global consciousness and cultural competency” (2006, p. 156). Considering media convergence as an “ongoing process occurring at various

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intersections between media technologies, industries, content and audiences” (2006, p. 154), Jenkins specifically focuses on the interaction between two forces: corporate convergence and grassroots convergence dictating the dynamics of the evolving media landscape, and the texts and meanings generated (2006, p. 155). In his view, corporate convergence leads to concentration of media ownership, whereas grassroots convergence provides empowerment to the audiences that actively produce, distribute, and consume media content. The dynamic relations between these two forces, one top-down and the other bottom-up, would lead to global convergence shaping a new kind of pop cosmopolitanism (2006, p. 156). Digital technology affects not only the content of entertainment, but also its distribution, as the digital format lends itself to a variety of new distribution platforms, unimaginable only a few decades ago. Digital content can be access to and retrieved by users living in different digital environments: work, home, and mobile. It allows a potentially “always connected” digital lifestyle for individuals who can utilize the connection with the outside world for many aspects of human life, including entertainment. Specifically, entertainment content in this landscape is usually referred to as rich digital media, as it incorporates large amounts of digital data, increasing from music to videos and ultimately to high quality feature-length motion pictures. In addition to digital discs, entertainment content can be transferred, without the support of any physical product, to audiences’ terminals through the processes of streaming and downloads over digital networks (streaming occurs when content is transferred across a network without the need of any local data storage in the users’ terminals, whereas downloads are stored locally). The costs associated with the activities of retrieving and storing digital entertainment content have significantly diminished in the last decade, and forecasts from industry analysts envision further declines in the foreseeable future as technological advancements unfold (Berman et al. 2006, p. 18). The changes in the delivery of entertainment have the potential to alter existing industry dynamics, as distribution has been a key strategic element in the twentieth century landscape, and an essential global competitive advantage of Hollywood studios analyzed in Part II.

8.3 Conduits: Changes in the Delivery Platforms The digital revolution is starting to impact the delivery of entertainment content, and it is poised to determine larger changes in the industry in the following aspects. First, on the exhibition side of the business, theaters are exploring the shift to digital projectors (as opposed to the current 35 mm analog film projectors), allowing the associated shift in the content shown to movie goers to go from analog to digital. The potential savings for the industry are significant (Culkin et al. 2006), stemming basically from the abolition of the cost of prints. At this stage, it is still unclear who will bear the costs associated with the full transition, between the exhibitors (theaters owners) and the distributors (Hollywood studios).

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Considering the costs of the roll out and the periodical upgrade of digital projectors in the exhibition of movies on one hand, and the box office revenues generated from the exhibition on the other, the new technology has the potential to increase the profitability of the industry. It is poised to augment the value of the entertainment experience of the audience, which could translate into higher ticket prices. Moreover, the digitalization of movie theaters could generate new advertising possibilities and new flexible programming opportunities, such as screening live events for example (Eliashberg 2005, p. 152). Even if this increase should not produce additional revenues for the distributors and exhibitors, savings stemming from this transition should benefit the industry. In other words, this change could have a positive economic effect even if customers prove not to be willing and able to pay more for the digital experience, or be more inclined to go to the movie theaters as a result, and the resulting box office revenue would not change. Digital projectors do not call for the costly analog distribution of prints, lowering the distribution costs (Eliashberg 2005; Culkin et al. 2006). As a result of falling distribution costs due to savings generated by digital delivery, profit should rise, even should revenues remain virtually unchanged. As mentioned, to this day it still remains to be seen who (between the distributors and the exhibitors) will ultimately bear the costs associated with the transition from an analog to a digital exhibition. Tensions over this issue have in the meantime slowed down the digital rollout in the exhibition side of the business (Fritz and McClintock 2008). The slow digital rollout of movie theaters is particularly affecting the 3D animation segment (Fritz and McClintock 2008), which greatly benefits from digital theaters, as they enhance the entertainment experience provided. Industry leaders and experts have been trying to identify the changes and impacts of the ICT revolution since it appeared and still unfolds on the media and entertainment landscape as a whole, beyond the theatrical exhibition of films in movie theaters, which represent only a fraction of the revenues generated by the industry. Technically, the combined action of three distinct forces appears to be the driver of the most significant and potentially disruptive evolutions: the openness of digital standards, the roll out of broadband services, and the rise of many-to-many networks (Benson 2007, pp. 3–6). Open standards refer to the nature of protocols in the digital landscape, such as Transmission Control Protocol/Internet Protocol (TCP/IP), Motion Picture Experts Group Audio Layer 3 (MP3), Joint Photographic Experts Group (JPEG), Hyper Text Markup Language (HTML), which are typically license-free and allow different users to distribute and share digital content on the different available platforms. This is a novelty compared to previous technologies, as in TV for example, where different countries would adopt different standards, usually within the protection of intellectual property rights, creating barriers to entry for new comers and rendering more difficult for foreign entities, and virtually impossible for singular individuals, to interact at a global level. Open standards create the preexisting conditions of global communication at the individual level and of a global market in the media and entertainment landscape for profit-oriented entities.

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Broadband services on the Internet are generally defined by the FCC as “data transmission speeds exceeding 200 kilobits per second (Kbps) […] in at least one direction” (FCC, p. 1). Other sources, such as the Gartner Inc., a research and advisory firm, consider that “true broadband” is reached at a level of 10 megabits per second (Mbps), as reported by Moyers (2006, p. 3) and this is consistent with the evaluations of Baya and Berg at the Global Technology Center of PricewaterhouseCooper (2003). Between these two extremes, a level of 1.5 Mbps is deemed the minimum level to reach near DVD quality by industry standards (Baya and Berg 2003, p. 13). The roll out of broadband has specific consequences in media fruition. In fact, rich digital content can be delivered in a faster way through broadband, depending on its level. High network speeds widen the range of applications: While Internet Protocol (IP) telephony, basic Web surfing, and e-mails require only 130 Kbps, MP3 audio streaming and online Personal Computer (PC) games call for at least double the amount of speed (Baya and Berg 2003, p. 13). The music file sharing phenomenon rendered possible by the deployment of broadband for example has already shown its disruptive effect on the music industry, with revenues stemming from consumer purchase of music now in decline and poised to face significant challenges in the foreseeable future, as pointed out by industry analysts (Amobi and Donald 2007a). The delivery of digital entertainment content, including feature-length motion pictures, is also clearly linked to the broadband roll out to guarantee to the audiences an experience similar to DVDs, as a slow Internet connection renders the processes of streaming entertainment content not feasible and downloading painstakingly slow. This is due to mechanism of sending data over the Internet in “packages” to be reassembled at the receiving end. In a slow Internet environment video and audio would “drop out” randomly and the movie would not play smoothly (Ochiva 2004). As a result, the rise of broadband services has a direct impact on the consumption of entertainment on the one hand, and on the media and entertainment industry on the other. As Benson puts it (2007, p. 4) the advent of broadband is for the media industry “as gargantuan in its eventual impact as the shift from horse and buggy to the automobile.” Its global diffusion is occurring at an uneven pace at the beginning of the twenty-first century, with some countries in the Far East, such as Japan and South Korea, and Western Europe surpassing the United States in this regard, both in broadband penetration and average speed available. In 2002 for example, ­broadband penetration in South Korea was 21.28% compared to 6.8% in the United States (Baya and Berg 2003, p. 14). Also, broadband’s average speed in the United States in 2007 was around 400 Kbps to 1 Mbps, while in South Korea was 10, and 2–5 Mbps were common in Western Europe in the same time period (Benson 2007, p. 5). The structure of the Internet itself has shown to lend itself to specific appropriations by audiences, with a clear impact on entertainment creation and consumption. In stark contrast with previous one-to-many mass communication technologies, as broadcast TV, the Internet provides an environment where many-to-many networks thrive. These networks comprise different communities sharing specific common interests, such as eBay, MySpace, and Facebook. Specifically, the aforementioned YouTube has over 60 million users globally offering more than 100 million video

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streams a day, exceeding the viewership of all the TV networks in the United States combined (Benson 2007, p. 6). Social networks develop over the available digital platforms, allowing individual users to share content and experiences related to many human interests, nuances, and niches, oftentimes through user-generated content, whose reach is now potentially global. Peer-to-peer technologies (P2P) provide the technical support for many of these activities involving the sharing of media and entertainment content. These technologies are still evolving. Currently, advanced protocols are being developed increasing networks’ efficiencies in the delivery of digital content. Specifically, the Distributing Computing Industry Association (DCIA) promoted the creation of the Proactive Network Provider Participation for P2P (P4P) Working Group, involving many of its affiliates and academic institutions globally, with the goal of improving and optimizing these technologies. Another specific impact on the global entertainment and media landscape is the phenomenon of different, Internet based, delivery channels in addition to the existing “windows” of exhibition described in Part II, made possible by the digital nature of the content and the distribution channels. The phenomenon of TV content available through Internet platforms is usually referred to as Internet Protocol TV (IPTV), made possible by broadband connections, when they are available. IPTV potentially disrupts national and cultural boundaries, as it creates a global medium based on the Internet. Through interactivity, IPTV provides a personalized TV experience, allowing users to access, save, and potentially modify existing content, create and share new content, and ultimately altering the user experience with the medium. Also, the development of broadband services for mobile phones allows what has been defined as “Mobile TV,” providing video and interactive content to mobile users. Apple’s iTunes platform is emerging as a major player in the digital release of entertainment content and it is making inroads in the segment of movie digital downloads, having sold reportedly more than 2 million movies in a landscape where both Movielink (a joint venture funded by every Hollywood studios except Disney) and CinemaNow (owned mostly by Lionsgate Entertainment) have so far failed to take off (Kirsner 2007). The competitive landscape of digital distribution also includes many other different start-up companies, which can be generally categorized as video aggregators of entertainment content, whether professionally produced or user-generated. Among the new entities in the landscape, Joost (www.joost.com) and Babelgum (www.babelgum.com) have been founded by professionals with previous successes in the digital environment. They both provide access to, at the time of this writing, more than 20,000 free shows available through multiple, customizable channels and they also provide their audiences the possibility of participating in interactive communities: They represent a global alternative to local TV broadcasters whenever a broadband connection is available. Furthermore, in the evolving “video aggregators” landscape, numerous players are appearing at the horizon: Among the new entities, Azureus (www.vuze.com) provides another open entertainment platform, specifically betting on the high resolution of the content provided as their competitive advantage.

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In addition, Hollywood players are exploring the landscape: NBC Universal, News Corporation, and ABC/Disney have backed the online video joint venture Hulu (www.hulu.com), and Warner Bros. has developed the WB online platform (Garrett 2008). Oftentimes former Hollywood executives are involved in these ventures, as in the case of the video hosting and sharing site Veoh (www.veoh.com), whose board comprises Michael Eisner, the former chairman of Disney as one of the investors along with Time Warner. In an overcrowded profit-oriented landscape where few players, if any, are reaching a profit in distributing entertainment though digital platforms, access to financing appears to be a key success factor to operate until a future break-even point will be reached, when market conditions and dimensions allow. At that point an established competitive advantage (and market share) could prove particularly profitable, should significant portions of the “old” media have migrated to the new digital platforms. As a result, entities able to raise funds in the global financial markets (or backed by entertainment conglomerates) have more chances to survive the transition. In addition, access to entertainment content through strategic partnerships with content providers, technological advantages (especially if codified in patents), and attractive and clearly identifiable brands appear to be strategically important to create a competitive advantage in a fast-paced evolving market. The earlier mentioned entities appear to have some of these features to leverage with offensive strategies aimed at testing the boundaries of the field as the landscape evolves and the changes in the mediascape unfold. Moreover, new players are continuously appearing at the horizon of landscape in the first decade of the twenty-first century, trying to carve out a space in the evolving industry. The emerging market, with its distinct features involving both the content and its global distribution, also calls for specific business models able to capture the value of the entertainment proposed and delivered to the audiences.

8.4 New Business Models For profit-oriented entities, such as the media and entertainment conglomerates, the central question is how to create, deliver, and capture value in the evolving landscape shaped by the ICT revolution. The strategic decisions involving the competitive positioning of these companies within the evolving industry value chain (as shown in Fig. 2.3) determine the business models of these entities, which incorporate the operational structure of their competitive strategies indicating the different sources of revenue and the costs with them associated. The specific issue for profit-oriented companies operating in the media and entertainment industry is therefore to determine to what extent the existing business models, which have been regulating the industry in the last decades, are still successfully applicable in the twenty-first century. The new digital landscape is ushering in new, particular issues. On the one hand, digital technology vastly improves the quality of the copies reproduced, and on the other, the potential speed and reach of their distribution (Ravid 2005). Digital copies

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have the potential of reproducing the original piece of entertainment without any loss in quality, unlike analog technologies, which diminish it at every step of the reproduction chain. While “analog technology attempts to mimic – or create an analogy of” images or sounds originated in nature, digital technology converts them into bits of information, which can be reproduced ad infinitum exactly as in the original first copy (Ochiva 2004, pp. 506–507). For example, the quality of the entertainment experience, both visual and auditory, provided by DVDs available for home entertainment is vastly superior to the one provided by their analog predecessors (the VHS cassettes) and it is poised to increase with the diffusion of high definition DVDs, now that the industry standard has been established (Sony’s Blu-Ray), providing movie theater-like experience at home. Entertainment products are information goods as defined by Shapiro & Varian: “Anything that can be digitized – encoded as stream of bits – is information” (1999, p. 3). As such, they are costly to produce, but cheap to reproduce: While the cost of producing the first copy can be substantial, the costs associated with its reproduction are negligible (Shapiro and Varian 1999, p. 3). Therefore, the relevance of the issue of Intellectual Property Rights (IPR) and their protection has significantly increased as the entertainment content under copyright faces a potentially global distribution outlet: the Internet. One general approach, suggested by Price Waterhouse Cooper (PriceWaterhouse Cooper 2005, p. 2) is to implement a corporate strategy of IP value management, as opposed to a traditional approach of IPR protection, in redefining IP value. The specific aspects of the entertainment business suggest a different approach, and call for a specific flexibility from the Hollywood studios, which have been operating successfully in an analog media and entertainment landscape. A suggested strategy is “the long tail” approach (Anderson 2004), shifting the distribution of entertainment content from mass markets to millions of niches, made possible, and economically viable, by digital delivery, as the new technology of delivery allows a more accurate distribution to the individual customers. It is argued then that “as the costs of production and distribution fall, especially on line, there is now less need to lump products and consumers into one-size-fits-all containers” (Anderson 2004, p. 2). This move attempts to follow and capture the interests of a more and more media savvy, active audience, in control of their entertainment decisions, as demonstrated for example by the surge also of Digital Video Recording (DVR) devices, which allow customers to select their content. It is worth noticing, however, that Anderson’s intuition of the “long tail” phenomenon in the entertainment sector has not been confirmed by empirical studies: A 2008 longitudinal study by Elberse on movies and music sales data shows no evidence of any “long tail” trends occurring in the industries analyzed (Elberse 2008). Also, advertising-based business models have been widely utilized for decades in different media, not only by “old” or legacy media, as terrestrial broadcasters, radio, television, and print, but also by “new” media. For example, Universal backed a start-up “Spiral frogs,” whose business model is based on allowing customers to download songs under copyright for free, and relying solely on advertising for their revenue, not to mention the successful business model of Google, arguably the current most profitable “new media” company, setting the standards for the market, which

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is almost entirely based on advertising sales related to its search engine. Under these business models, viewers have access to free content. In turn the viewers of the medium are offered to advertisers, who in exchange provide a significant revenue stream to the media outlet in order to reach them with their messages. The Google case history shows the potential of the impact of the ICT revolution in the media and entertainment landscape. Founded in 1998 by Stanford’s PhD students Larry Paige and Sergey Brin, a decade later it is one of the largest media company in the world, and still growing, with revenues of US $16.5B in 2007, vs. US $10.6B in 2006 (Google Inc. 2008), and a market capitalization, an estimate of its value based on its stock price and the number of its outstanding shares, of approximately US $179B as of May 9, 2008 (data from the Yahoo! Finance website, retrieved on May 9, 2008 from: http://finance.yahoo.com/q?s=Goog). The articulation of a business model in Information Technology-intensive sectors calls for specific theoretical frameworks, adapting existing models to the specific elements ushered in by rapidly evolving and potentially disrupting technologies. The Institute for Communication Technology Management (CTM) at the Marshall Business School of the University of Southern California utilizes the VISOR’s business model framework to evaluate opportunities and “unlock the hidden value in the Networked Digital Industry marketplace,” providing an exhaustive and comprehensive framework of the key success elements to factor in the digital economy landscape. VISOR is the acronym of the following components, deemed essential elements in a networked digital industry: Value proposition, Interface experience, Service platform, Organizing model and Revenue/cost sharing (El Sawy 2005). The model combines the different aspect of a corporate strategy in a digital marketplace and comprises five elements: the marketing component, identifying the value proposition for targeted customer segments; the specific internet component, providing the “wow” interface experience; the technological component, identifying the appropriate service platforms to enable delivery; the organizational component, identifying the processes and relationships; and the finance component, identifying the revenue/ cost model calculations (El Sawy 2005). Successful examples, beyond the aforementioned Google, include the iPod and iPad or the RIM Blackberry devices, which implement business models creating a competitive advantage in the digital media landscape successfully incorporating the five aforementioned elements. In an analog world, the exploitation of intellectual properties under copyright stems from a carefully planned distribution through subsequent, oftentimes exclusive, windows of exhibition through price discrimination, allowing the content owners to capture the largest and most diversified revenue streams from the same properties. The new digital channels available in the twenty-first centuries, however, have the potential to alter if not disrupt this mechanism, which represents the cornerstone of the profitability of the entities operating in the industry. The distribution on different digital platforms has the capacity to replicate the timing of the release of the windows of exhibition, from theaters to Free TV networks. The digital distribution therefore provides a parallel shelf life for entertainment content, generating potentially new revenue streams from the same properties under copyright. Figure  8.1 illustrates graphically how the digital distribution channels provide the parallel shelf life for entertainment content compared to the traditional

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Fig. 8.1  The potential impact of the digital distribution channels on the “windows” of exhibition

and planned sequence of the different windows of exhibition. The duration of the different “windows” of exhibition is in constant evolution over time. The data reported in the figure, detailing the different windows and their average duration, stem from Blume’s analysis (2004) and are reported as a point of reference of the mechanism. At the same time, however, the digital sources of additional revenues impact the size of the existing ones, not to mention the increased risk posed by the global increase of non-authorized use and consumption of entertainment content facilitated by its digital nature and new available digital distribution channels. The media landscape emerging from the ICT revolution appears to lend itself to a new, digital shelf life for entertainment content. Entertainment is more and more utilized by audiences as soon as it is released by its distributors. As a result, distribution “windows” tend to be shortened by the process or accompanied by a parallel distribution via different digital platforms, authorized and non-authorized. Therefore, different ways of capturing value from entertainment content are being explored, some shared with existing business models of “old media” adapted to the modified digital scenario, others proposing and implementing different approaches. Advertising appears to remain a key element in the business models of media companies, new or old. In a digital environment it is a different kind of advertising compared to the old one-to-many broadcasting media, allowing a more precise, potentially one-on-one and interactive communication with audiences.

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Still, it represents the fundamental connecting link between private entities through their corporate marketing strategies, both profit and nonprofit, and their constituencies, and as a result the destination of some of their most relevant budgets. As a consequence, it still constitutes at the same time a vital revenue stream for media companies. Google’s revenues, for example, stem 99% from advertising: 64% from Google websites and 35% from Google network websites, through its AdSense Programs, while only 1% of their revenues are generated by licensing and other activities (Google Inc. 2008). Advertising revenues, however, face specific challenges in the new landscape, as active audiences utilize new devices as Digital Video Recording, as TiVo for example, to access their preferred entertainment content at a time of their choosing. These devices allow audiences to eliminate advertising from their entertainment experience, and as a result, their diffusion combined with existing devices, as remote controls, have the potential to impact these revenue streams. The rise of these devices, while the need of consumer-oriented companies to communicate with their customers remains vital, has been generating different ideas to communicate with the public. Generally, a new impulse to integrate commercial messages within entertainment content has revitalized the old practices of corporate sponsorships of programs, or the insertion of commercial products within the plot of the content proposed through what is defined as “product placement” both in feature-length motion pictures and in made-for-TV content (Sim 2007). In addition, other revenue streams for media and entertainment entities are explored. They stem mainly from the subscription fees collected from consumers willing and able to pay directly for entertainment content from different platforms, whether on-demand or through subscription to premium packages, usually without advertising interruptions. Oftentimes, a mixed business model is utilized, combining advertising revenues with subscription fees, as in the case of cable or satellite TV channels benefiting from this dual revenue streams. The value of TV advertising in the United States is estimated at US $74B by Standard & Poor in 2007 (Amobi and Donald 2007b, p. 3), whereas the subscription revenue streams are estimated at US $75B by Standard & Poor in 2007 (Amobi and Donald 2007b, p. 15). In this evolving landscape, industry executives from different corners of the sector foresee different relevance of these components in their future revenue streams, as the convergence of the telecom and media industries is unfolding. A survey of executives conducted by the Economist Intelligence Unit within the IBM institute for Business Value in 2006 reveals that on-demand subscription and entertainment content rental are deemed the most significant revenue streams in the future by both telecom, network, and Multiple System Operators (MSO) executives, while advertising will still play a pivotal role according to network executives. There are many possible operating ways to implement these different business models, as shown for example by the report “The end of television as we know it” (Berman et al. 2006, p. 9). Their differences depend on the device utilized by the consumer, ranging from traditional TV sets to PC or mobile devices such as iPods or iPads, to the different ways media and entertainment companies attempt to capture and share revenues as audiences access entertainment content through different platforms. Generally, subscription or user fees are utilized, usually on a monthly basis, or on-demand fees,

References

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whenever consumers pay for the specific content they demand access to, with or without advertising. Network executives envision as their main competitive challenges in the foreseeable future heightened competition from current competitors, and also the competition from Internet portals and major content owners reaching directly their consumers (Berman et al. 2006). The current business model of the entertainment industry based on the different “windows” of exploitation is in peril: Hollywood veteran David Weitzner, former president, Worldwide Marketing at 20th Century Fox and Universal Pictures, predict that the existing “windows” of exhibition, already altered by the ICT revolution, will ultimately cease to exist, as content providers are bound to consider the worldwide simultaneous release of entertainment content via multiple platforms, in theaters, at home, or through mobile devices as the most effective strategy to capture value in the digital landscape (Weitzner 2008). The offensive or defensive strategies of profit-oriented entities help shape the landscape in evolution as a result of technological change. Their ability to effectively incorporate select features drawing on the new digital landscape appears to be a key success factor in producing and distributing next-generation entertainment content to audiences worldwide and to establish a long-term competitive advantage in the process. The digital media landscape calls for new paradigms, as the digital glocalization of entertainment.

References Amobi TN, Donald W (2007a) Movies & home entertainment. Standard & Poor’s Industry Surveys. McGraw-Hill, New York Amobi TN, Donald W (2007b) Broadcasting, cable and satellite. Standard & Poor’s Industry Surveys. McGraw-Hill, New York Anderson C (2004) The long tail. Wired Magazine. http://www.wired.com/wired/archive/12.10/ tail.html. Accessed 1 Oct 2008 Baya V, Berg EM (2003) The broadband future: interactive, networked, and personalized. http:// www.pwc.com/extweb/pwcpublications.nsf/docid/3AA6C798B1E7B91A85256E30006B6D A2. Accessed 10 Nov 2006 Benson B (2007) Couch potato famine: prospering through an era of disruptive change in media. FTI Consulting, New York Berman SJ, Duffy N, Shipnuck LA (2006) The end of television as we know it: a future industry perspective. IBM Institute for Business Value, Somers. http://www-935.ibm.com/services/us/ imc/pdf/ge510-6248-end-of-tv-full.pdf. Accessed 30 Nov 2007 Center for the Digital Future (2008) The 2008 Digital future report: surveying the digital future, year seven. Annenberg School for Communication, University of Southern California, Los Angeles Culkin N, Morawetz N, Randle K (2006) Digital cinema as disruptive technology: exploring new business models in the age of digital distribution. In: van der Graaf S, Wahida Y (eds) Information communication technologies and emerging business strategies. Idea Group, Hershey El Sawy O (2005) The VISOR framework: business model definition for new marketspaces in the networked digital industry. Center for Telecom Management, University of Southern California. http://dblab.usc.edu/csci599/CTMVISORFramework.pdf. Accessed 15 Nov 2007

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Elberse A (2008) Should you invest in the long tail? Harvard Business Review (July–August 2008). http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?ml_subscriber=true&ml_ action=getarticle&ml_issueid=BR0807&articleID=R0807H&pageNumber=1. Accessed 22 July 2008 Eliashberg J (2005) The film exhibition business: critical issues, practice and research. In: Moul CC (ed) A concise handbook of movie industry economics. Cambridge University Press, New York Entertainment Software Association (ESA) (2005) Essential facts about the computer and video game industry. http://www.theesa.com. Accessed 15 May 2007 Fritz B, McClintock P (2008) Jeffrey Katzenberg urges action: tensions mount over slow digital rollout. Variety. http://www.variety.com/article/VR1117984844.html. Accessed 11 July 2008 Garrett D (2008) WB revived as online platform: TV unit unveils The WB.com. Variety. http:// www.variety.com/article/VR1117984772.html. Accessed 30 April 2008 Google Inc. (2008) Financial release 2007. http://investor.google.com/releases/2007Q4.html. Accessed 9 May 2008 Jenkins H (2006) Fans, bloggers, and gamers: exploring participatory culture. New York University Press, New York Kirsner S (2007) Studios’ digital dilemma: Apple calling shots as biz tries to control market. Variety. http://www.variety.com/article/VR1117975284.html. Accessed 10 March 2008 Kraidy MM (2005) Hybridity, or the cultural logic of globalization. Temple University Press, Philadelphia La Monica PR (2006) After YouTube: the beginning of the end? CnnMoney.com. http://money.cnn. com/2006/10/10/technology/googleyoutube_reaction/index.htm?cnn=yes. Accessed 10 Nov 2006 Moyers W (2006) The net at risk. The new digital divide. http://www.pbs.org/moyers/moyersonamerica/print/new/digitaldivideclass_print.html. Accessed 10 March 2007 Ochiva D (2004) Entertainment technologies: past, present and future. In: Squire JE (ed) The movie business book. Fireside, New York PriceWaterhouseCooper (2005) Redefining Intellectual Property Value: The case of China. http:// www.pwc.com/extweb/pwcpublications.nsf/docid/73162A9921902A99852570910073564A. Accessed 30 Nov 2006 Ravid SA (2005) Film production in the digital age: what do we know about the past and the future? In: Moul CC (ed) A concise handbook of movie industry economics. Cambridge University Press, New York Shapiro C, Varian HR (1999) Information rules: a strategic guide to the network Economy. Harvard Business School Press, Boston Sim G (2007) Product placement in Hollywood films: a history. Film Q 61(1):87–89 Taplin J (2005) The IP TV revolution. Paper presented at the seminar The network society and the knowledge economy: Portugal in the global context, Lisbon, Portugal. http://www-rcf.usc. edu/~jtaplin/IPTV.pdf. Accessed 1 Oct 2010 Weitzner D (2008) Personal, unstructured interview conducted with David Weitzner, former president, Worldwide Marketing at 20th Century Fox and Universal Pictures on 26 June 2008

Chapter 9

New Pardigms in the Next-Generation Media: The Digital Glocalization of Entertainment

9.1 Digital Entertainment: Threat or Opportunity? As the ICT revolution unfolds, and its effects on the entertainment industry appear to become more and more pervasive, the different entities operating in the landscape face new, different challenges and opportunities. In the situation analysis that the individual components of the industry face, they attempt to assess their role and potential interaction with the surrounding environment, and to identify what are the most effective strategic moves they can adopt to create and sustain a competitive advantage in the evolving landscape. Corporate and business strategy theoretical frameworks provide specific analytical tools, as their goal is to successfully create “a link between the firm and its environment” (Grant 2002, p. 15). The corporate and business strategy academic conversation is significantly indebted to military strategies, and draws specifically on military terms and literature (as for instance the corporate strategy revitalization and adaptation of the classic Sun Tzu’s The Art of War, with the notion of “knowing yourself and your enemies” as the cornerstone of the successful preparation of a battle). In corporate and business strategy parlance, this translates into the analysis focusing on the internal factors and external factors as key dimensions to monitor on a regular basis. A widely utilized tool in the corporate world to conduct a situation analysis is the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis (Grant 2002, pp. 15–16). This two-step analysis focuses on internal features (strengths and weakness of the entity being evaluated), external features (opportunities and threats provided by the environment), and their linkages. The analysis of the internal features reveals the core competencies of the entity (their specific “know-how”) and their potential successful adaptability to the evolving environment. At the same time, the assessment of the external features attempts to shed light on the evolution of the competitive landscape in the foreseeable future, focusing on the opportunities and threats the entity operating in the industry faces. As a result of the situation assessment stemming from the SWOT analysis, the individual entities can establish their future strategic course of action and positioning in the landscape, linking their internal P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3_9, © Springer Science+Business Media, LLC 2011

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strengths to the external opportunities, and/or defending their weaknesses from the external threats of the environment. Applying the SWOT analysis to the entertainment industry facing the challenges of the ICT revolution at the turn of the twenty-first century, each entity can adopt a different strategy, stemming from their assessment of their internal strengths and weaknesses. Following their internal and external analysis, they can determine two completely different courses of action to create and maintain a competitive advantage in the evolving landscape, which can be defined as “defensive” strategies or “offensive” strategies. The defensive strategies focus on the threats posed by the environment and attempt to minimize their effects on the weaknesses of the entity. In the entertainment industry new digital environment, these strategies translate for example into antagonism to net neutrality or into a strict enforcement of IPR, as illustrated in the previous chapters analyzing the actions of the MPAA on behalf of the Hollywood studios. The strategy of establishing and enforcing tight regulations, at a global level, on the use of intellectual properties under copyright attempts to curb the phenomenon of the diffusion of non-authorized copies of content rendered more effective and pervasive by the digitalization of entertainment content and its global distribution. The rise of non-authorized consumption of entertainment, or “piracy” as it is defined by the Hollywood studios, is perceived as a major threat for the industry leaders, and therefore the MPAA devotes a large portion of its attention and resources to prevent the diffusion and development of the phenomenon. The entities operating in the entertainment industry, however, can adopt “offensive” strategies, focusing on the opportunities provided by the ICT revolution, and specifically on the potential offered by the digital environment to expand the boundaries of the twentieth century analog mass media at a global level. Specifically, they can take advantage of different features available in the new digital landscape: the stylistic and aesthetic superiority, the interactive potential, the ubiquitous distribution capacity, and the spectacular nature of events proposed live in a digital environment.

9.2 The NBC 2008 Olympics Coverage as Digital Glocalization of Entertainment A specific example of an offensive strategy was offered by the 2008 NBC coverage in the United States of the Olympic Games in Beijing. The decision by the network to utilize fully the available communication technology to propose the event to its twenty-first century audience explored and expanded the boundaries and contours of the media and entertainment landscape. In so doing, network executives intentionally tested the potentiality of the new media landscape, as they provided a research lab experiment (Gough 2008) on an unprecedented scale on the one hand, while potentially setting the standards for future endeavors in media digital entertainment on the other.

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The modern Olympic Games originated in the late nineteenth century from the ideas and the efforts of Pierre de Coubertin, who envisioned international sports as a vehicle to promote international peace (Lucas 1992). It did not take long for profitoriented entities however to envision the commercial potential of the event as a vehicle to generate business at an international level, creating or expanding markets for a variety of commodities. As early as the 1920 Antwerp Olympic Games, de Coubertin explicitly warned athletes and officials involved in the event to refrain from associating their activities with profit-oriented entities, one of the first signs of the rise of Olympic commercialism (Barney et al. 2002). Media coverage plays a pivotal role in the representation of the event itself and in its commercialization. Originally broadcast only domestically in 1936 in Germany, due to technical limitations (Barney et  al. 2002), the Olympic Games eventually became an internationally televised event. Only in the 1960 Winter and Summer editions (in Squaw Valley, California and Rome, Italy respectively), however, did US TV networks begun to purchase broadcasting rights. US $50,000 was the amount of the rights fee for the Winter Olympics and US $394,000 for the Summer Olympics paid by CBS (Moretti 2005, p. 229). Furthermore, starting from the 1964 Tokyo Summer Olympics, US networks commenced to broadcast portions of the event live (initially limited to the opening ceremony, only for the East coast of the United States), and have been presenting American audiences live and tape-delayed coverage ever since, treating the Olympics “more as entertainment than as news” and reserving for them the more lucrative prime time slots (Moretti 2005, p. 230). The rights fees have been increasing over the years on a regular basis, altering “the shape of the Olympics” (Rader 1984, p. 159). For the 2004 Athens Summer Olympics, the International Olympic Committee (IOC) reports a total US $1.47B in revenue generated as the global broadcasting rights fees. In the magnitude of rights fees paid, NBC leads with US $793M, followed by the European Broadcasting Union (EBU) with US $394M, and the Athens Olympic Japan Consortium (AOJC) with US $155M (IOC 2004, p. 89), reflecting the different potentials of their relative domestic advertising and media markets. The distribution medium itself has become an integral part of the event, attracting on the one hand large audiences and on the other significant advertising investments. The dimensions of global audience watching the Olympic Games are impressive and position the event at the top of the most watched global media spectacles, rivaled only by another sports event: the soccer FIFA world cup. The audience estimates for the opening ceremonies range between 700 million to 1 billion viewers (de Moragas Spa et  al. 1995). Furthermore, the IOC reports that the 2004 Athens Summer Olympics established global records, reaching an estimated unduplicated audience of 3.9 billion viewers in 220 countries and territories, compared to the previous Olympic Games in Sidney in 2000, watched by 3.6 billion viewers. Also, each worldwide television viewer is estimated to have watched on average 12 h of the Games over the 17 days of the event (IOC 2004, pp. 77–79). Analyzing the ongoing debate on the relationship between media and sports in general, and TV and Olympics in particular, Moretti (2005, p. 222) points out the

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different existing approaches, which identify the linkages between the two as signs of either a parasitic or symbiotic relationship. On the one hand, media in general and TV in particular could be seen as parasites of the event, tapping into the spectacle without any significant contributions (Rader 1984). On the other, however, pointing out the mutual beneficial relationship between TV and sports, other voices suggest that a symbiotic relationship best describes the dynamics, as they both benefit from each other, enhancing the media value of the event on the one hand, and improving the image and increasing the revenues of the media on the other (Boyle and Haynes 2000). NBC’s approach to the 2008 Beijing Olympics appears to have followed a welldefined offensive strategy, testing the possibilities of the new digital media environment, while at the same time investing resources and efforts to capture value from the broadcast event stemming from multiple sources, and leveraging the conglomerate’s different media assets. NBC decided to broadcast 3,600 h of the Olympic Games across its TV networks in the United States: NBC, USA Network, MSNBC, Consumer News and Business Channel (CNBC), Oxygen, Telemundo, Bravo and Universal HD, and through the Internet via the portal NBCOlympics.com (featuring approximately 2,200 h of live streaming video): the first live online Olympic coverage in the US, available also on VOD and on mobile platforms. The move was considered “the most ambitious single media project in history,” where the live component played a pivotal role providing “more live coverage from a single Olympics than the total of all previous summer Olympics combined,” as Dick Ebersol, executive producer of NBC Olympics coverage and chairman of NBCU (NBC Universal) sports and Olympics, pointed out (Benzine 2008). This strategy fully involved and took advantage of the available features in the new digital entertainment environment. Stylistically and aesthetically, via High Definition (HD) channels, the images presented to the American audiences had high definition digital quality. Specifically, NBC decided to deliver 756 h of HD in its coverage of the 2008 Olympic Games through its channels NBC HD, Universal HD, and USA HD, with many events broadcast live (Frankel 2008). The images in HD were accompanied by simultaneous 5.1 stereo discrete channels of audio, also providing an unprecedented sound quality (BroadcastingEngineering 2008). These decisions enhanced the viewing experience of the competitions presented in an unprecedented way by providing participation to the event at home, even richer than the one available at the actual location, through replays and multiple cameras broadcast. Also, through multiple media outlets including the mobile platform, NBC offered to its audience access to the events from their home, from the office, or “on the go,” fully taking advantage of the digital entertainment ubiquitous capability to reach viewers. At the same time, audiences could experience the interactive potential of the digital delivery platforms, by selecting to access one among the approximately 300 events in 28 different sports, ranging from athletics to volleyball (IOC 2008) at a time, and via the platform of their choosing. Furthermore, the spectacular nature of the events was enhanced by the live component of many of the competitions proposed, as NBC strategically decided to provide 2,900 h of live coverage of the Olympics (Benzine 2008).

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The different platforms utilized, combined with the diversity of content stemming from the 2008 Olympic Games, provided NBC tools not only to explore but also to test the boundaries of the new digital entertainment landscape, as they combined “old” analog media coverage to “new” digital platforms for the same events. The research possibility of this experiment did not go unnoticed. Alan Wurtzel, NBC Universal research chief, pointed out the intention of the network to utilize the different available delivery platforms “in a way they’ve never been used before” and the fact that “there’s no event that can match this from a research perspective,” as the conglomerate planned to monitor, on a continuous basis, who was having access to what content via which platform throughout the length of the Olympics (Gough 2008). Working with Nielsen Media research, NBC had access to daily metrics of viewership as the Total Audience Measurement Index (TAMI), combined with daily surveys of audiences (500 individuals) and a single-source panel of 40–50 people monitored by a passive measurement device owned by the research firm Integrated Media Measurement to track their exposure to the event, plus an online survey and two focus groups about the different platforms (Gough 2008). Similarly to non-scripted entertainment programs combining global formats with local adaptations to generate glocalization of entertainment, NBC coverage of the 2008 Olympics combined global factors with local adaptations, taking advantage of the possibilities of the new digital media environment, both in the content and the delivery of entertainment. The Olympic Games represent a truly global event, with virtually every nation or territory in the world in attendance (and watching): It has been estimated that the grandiose opening ceremony of the 2008 Beijing Olympiad, involving more than 10,000 performers, was watched by approximately 15% of the world’s population. Estimates of global TV audience varied, given the fractured composition of the global audience, and relative measures, in different countries. However, a conservative “poll of polls” conducted by Reuters (Goldsmith 2008) estimated at 1 billion individuals (15% of the world population) the global audience for the event. The event proposed by NBC to the American public was adapted to the local mores, expectations, and specific demographics. For example, the prime time coverage of female beach volley and gymnastics events intentionally targeted female audiences (Lowry 2008), unlike other traditional sports. The hosts and the content proposed (all major US athletes’ competitions were covered) reproduced images and themes familiar to the American public. Also, the TV schedule was designed having the local audiences in mind, presenting in the US prime time the most significant events, with tape-delayed coverage, especially for the West coast of the United States, whenever they took place at different times, given the existing time zone difference with Beijing. The events proposed varied from the global, as the opening ceremony, watched in the United States by an estimated 35 million viewers or the American swimmer Michael Phelps’ and Jamaican sprinter Usain Bolt’s record setting performances, to more specific events covering US athletes, whose stories and performances could resonate more with American audiences, as in the case of the 41-year-old swimmer Dana Torres’ silver medal, or the US gymnastic teams. The events proposed attracting the most attention, mainly swimming and gymnastics (Triplett 2008), appear to have been those where cultural proximity (Straubhaar 1991; Trepte 2003) and national pride (Cohen 2008) involved local audiences the most.

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The NBC coverage of the 2008 Olympics provides an effective example of glocalization of entertainment, as the global and local elements were incorporated in the content proposed. Furthermore, in addition to the classic analog mass media coverage, NBC fully explored the possibilities available in a digital environment (interactivity and ubiquity of the delivery), adding a digital dimension to the glocalization of content, as they allowed a more personal fruition of the events selected. Audiences could pick their favorite events out of the multitude proposed and have access to it via a platform of their choosing (at home, office, or mobile), with interactive capability. The end result could be defined as “digital glocalization of entertainment”: The content proposed incorporates global and local elements, enriched by customized elements made possible by the digital media environment. NBC’s strategy appears to have paid off: The 2008 Beijing Olympics was the most watched event in US television history, with approximately 214 million viewers watching a least a portion of the Games (Levine 2008). Audiences increased about 11% compared to the second most watched event, the Atlanta Olympics of 1996. Moreover, the average prime time audience in the United States was 27.7 million viewers, a truly remarkable result, especially given the timing of the event, helping also promote NBC’s fall schedule in the process (Schneider 2008). As a result of the record audiences, the network’s advertising revenues stemming from the Olympics have reportedly exceeded US $1B (Levine 2008). Evaluating the multiplatform coverage leveraging the different media assets, NBC president Jeff Zucker pointed out that “the event shows the pipes work” (Lowry 2008), as the different delivery channels appear on the one hand to have enhanced the primary network coverage, instead of cannibalizing viewers, and on the other to have provided viewers with different options to access and retrieve content. By utilizing an offensive strategy in the new evolving digital landscape, NBC’s 2008 Olympic coverage is showing the potential effectiveness of a new paradigm in the media landscape: the digital glocalization of entertainment. Non-scripted entertainment in general (including sports events, especially if they are proposed live to their audiences) appears to lend itself better to an offensive strategy in the new digital environment, as analyzed also in Part II with the successful global distribution of Endemol’s “reality TV” show Big Brother, another example of digital glocalization of entertainment, adapted locally from global formats and delivered via multiple platforms. Specifically, non-scripted entertainment appears to be more able, compared to the classic scripted entertainment, to create, deliver, and capture value in the landscape, taking advantage of the possibilities made available by digital technologies. On the one hand, non-scripted entertainment shares with classic scripted entertainment the possibility to tap into the stylistic superiority of digital high definition images (and sound) and the ubiquitous distribution potential of multiple platforms. It is worth pointing out though that mobile platforms appear to provide a better media outlet for short, non-scripted entertainment than for classic scripted entertainment, as feature-length motion pictures, due to the intrinsic technical limitations of the platform. On the other, however, non-scripted entertainment appears to take more advantage of the new digital entertainment landscape, whose features are the limited, if any at all, “windows” of subsequent exploitation of content (reducing as a result

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its non-authorized diffusion), the possibility to present live spectacular events (worth watching as they unfold as opposed to a delayed fruition potentially without advertising with DVR devices), and the interactive capacity provided by a digital environment.

9.3 An Evolving Digital Entertainment Landscape In an attempt to answer the question posed in the introduction of Chap. 7 about the possibility of the next big earthquake shaking the entertainment landscape to take place in the near future, industry analysts generally appear to concur that “the next great ‘earthquake’ is coming (but not today)” (Berman et al. 2006, p. 10), especially for the TV landscape, as a result of two specific drivers of change. From an era of limited content access, the landscape is evolving into an open access environment, while the consumers’ media control has evolved increasing the shift from passive individuals to more involved agents, or as they put it, from “lean back consumers” to “lean forward consumers” of entertainment (Berman et  al. 2006, p. 15). As a result of these two combined forces, the landscape is poised to experience long-term disruption of the existing market dynamics. The end result, however, will depend on the combined actions of the different players of the landscape, which is evolving as the ICT changes unfold. Their actions and counteractions will help determine the results and the ultimate structure of the industry at a global level, while new entities are entering the arena from different angles. The industry leaders can adopt a defensive strategy, focusing their attention and resources on the threats posed by the new digital environment, as in the defense of their intellectual properties under copyright or opposing net neutrality. Or they could decide on a different course of action, fully exploring the opportunities available in a digital entertainment environment, while leveraging their core competencies developed in an analog media environment, as in the example of the NBC’s coverage of the 2008 Olympic Games in Beijing, facilitating the diffusion of the new paradigm of the digital glocalization of entertainment. At the same time, new players are emerging in the global entertainment landscape, building their competitive advantage as they successfully leverage the possibilities provided by the new environment, with offensive strategies disrupting the existing status quo. From the distribution side, new media entities are increasing their relevance, by providing new entertainment experiences to their customers on the one hand and providing potentially interactive customers to advertisers on the other (and in so doing challenging the existing advertising-based media). From the production side of the industry, non-scripted entertainment providers, coming mainly from outside the Hollywood system (and specifically from Europe), compete globally in the TV market and in the new emerging digital markets and platforms, as IPTV or mobile TV for example, providing potentially interactive shows. These lend themselves better to be exploited in the twenty-first century media landscape, where the new paradigm of the digital glocalization of entertainment is increasingly relevant, as illustrated by the examples of Endemol’s “reality TV” show

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Big Brother and the NBC coverage of the 2008 Olympic Games in Beijing. The combination of the two institutional trajectories analyzed in Part II and Part III, the rise of non-scripted entertainment and technological change, has the potential to threaten the existing Hollywood’s global primacy, illustrated in Part I of the book. As analyzed in Chap. 7, the ICT revolution appears to be the last chapter of a century-long complex and ambivalent relationship between Hollywood and new communication technologies applicable to the entertainment landscape, as they are made available. In general, defensive strategies vis-à-vis new technologies have proven historically shortsighted, as in the cases of the introduction of sound, TV, or videocassette recording for example. Ignoring the media and entertainment possibilities made available by digital technology, and in particular, the new paradigm of digital glocalization of entertainment, would represent a twenty-first century version of marketing myopia on the part of the leaders of the industry. The uniqueness of the ICT revolution’s impact on the entertainment landscape, compared to previous technological changes, is that it affects the industry at a global level on three key aspects: the content of the entertainment proposed, its conduits through multiple delivery platforms, and it raises the necessity for new business models to capture value in a digital environment where the shelf-life of entertainment is significantly altered. As such, the ICT revolution appears to be a game changer for the global entertainment landscape, affecting the existing drivers of competitive advantage analyzed in the previous chapters within the theoretical frameworks of “five forces” and “national diamond,” while its impact is unfolding at the turn of the twenty-first century. The relevance of the changes ushered in by the ICT revolution on the media landscape has also elevated the conversations on the topic beyond the economic analysis of its impact and consequences. Concerns have been raised on the potential damages for the society as a whole ushered in by technological change in general, and by the ICT revolution in particular, under the disguise of a more democratic access to media and through the potentially misleading promises of audience participation.

9.4 The Contradictions and Complexity of the ICT Revolution in the Twenty-First Century Media Landscape The role of technology in society in general, and specifically through the evolutions of available media, has been the topic of different scholarly conversations and theoretical frameworks, leading some media scholars, such as McLuhan, to identify technology as the key dimension of the landscape (1994). Historically, new technologies impacting information and communication have ignited expectations and claims of their potentials in fostering democracy and emancipation, while their expost analysis have usually shown that human design technologies and use had different purpose and yielded diverse societal results. Analyzing the theme of technology and society, as it is rendered visible by media evolutions, some scholars have focused on the potential democratic impact and

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c­ onsequences of technological change, helping audiences/citizens contribute to media content, and in so doing increasing the freedom and choices of citizens as they access the available media (de Sola Pool 1983). On the other hand, other scholarly voices have pointed out, analyzing specific cases and regional example, the role of media technologies, such as satellite television and VCRs, in expanding existing economic primacies around the globe, while stifling alternative entities and voices more than providing the freedom of choice envisioned by the aforementioned conversations (Mattelart and Schmucler 1985). The ICT revolution is no exception, raising expectations of a new era in media participation, as shown for example by the selection of the 2006 Time person of the year: You (the media user), as “you control the Information Age” since you can have “your web, your way” (Howe 2007), and by the renewed potential of alternative media to carve out a specific space in the local/global dimensions of media landscapes around the globe (Dowining 2001). At the same time, however, it has been pointed out in the critique of the participatory potential of the Internet that it is a “medium rife with contradictions,” as it can be also considered “one of the drivers of the present hypercapitalistic system.” Specifically, there appear to be phenomena undermining the participatory character of the Internet both at the structural–organizational level and at the individual or citizen level (Cammaerts 2008, p. 372). At the structural level, the appropriation of participatory tendencies from the audience by profit-oriented media entities might occur, as illustrated in previous chapters in the case of American Idol, where audience participation generates another revenue stream for the program. Furthermore, at the individual level there is the issue of new surveillance made possible by new communication technologies, especially related to non-scripted entertainment. Overall, the diffusion of innovations ushered in by changes in communication technology appears to generate concerns of a media environment with potentially more corporate control, effectively networking the global market system (Schiller 1999). Following Straubhaar’s theoretical framework, this study “sees both these trends at work in a complex, contradictory process” (2007, p. 112). Technology is identified as a structuring force, and its evolution as an institutional trajectory, impacting global media flows in key features: production, distribution, and business models. This trajectory brings about change in access to media and provides new choices for audiences around the globe, while at the same time the economic dimensions involved in the diffusion of technology have an impact on the structures operating in the landscape on the one hand and on the final audiences on the other. The global entertainment landscape is evolving, modifying its boundaries and contours at the turn of a new millennium, and is now at a crucial crossroads. New players are entering the landscape, and Hollywood’s global primacy is being threatened by the two institutional trajectories analyzed in this book: the rise of nonscripted entertainment and changes ushered in by the ICT revolution, as the rise of the digital glocalization of entertainment emerges. The evolving challenges of the global media landscape are analyzed in the following, and final, Chap. 10, which illustrates the conclusions of this study.

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References Barney RK, Wenn SR, Martyn SG (2002) Selling the five rings: The International Olympic Committee and the rise of Olympic commercialism. University of Utah Press, Salt Lake City Benzine A (2008) NBCU goes for gold with Olympic coverage. C21Media. http://www.c21media. net/resources/detail.asp?area=100&article=42949. Accessed 10 July 2008 Berman SJ, Duffy N, Shipnuck LA (2006) The end of television as we know it: a future industry perspective. IBM Institute for Business Value, Somers. http://www-935.ibm.com/services/us/ imc/pdf/ge510-6248-end-of-tv-full.pdf. Accessed 30 Nov 2007 Boyle R, Haynes R (2000) Power play: sport, the media, and popular culture. Longman, London BroadcastingEngineering (2008) NBC Olympics plans for simultaneous 5.1, stereo broadcasting. http://www.broadcastingengeneering.com/news/nbc_olympics_plans_simultaneous_0408/ index.html. Accessed 11 July 2008 Cammaerts B (2008) Critique on the participatory potentials of Web 2.0. Commun Cult Crit 1(4):358–377 Cohen J (2008) What I watch and who I am: national pride and the viewing of local and foreign television in Israel. J Commun 58(1):149–167 de Moragas Spa M, Rivenburgh NK, Larson JF (1995) Television in the Olympics. John Libbey, London de Sola Pool I (1983) Technologies of freedom. MIT Press, Cambridge Downing JDH with Ford TV, Gil G, Stein L (2001) Radical media: rebellious communication and social movements. Sage, Thousand Oaks Frankel D (2008) Olympics offer HDTV showcase: NBC coverage provides coveted platform. Variety. http://www.variety.com/article/VR1117983854.html. Accessed 11 July 2008 Goldsmith B (2008) Beijing opening night lures 15 percent of the world. Reuters. http://www. reuters.com/article/newsOne/idUSPEK15134720080811. Accessed 18 Aug 2008 Gough PJ (2008) Olympian research effort at NBC: anticipating the largest amount of coverage in history. The Hollywood Reporter. http://hollywoodreporter.com/hr/content_display/news/ e3i9a3650f4bf2de299f7a1f691136964cd. Accessed 8 July 2008 Grant RM (2002) Contemporary strategy analysis: concepts, techniques, applications, 4th edn. Blackwell, Malden Howe J (2007) Your web, your way. Time, pp 60–61 International Olympic Committee (IOC) (2004) Athens Olympic broadcast report. http://multimedia.olympic.org/pdf/en_report_899.pdf. Accessed 10 July 2008 International Olympic Committee (IOC) (2008) Programme of the games of the XXIX Olympiad, Beijing 2008. http://multimedia.olympic.org/pdf/en_report_1056.pdf. Accessed 10 July 2008 Levine S (2008) Olympics garb huge ratings for NBC. Variety. http://www.variety.com/article/ VR1117991102.html. Accessed 25 Aug 2008 Lowry B (2008) NBC thriving with 24/7 Olympics. Network benefits from multiplatform coverage. Variety. http://www.variety.com/article/VR1117990933.html. Accessed 25 Aug 2008 Lucas J (1992) The future of the Olympic games. Human Kinetics Books, Champaign Mattelart A, Schmucler H (1985) Communication and information technologies: freedom of choice for Latin America? Ablex, Norwood McLuhan M (1994) Understanding media: the extensions of man. MIT Press, Cambridge Moretti A (2005) The Olympics. In: Cooper-Chen A (ed) Global entertainment media. Lawrence Erlbaum, Mahwah Rader B (1984) In its own image: how television has transformed sports. The Free Press, New York Schiller D (1999) Digital capitalism: networking the global market system. MIT Press, Boston Schneider M (2008) Will games boost NBC’s fall bows? Variety. http://www.variety.com/article/ VR1117991116.html. Accessed 25 Aug 2008 Straubhaar JD (1991) Beyond media imperialism: Asymmetrical and cultural proximity. Critical Studies in Mass Communication 8(1):39–59

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Straubhaar JD (2007) World television: from global to local. Sage, Thousand Oaks Trepte S (2003) The intercultural perspective: cultural proximity as a key factor of television success. Paper presented at ICA Conference, San Diego, CA, 23–27 June 2003. http://www.universitäthamburg.de/fachbereiche-einrichtungen/fb16/absozpsy/pdf_cultural_proximity.pdf. Accessed 1 Oct 2010 Triplett W (2008) Olympic audiences find focus. Study: viewers prefer swimming, gymnastics. Variety. http://www.variety.com/article/VR11179991066.html. Accessed 25 Aug 2008

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Chapter 10

Conclusion: The Entertainment Industry at a Crossroads

10.1 Does Hollywood Still Rule the World? This is the question the trade journal Variety poses to its audience, composed mainly of Hollywood’s professional community, at the beginning of a report analyzing the evolutions of the global motion picture industry (McNary 2008). The report focuses on the rise of local production of entertainment globally in the last decade, pointing out that the surge of local productions has challenged Hollywood’s economic leadership in many relevant territories. As a result, Hollywood studios have increased local production of feature-length motion pictures, expanding their presence in some lucrative markets. The rise of local productions of entertainment in the global landscape, however, reveals only the tip of the iceberg of challenges Hollywood’s global primacy faces at the turn of the twenty-first century. In addition to the specific threats posed to Hollywood’s primacy in the global motion picture business by local productions worldwide, there are definitely signs that the global entertainment landscape is evolving: New players outside the Hollywood system are emerging globally, nonscripted entertainment is increasing its relevance in the global TV marketplace, and the ICT revolution is unfolding, specifically impacting the entertainment sector in its content, distribution, and business models. These new elements in the global landscape pose specific challenges to Hollywood’s global primacy in the entertainment business, raising concerns in the Hollywood community that the global TV production center of gravity could be poised to shift from the United States to new international centers based in London, Amsterdam, Mumbai, and Hong Kong (Clarke 2007). A 2008 report by the investment bank Lehman Brothers, also promptly reported by Variety, captures the lingering fears affecting Hollywood as it is pointed out that “the structural shift created by ubiquitous technological change … could also disrupt the core economic models of the creators of the majority of film and TV content” (Littleton 2008). Technological shifts and their impact on the entertainment landscape constitute a major concern for all the players involved both in the entertainment P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3_10, © Springer Science+Business Media, LLC 2011

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sector and the financial community on the East and West coast of the United States, from Hollywood Boulevard to Wall Street. Hollywood studios have long discovered, not without painful restructuring processes, to operate not in the narrow “movie business,” but in the larger “entertainment business,” providing experience, nonexcludable, public goods destined to entertain global audiences. As players, and leaders, of the global entertainment landscape, Hollywood studios cannot afford a twenty-first century version of the “marketing myopias” by which they were affected in the 1950s, when they ignored, if not opposed, the then upcoming new medium television, or in the 1980s when they fiercely contested the rise of VCR devices, which ultimately expanded the entertainment market broadening the home entertainment sector. Their course of actions vis-à-vis the new challenges in the next decade, though, will prove essential in shaping the future entertainment landscape, and their role in it. An evolving body of scholarly literature on global entertainment has focused on the various issues generated when entertainment content crosses national borders and meets locally situated audiences worldwide. Many contributions grounded in different fields of study have analyzed the profit-oriented entities operating in the mediascape and specifically the Hollywood system as the global economic leader in the production and distribution of entertainment, the impact and consequences of this primacy. This book contributes to the scholarly conversation, by utilizing analytical tools drawn from industrial economics, Porter’s (1980, 1990) “five forces” and “national diamond,” enriched by contributions from an interdisciplinary approach to assess the drivers of Hollywood’s global competitive advantage, and within this framework, analyzes two specific institutional trajectories: the rise of non-scripted entertainment and select features shaping the boundaries and contours of the new, digital landscape of entertainment, ushered in by the ICT revolution. Hollywood’s worldwide primacy in the entertainment sector has relevant economic, political, cultural, and social consequences on a global scale. A shift within the market dynamics impacting Hollywood’s competitive advantages could affect diverse key dimensions within the evolving global landscape. The study has analyzed specific potential threats to Hollywood originating within the “old media” paradigm, the rise of the new wave of non-scripted entertainment, and select aspects ushered in by the ICT revolution with their challenges and opportunities. At the same time, it acknowledges the potential negative impacts of these institutional trajectories (such as the issues of surveillance, labor disputes, monetization of audience participation, etc.). This final chapter illustrates the conclusions of the study suggesting future trajectories as the global entertainment landscape evolves. The global entertainment industry is at a critical crossroads, as the global economy is experiencing an economic downturn. The actions and reactions of the profit-oriented entities impacted by technological change provide a central component in a complex scenario where also governmental entities, academic institutions, and other NGOs will help shape the boundaries and contours of the entertainment landscape.

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10.2 New Challenges and Opportunities Unfolding in the Global Entertainment Landscape Overall, affecting content, conduits, and business models of the entertainment industry, the ICT revolution appears to be a game changer for the global entertainment landscape, affecting the existing drivers of competitive advantage while its impact is unfolding at the turn of the twenty-first century. Profit-oriented entities furnish a key piece of the landscape, in their quest to create, deliver, and capture value in the new digital entertainment landscape, utilizing different offensive or defensive strategies in the evolving landscape, within the new paradigm of digital glocalization of entertainment (taking advantage for example of the participatory tendencies of audiences, made possible by the digital environment). In particular, the Hollywood studios, the talent agencies, the TV networks and entertainment conglomerates (from the United States and overseas), “reality TV” new players, and advertisers (through old, legacy media and new media paradigms to reach their potential customers) continue to play a pivotal role. The two institutional trajectories analyzed in this study have the potential to challenge, jointly and severally, Hollywood’s global primacy at the turn of the twenty-first century. Furthermore, the global mediascape has been shaken by the effects of a global economic recession at the end of the first decade of the twenty-first century, whose impact has reached the media and entertainment industry, testing the financial solidity of the different entities operating globally. The economic recession, driven by a financial crisis stemming from the collapse of major financial institutions involved in the subprime lending practices, began in December 2007, ending an expansion lasting 73 months, according to the US National Bureau of Economic Research (NBER 2008). The economic downturn experienced by the United States since then qualifies as a recession, defined as “a significant decline in economic activity spreading across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators” (NBER 2008, p. 1). As a result of globalization processes, worldwide financial markets are at the turn of the twenty-first century connected and intertwined as never before, constituting what Appadurai defines as “financescape” (1990). Consequently, this recession has turned out to be “the most synchronized in historical memory” (Bovino 2009, p. 1). Through multiple channels, the financial turmoil has reached the different sectors of the economy, while expanding globally, generating what has been deemed as “the worst global recession in decades as the fallout of the most severe financial crisis since the Great Depression” (Roubini 2009, p. 1). The economic recession has impacted the media and entertainment industry in different aspects of its value chain, both the production and distribution of entertainment, and the delivery platforms. In this scenario, all the different entities operating in the global marketplace had to experience a stress test on the soundness of their strategic positioning and business models. These, however, appear to have faced distinct challenges, as the economic downturn has impacted all the different sectors

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of the media and entertainment industry, from theatrical exhibition to the TV sector and the licensing business, both domestically and internationally (Graser 2009; Schneider 2009b; Swart and Keslassy 2009). On one hand, consumer spending in general has been impacted by the economic recession, as the average disposable incomes of families and individual across the globe have diminished: This phenomenon generally leads to the contraction of resources specifically destined to the entertainment industry from a consumer standpoint, overall driving down the revenue streams generated by entertainment products, whose exploitation benefits from multiple ancillary revenues. On the other hand, the drastic economic downturns occurring in many consumer markets had a direct impact on the advertising investments of many consumer-oriented sectors. With fewer resources available, and a diminished pool of consumers willing and able to buy new products, some key advertising markets, such as the financial services and automobile sectors, have significantly reduced their investments in advertising. As a result, the revenue streams generated by advertising have experienced a contraction for the media and entertainment sector: For the existing advertising-driven business models adopted by different media platforms, as free TV broadcasting for example, this represents a significant issue. At the same time, the different sectors of the entertainment value chain are intrinsically interconnected (as shown in Fig. 2.3), and difficulties experienced by one sector are bound to impact others in the overall media and entertainment landscape. Therefore, the combination of these two elements, diminished disposable income for consumers and decreased advertising spending as a consequence, has affected the entities competing in the global mediascape. Generally, the media and entertainment industry is deemed by practitioners as “recession proof,” as audiences look for entertainment regardless of changes taking place in the economy: During economic downturns, people appear to look for escape in entertainment, during prosperity for increase in well-being. As a result, Hollywood, defined by Powdermaker (1950) as the ultimate “dream factory,” never seems to falter, whereas other economic sectors appear to be more inclined to suffer as a result of financial or economic woes. While this is still true to a certain extent, and the entertainment industry does not incur in dramatic immediate economic downturns as a result of recessions as other sectors (such as the real estate and automobile sectors for example), it has been experiencing difficulties. Major revenue streams appear to have been impacted, as, for example, those generated from movie and TV show merchandise (Graser 2009). Also, while all the entertainment sectors have experienced contractions in their activities as a result of the economic recession, some appear to have been under more pressure than others as the signs of the recession unfolded: For example, TV viewing and box office receipts do not appear to have been impacted greatly and have remained stable, whereas DVD sales have shown a significant decline. The overall sector has been experiencing the effects of the economic recession, as the entertainment industry has long evolved from just offering feature-length motion pictures in movie theaters to a multitude of products destined to reach consumers worldwide through a variety of distribution platforms, and generating multiple revenue streams. As a result, diminishing numbers on some of the revenue streams, if not

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compensated by new emergent ones, drive downward the results of the profit-oriented entities operating in the media and entertainment landscape. In terms of the content proposed, specifically scripted vs. non-scripted entertainment, there appears to be recession vulnerabilities on both sides, but also distinct challenges and opportunities. Scripted entertainment could usually benefit from the increased desire to escape offered by fictional entertainment, but it could suffer because a major revenue stream, DVD sales, is diminishing. In general, due to the “windows” structure of its business model, the investment in scripted entertainment is recouped later (compared to “reality TV” shows), as scripted shows usually reach a profit only when a critical mass of episodes is reached and ancillary revenues (as those stemming from licensing in the syndication circuits) are generated. Moreover, uncertainty and further risks are associated with new scripted shows: As a result, fewer pilots are being developed, with less resources being allocated to these programs (Schneider 2009b). The impact of the recession on non-scripted entertainment could be not as damaging because TV ratings are generally stable, and investment in these programs are recouped immediately (without significant subsequent “windows” of exhibition), while other immediate revenue streams for the broadcaster and the producer/distributor (as SMS, product placement, etc.) are being generated. Although “reality TV,” as the trade journal Variety puts it, “offers ads an immunity” (Debruge 2009), it  appears to be more effective in product placement, in an evolving advertising environment where the 30-s spot impact is being questioned. Furthermore, nonscripted entertainment programs, especially when distributed by established players, are deemed to have usually fewer risks associated with their distribution, as they are generally less expensive to develop and distribute: These programs are typically local adaptations of global formats, already tested in other markets. Also, they are not too affected by decline in DVD sales, as this revenue stream is marginal for their business models, contrary to scripted entertainment. In terms of the analysis of the specific subgenres in the non-scripted entertainment galaxy, it depends on the shows and how they capture, in the words of Endemol USA’s executive David Goldberg, what is “topical and timely in the zeitgeist” (Schneider 2009a). For example the program Extreme Makeover deals with adversities and how to overcome them, while Someone’s Gotta Go picked up by Fox in 2009 deals with the reality of people losing jobs, by giving employees, as participants and contestants of the program, the power to decide which one of them will be terminated in the event of a lay off (Schneider 2009a). Therefore, the success (or lack thereof) of non-scripted entertainment programs in times of economic downturn has to be analyzed on a case by case basis: The landscape of non-scripted entertainment is constantly evolving, as the genre is very flexible and lends itself to multiple possible narrative structures and environments. All in all, the stress test provided by the economic downturn on the dynamics of the entertainment and media business industry at the end of the first decade of the twenty-first century appears to point into the direction of an increased presence of established non-scripted shows in periods of economic difficulties, specifically due to their business models and practices analyzed in previous chapters. Their flexibility

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and adaptability, generally combined with their less expensive production and distribution business practices, appear to be attractive factors for media decision makers in a landscape increasingly risk adverse and eager to recoup the investments associated with programming without waiting for the lengthy shelf life of scripted entertainment programs.

10.3 A Path Toward Sustainable Innovation in Digital Media The profit-oriented entities operating in the global entertainment industry have a clear role in how the landscape evolves, including the changes driven by new technological systems. In the evolving twenty-first century global entertainment landscape, profit-oriented entities are at a critical historical juncture as they face new, unfolding challenges and opportunities. The global entertainment industry is at a crossroads: Future landscapes will be shaped by the strategic actions and reactions of the major players (such as the Hollywood studios), the new entities emerged in the last decade (from Google to the global non-scripted entertainment leaders, such as Endemol and FremantleMedia), and other new players emerging as the landscape evolves. As illustrated with the SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats analysis), each entity may implement a different strategy, stemming from their assessment and comparison of their internal strengths and weaknesses to the external threats and opportunities. Specifically, following their internal and external analyses each can determine completely different courses of action, pursuing a mix of “defensive” strategies and “offensive” strategies that generate and/or sustain a competitive advantage in the evolving landscape. The defensive strategies focus on the threats posed by the environment and attempt to minimize their effects on the weaknesses of the entity. The offensive strategies attempt to capture the opportunities provided by the ICT revolution, and specifically on the potential offered by the digital environment to expand the boundaries of the twentieth century analog mass media at a global level. The non-scripted program Big Brother on the one hand and the NBC coverage of the 2008 Olympics on the other provide examples of offensive strategies in the new global media landscape, and have been defined as examples of digital glocalization of entertainment. The content proposed by these two programs incorporates global, glocal, and local elements enriched by customized elements made possible by the digital media environment. Digital glocalization of entertainment appears to provide a new paradigm to successfully create and capture value in the global entertainment sector shaped by technological change. For the historical economic leaders of the sectors, the Hollywood system, a significant issue arises after the acknowledgment that the scenario has evolved and calls for different paradigms: The transition from one landscape (with well established business practices as the carefully designed “shelf-life” of entertainment) to the new, uncertain one, where the drivers of competitive advantage remain to be determined, as the landscape evolves, is indeed a complex and difficult one.

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The analysis conducted in the previous chapters of the dynamics of the entertainment industry brings to the fore the central role played by technology in determining its boundaries, challenges, and opportunities. Drawing on existing studies on reactions to technological change by leaders of other sectors can help shed light on different possible courses of action. Specifically, analyzing the impact of new technologies on existing competitive advantages across different consumer products sectors, Tellis (2006, p. 34) points out that the disruption of incumbents in a sector affected by technological change, when and if it happens, “is not due to technological innovation per se but rather to the incumbents’ lack of vision of the mass market and unwillingness to cannibalize assets to serve that market.” As a result, the course of action taken in a turbulent environment affected by technological change rests on the vision, or lack thereof, of the leaders of the industry. Leaders successfully transitioning technological change, by maintaining or expanding their existing competitive advantages, appear to be willing and able to cannibalize their more successful assets in pursuit of future potential gains, whereas leaders unwilling to do so appear to succumb to technological change. Research conducted on different sectors impacted by technological innovations (Tellis 2006) specifically points out the successful examples of innovative leaders in consumer products sector (such as Procter & Gamble) and in the hardware sector (such as Intel), which have consistently innovated their offering by replacing their successful products with new and technologically improved products (or versions). In so doing, these leaders were able to sustain and expand their competitive advantages in the process. By contrast, the entities unable to do so have experienced drawbacks as a result of technological evolutions, as for example Xerox in the 1970s and 1980s, unwilling to modify its strategic positioning in an evolving scenario and as a result unable to successfully transition from the old landscape to the new one, with its new challenges and opportunities. Transporting and adapting these findings to the uniqueness of the entertainment sector, Hollywood studios, in order to maintain their existing competitive advantages, would appear to be better off embracing the digital revolution, even should this change cannibalize some existing revenue streams (the VHS and DVD share of the home entertainment market for example), in pursuit of future digital revenue streams. As analyzed previously, this is not the first technological change experienced by the industry in its centennial run. Historically, those who pursued the strategy of innovation, as Warner Bros. did with the introduction of sound in the 1920s, and were willing to cannibalize existing products (silent movies) for new ones (the “talkies”), were able to establish as a consequence new, and more robust, competitive advantages in the evolving landscape (Jewell 2007). In the twenty-first century, as the competitive landscape faces turbulent environments, a successful strategy for the current leaders could be to turn the existing competitive advantages into a different kind of advantage, a “keystone advantage”: Acting in their best long-term interest, leaders should not play the role of “dominators,” but of “keystone” players, driving the changes in the landscape facing shifting, potentially disruptive paradigms. Comparing the different entities operating in a competitive landscape to individual species in a biological ecosystem, the competitive

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strategy scholars Iansiti and Levien (2004) identify and bring to the fore the keystone advantage as the long-term successful sustainable approach to be adopted by the entities playing a crucial role in the business ecosystem in turbulent times. Specifically, Iansiti and Levien (2004) expand Porter’s competitive advantage and national diamond’s theoretical frameworks and define the competitive landscape as an “ecosystem,” where they identify three main strategies available for its entities: keystone, physical dominator, or niche. These different strategies appear to be effective under different circumstances. In an industry characterized by a “complex network of external assets,” the niche strategy does not appear to be the optimal course of action. In a mature industry, physical dominance is usually the most successful strategy, absorbing the complex network of interindependencies between different entities and eventually creating its own ecosystem. That was the case, for instance, in the Hollywood studios’ golden age of the 1920s, but the landscape has changed dramatically since then and it is experiencing the effects of the ICT revolution. In a turbulent environment affected by changes in technology, a keystone strategy appears to be more effective. Keystones operate in two ways: On the one hand they create a platform that offers solutions to others in the ecosystem and on the other they share throughout the ecosystem much of the value they have created (Iansiti and Levien 2004, p. 82). In other words, when the leaders operate as “keystones,” they work in the industry’s best interest by increasing its ecology and as a result they build long-term competitive advantages in an evolving, yet healthy landscape. Should Hollywood studios adopt this course of action to facilitate the wealth of the whole landscape, sharing the value created throughout the system, this strategy could have very significant consequences on how the business operates. Hollywood could change its current stands on issues like net neutrality and diffusion of nonauthorized content, while at the same time share the rewards of the value generated with the system developed in the industry. At the same time, nation states, governments at local and federal level, and international NGOs continue to shape regulatory frameworks at a global level impacting key aspects of the landscape (from the issue of net neutrality to the definition of “piracy” by enacting and enforcing rules to curb or facilitate the phenomena, etc.). Select entities from this milieu could prove particularly effective strategic partners to create a path toward sustainable innovation, especially in a technologically evolving landscape. The experiences of Silicon Valley in Northern California and Route 128 in Massachusetts, for example, suggest that long-term economic regional advantages stem from the interplay of different forces and entities, profit oriented and non-profit oriented. The “creative tension” among industry, academia, and government proved essential, for example, in creating a regional cluster in the Route 128 region (Rosegrant and Lampe 1992). As Saxenian points out, the experiences of Silicon Valley and Route 128 “suggest that industrial systems build on regional networks are more flexible and technologically dynamic than those in which experimentation and learning are confined to individual firms” (1994, p. 161). In the realm of digital media, the involvement of top research institutions in Southern California, combined with local and state governments and local NGOs, could create a unique path toward sustainable innovation

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backed by long-term stakeholders in the region, in addition to the Hollywood system. The twenty-first century technologically evolving digital media landscape calls for the cooperation among these actors on a systematic, structured way. The continuity of these interactions could produce a virtuous cycle in the Southern California digital media landscape, creating long-term competitive advantage based upon sustainable innovation, above and beyond the economic forces identified by Porter’s “national diamond.” At the same time, worldwide, culturally situated audiences play the ultimate role within the landscape, in their selection and acceptance (or lack thereof) of the programs proposed, and in their appropriation and remix of entertainment content. The boundaries and contours of the industry keep expanding within the unfolding phenomena of globalization, reaching more local and culturally situated audiences worldwide. In this scenario the Hollywood system appears to have a vested interest in the overall global media and entertainment ecology.

10.4 From the Catalina Bison to the Digital Glocalization of Entertainment: A New Ecology of the Global Mediascape The Catalina bison have been roaming the island since they were left behind by the Hollywood crew shooting the movie The Vanishing American in 1924. In so doing, they have been altering ever since the ecosystem of the small island, situated 22 miles off the coast of Los Angeles, impacting the preexisting flora and fauna of the landscape. The Hollywood system has maintained a primacy in the global entertainment landscape over the last decades, as explicated by the national diamond and five forces theoretical frameworks drawn from the field of industrial economics. As a result, intellectual and political voices worldwide have been raising continued concerns that the US originated international flow of entertainment, providing images and sets of values embedded within their media texts, has been producing an effect similar to the Catalina bison’s on worldwide audiences, altering local cultural developments and dynamics. Local audiences have been reached and impacted over the last decades by the increasing flow of global entertainment content devised and produced by entities physically and culturally situated far from their cultural milieu. Hollywood has played a pivotal leadership role within this increasing global, and apparently seamless, flow of entertainment content reaching distant audiences in virtually every corner of the globe. Through the analysis of the rise of non-scripted content, globally created and locally produced and adapted, and the unfolding impact of the ICT revolution on the global entertainment landscape, this study brings to the fore the rise of a new paradigm in the landscape: the digital glocalization of entertainment. Successfully meeting audiences’ expectations, entertainment content is increasingly globally created and locally produced/adapted, and actively takes advantage of the new media environment adding digital dimensions to the content proposed.

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10  Conclusion: The Entertainment Industry at a Crossroads

Profit-oriented entities play a pivotal role, in the creation and distribution of global media text reaching global audiences. The landscape, however, is changing: New entities are entering the arena, challenging Hollywood’s global primacy. As the paradigms change, so do the drivers of competitive advantage. While the distribution appears to remain a key strategic element, the adaptability of entertainment content to locally situated audiences emerges as an essential element, especially when combined with the possibilities offered by digital technology. As the landscape evolves, its new boundaries and contours are unfolding, shaped by the interactions of not only profit-oriented entities, but also local and federal governments, NGOs, academic research institutions, and global audiences, locally situated. New paradigms are taking shape, delineating the need for a new “ecology” of the landscape, and dictating future paths for courses of strategic actions to profitoriented entities. The transition from the “Catalina bison” impact to the digital glocalization of entertainment calls for the dominant leaders to turn into keystone players, and build a more solid path toward sustainable innovation, partnering with long-term regional stakeholders, such as top research universities and local governments and NGOs. Furthermore, the interest for the ecology of the system should expand to the ecology of the overall landscape, which is increasingly global, as a result of the phenomena of globalization. Academic institutions in Southern California, for example, could help bridge this local–global gap, as they train and develop global students in a unique regional setting. They could ultimately facilitate the rise of “new Argonauts” in digital media, similarly to the experience of Silicon Valley (Saxenian 2006), which facilitated the creation of “cross-regional communities” overseas of international professionals trained in Northern California who in turn successfully established networked businesses once back in their home countries. The intellectual, academic, governmental, and industrial communities in Southern California have the unique potential to recreate a similar experience in the realm of digital media, through sustained long-term partnerships. The ecology of the landscape extends beyond the previously defined Hollywood system, as the processes of globalization involve more and more local cultures in processes of digital glocalizations across the globe. From an era of unidirectional export of entertainment content from the West to the Rest, and Hollywood’s leadership within the West, dictating the pace and the content of the transnational flow of the global mediascape, the twenty-first century is witnessing the emergence of different phenomena in the more complex mosaic of the global entertainment landscape, shaped by the interactions of local–global forces. As the analysis of the global rise of nonscripted entertainment content has shown, local adaptations provide a key element in the success of entertainment content, regardless of its origin. In addition, the ICT revolution is ushering in specific dimensions to the landscape, altering globally the creation, production, and distribution of entertainment for the foreseeable future. Profit-oriented entities maintain a key relevance in the international flow of entertainment crossing the globe via new, multiple distribution platforms, while anew different entities are emerging, challenging Hollywood’s global competitive advantage. The paradigms of the global mediascape with its “image-centered, narrativebased accounts of strips of reality” (Appadurai 1990) are shifting though, as the digital glocalization of entertainment rises in the global entertainment landscape.

References

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Index

A Active audience paradigm, 95, 101 Advertising based media business models, 101, 103, 122 interactive, 113 revenues, 47, 60, 71, 104, 112 All American Television, 70 The Amazing Race, 46, 50 American Broadcasting Company (ABC), 45 American Idol, 39, 45, 46, 49, 51, 54, 58, 64, 71, 75, 115 Analog content, 11, 87, 93–96, 102 distribution, 97 An American Family, 51 Ancillary revenue, 37, 64, 122, 123 Apple, 99 Arthur Godfrey’s Talent Scout, 49 Authenticity, 51–53 Avatar, 94 Azureus, 99 B Babelgum, 99 Barriers to entry, 26, 38, 40, 66, 97 Bazalgette, Peter, 58, 63 Beijing 2008 Olympics, 110, 112 Bertelsmann A.G., 49, 70 Betamax, 84, 85 Big Brother, 4, 7, 9, 45, 48, 49, 51–54, 57–62, 64–67, 69, 76, 112, 114, 124 The Biggest Loser, 45 Blinkx, 95 Blip.tv, 95 Blogs, 62

Blu-Ray, 85, 101 Brand exploitation, 69, 72, 76 global reach, 19, 50, 66, 69, 88 Britain Got Talent, 53 British Broadcasting Corporation (BBC), 72 Broadband, 69, 87, 88, 93, 97–99 Broadcasting & Cable, 8 BroadcastingEngineering, 8 Bureau of Economic Analysis (BEA), 7, 18, 19, 38 Burnett, Mark, 46, 50 Business models, 3, 5, 6, 11, 26, 29, 40, 76, 82, 85–88, 94, 100–105, 114, 115, 119, 121–123 practices, 7, 9, 21, 22, 24, 35–37, 40, 54, 61, 62, 64, 75, 124 C Candid Camera, 50 Candid Microphone, 50 Carlton Communications, 72, 73 Castaway Productions, 73 Celebrity status, 53, 58 Cinéma vérité, 49 Clusters, 29, 33 C21 Media, 72 Columbia Broadcasting System (CBS), 45, 62, 109 Comcast, 62, 87, 88 Competitive advantages, 3, 5–7, 9, 11, 22, 29–40, 69, 75, 76, 83, 89, 93, 96, 100, 102, 105, 107, 113, 114, 120, 121, 124–128

P. Sigismondi, The Digital Glocalization of Entertainment, The Economics of Information, Communication, and Entertainment 3, DOI 10.1007/978-1-4614-0908-3, © Springer Science+Business Media, LLC 2011

131

132 Complexity theory, 4 Computer Generated Image (CGI), 94 Conditions demand, 29, 31–34, 39 factor, 29–30 relating and supporting industries, 29 strategy/structure/rivalry, 29 Conduits, 6, 11, 82, 94, 96–100, 114, 121 Constitutive moment, 87 Consumer Electronics Association (CEA), 7 Contra-flows, 38, 66 Convergence culture, 35, 95 Creative Artists Agency (CAA), 64, 71, 75 Cultural imperialism, 36 Cultural proximity, 9, 35, 39, 111 D 3-D, 94, 97 Dancing with the stars, 10, 45, 46, 48, 73 “Day and date” release, 21 The Deadliest Catch, 45 De Agostini Communication, 73 Deal or No Deal, 9, 51, 67, 69 Delivery platforms, 5, 96–100, 110, 111, 114, 121 Digital animation, 94, 97 content, 94–99 distribution, 37, 40, 99, 102, 103 glocalization of entertainment, 3, 7, 11, 105, 112–115, 121, 124, 127, 128 media, 3, 10, 11, 52, 67, 68, 81, 85, 96, 102, 105, 108, 110–112, 124, 126–128 movie theatres, 97 production, 94 Video Disc (DVD), 2, 27, 35, 54, 85, 89, 98, 101, 122, 123, 125 Digital Video Recording (DVR), 10, 35, 71, 82, 101, 104, 113 Disruptive technology, 81–82 Distributing Computing Industry Association (DCIA), 7, 99 Downloading, 93, 99 Dream factory, 24, 74, 122 E eBay, 98 Economic recession, 11, 121, 122 Ecosystem, 125–127 Emmy awards, 46 Encoding/decoding, 35

Index Endemol, 9, 10, 38, 47, 58, 59, 61, 63, 65–70, 74, 76, 112, 113, 123, 124 Entertainment economy, 2 Entertainment Software Association (ESA), 7, 95 industry, 2, 3, 5, 8, 10, 11, 17, 18, 22, 23, 26, 29, 30, 33–37, 48, 50, 53, 54, 81, 82, 84–88, 93–105, 107, 108, 119–128 non-scripted, 3, 6–11, 37–40, 45–54, 57–76, 111–115, 120, 123, 124 scripted, 9, 35, 38, 45, 46, 49, 50, 54, 60, 63–65, 68, 70, 75, 112, 123, 124 shelf life, 11, 19, 21, 40, 63, 65, 86, 102, 103, 114, 124 Eurofestival, 59 European Broadcasting Union (EBU), 59, 65, 109 F Facebook, 98 Factors global, 60, 111 glocal, 60, 61 local, 60, 61 Family Feud, 70, 72 Federal Communications Commission (FCC), 7, 24, 87, 88, 98 Federal Trade Commission (FTC), 24 Fédération Internationale de Football Association (FIFA), 7, 50, 109 Financescape, 121 Financial Interest and Syndication rules (FinSyn rules), 24, 86 Finding Nemo, 94 FOX, 45 Fox Reality, 47 FremantleMedia, 9, 38, 39, 49, 69–72, 76, 124 G Global entertainment, 2–9, 11, 26, 34, 35, 38–40, 50, 54, 63, 67, 68, 70, 71, 74, 82, 99, 113, 114, 115, 119–124, 127, 128 events, 111 global-local dilemma, 61 marketing, 21, 105 mediascape, 1–11, 36, 40, 82, 121, 122, 127–128 Globalization, 2, 22, 33, 49, 58, 69, 121, 127, 128

Index Glocalization, 3–5, 7, 9, 11, 60, 76, 105, 107–115, 121, 124, 127–128 The Golden Cage, 58 Google, 95, 101, 102, 104, 124 Granada, 10, 46, 72 Grundy World Wide, 70 H Hell’s Kitchen, 10, 72 High-definition Digital Video Disc (HD DVD), 85 Television (HDTV), 110 Hollywood competitive advantage, 5, 6, 29–40, 120 executives, 100 global primacy, 9, 34–40, 114, 115, 119, 121, 128 “golden age,” 24, 25, 83, 126 studios, 6, 8, 17–27, 30–34, 37–39, 48, 62, 74, 81–86, 88, 89, 93, 94, 96, 99, 101, 108, 119–121, 124–126 system, 5, 6, 18, 22–27, 30, 34–37, 39, 50, 76, 81, 83, 88, 113, 119, 120, 124, 127 The Hollywood Reporter, 7 Hulu, 100 Hybridity, 95 Hyper Text Markup Language (HTML), 97 I Increasing returns, 85 The Incredibles, 94 Independent Television (ITV), 72 INDEX, 111 Information and Communication Technology (ICT) revolution, 3–8, 10, 11, 26, 37, 40, 52, 67, 76, 81, 82, 86, 87, 90, 93–105, 107, 108, 114–115, 119–121, 124, 126–128 Innovation, 7, 63, 124–128 Institutional trajectories, 3–5, 9, 37, 39, 40, 75, 76, 82, 114, 115, 120, 121 Intellectual Property Rights (IPR), 22, 82, 88–90, 93, 97, 101, 108 value management, 101 Interactivity, 6, 54, 58, 99, 112 International Creative Management (ICM), 75 International Olympic Committee (IOC), 7, 109 International TV & Video Almanac, 7, 45, 71 Internet protocol television (IPTV), 99, 113 service provider (ISP), 87

133 I Survived a Japanese Game Show, 47 iTunes, 99 J The Jazz Singer, 83 Jeopardy!, 74 Jeux Sans Frontières, 59 Jobs, Steve, 94 John de Mol, 58, 67, 68 Joint Photographic Experts Group (JPEG), 97 Joost, 62, 99 K Keystone advantage, 125, 126 Knowledge workers, 54 L Licensing, 2, 21, 36, 37, 64, 71, 73, 104, 122, 123 Linguistic affinity, 9, 35, 76 Local adaptation, 4, 39, 40, 53, 57–66, 71, 75, 111, 123, 128 Long tail, 40, 101 M Many-to-many networks, 97, 98 Marketing myopia, 37, 84, 114, 120 Marketing strategies, 4, 71, 104 Media conglomerates, 6, 18, 25, 26, 69, 72, 75 on demand, 94 landscape, 2, 5, 9, 10, 11, 35, 36, 60, 68, 70, 72, 73, 75, 83, 93, 95, 96, 99, 102, 103, 105, 108, 112–115, 124, 127 “new” media, 101 “old” or legacy media, 101, 121 packagers, 22 technologies, 96, 115 Mediascape, 1–11, 36, 40, 82, 100, 120–122, 127–128 Mediaset S.p.A., 69 Mobile platforms, 110, 112 Morris, William, 64 Motion Picture Association of America (MPAA), 6, 7, 10, 18, 20, 23, 31, 84, 88, 89, 108 Motion Picture Experts Group Audio Layer 3 (MP3), 97, 98 Multiple System Operator (MSO), 104 MySpace, 98

134

Index

N Nanny 911, 10, 72 Narrative transparency, 35, 39, 76 National Broadcasting Channel (NBC) NBC Olympic research lab, 108 NBC Sports, 109, 110 NBC Universal, 100, 110, 111 Net neutrality, 10, 87, 88, 108, 113, 126 Nielsen, 7, 45, 111 Non Governmental Organization (NGO), 5, 35, 82, 120, 126, 128

genre, 47–54, 65 programs, 3, 47 The Real World, 47, 49, 51 Regional advantage, 126 Regulatory environment, 6, 10, 21, 22, 82, 86–88, 90 Remake rights, 65 Revenue streams, 6, 20, 21, 26, 27, 31, 37, 39, 40, 51, 54, 64, 68, 69, 71, 76, 85, 86, 89, 102, 104, 115, 122, 123, 125 RTL group, 70

O The Office, 49, 63 Online video, 100 The Osbournes, 47

S Satellite distribution platform, 22, 47, 84 Screen Actors Guild (SAG), 52, 54 Short Message Service (SMS), 6, 40, 64, 72, 76, 123 The Simple Life, 54 Social networks, 99 Sony, 18, 20, 26, 59, 73, 74, 84, 85, 101 Sony Pictures Entertainment, 18, 26, 73 Sound revolution, 83 Southern California economy, 19 Special effects, 83 Sports events, 46, 48, 65, 112 Standards battle, 85 incompatible, 85 open, 97 Star Academy, 69 Star Search, 49 Strategy defensive, 11, 81, 82, 86, 88, 90, 105, 108, 113, 114, 121, 124 offensive, 11, 81, 82, 90, 100, 105, 108, 110, 112, 113, 121, 124 Streaming, 69, 96, 98, 110 The Surreal Life, 48 Survivor, 45, 46, 48–51, 57, 58, 63, 65, 73 Sustainable innovation, 124–128 SWOT analysis, 82, 107, 108, 124 Syndication, 24, 26, 123 Synergies, 21, 33, 83

P Paradigm shift, 11 Paramount consent decree 1948, 24, 83, 86 Paramount Pictures, 17, 18 Parsons, Charlie, 63, 73 Participatory culture, 76, 95 Passive viewing, 111 Path dependence, 85 Pay-Per-View (PPV), 19, 60, 89 Pearson Television, 70 Peer-to-peer technologies (P2P), 99 Piracy, 10, 40, 89, 108, 126 Pixar, 94 Polysemy, 35 Pop cosmopolitanism, 95, 96 Porter, Michael E. five forces, 7, 22, 33, 75, 114, 120 national diamond, 7, 9, 29, 33, 39, 40, 74, 114, 120, 126, 127 Power of 10, 74 The Price is Right, 9, 70, 72 Product placement, 60, 71, 104, 123 Programming, 45, 48, 52, 84, 97, 124 Project Runway, 54 Proximity, 9, 29, 35, 39, 76, 81, 111 Q Quiz shows, 51 R Reality TV controversies, 53

T Talent agencies, 6, 10, 18, 24, 25, 26, 30, 48, 71, 74, 75, 121 “Talkies,” 83, 125 Technological determinism, 5 Technology, 4, 5, 10, 11, 67, 81–86, 88, 90, 94, 95, 96, 97, 100, 101, 108, 114, 115, 125, 126, 128

Index Ted Mack’s Original Amateur Hour, 49 Telecommunications Act of 1996, 24 Telefónica SA, 67, 68 Television cable TV, 19, 45 formats, 6, 45, 52, 54, 57, 62–67, 69, 75 markets, 45, 57, 71, 72, 75, 113 mobile, 62, 99, 104, 113 network TV, 8, 19, 24, 26, 45, 46, 47, 48, 51, 54, 57, 58, 62, 66, 71, 84, 99, 102, 109, 110, 121 Thames Television, 70 Time Warner Cable, 39, 100 TiVo, 46, 71, 104 Total Audience Measurement Index (TAMI), 111 Transmission Control Protocol / Internet Protocol (TCP/IP), 97 Turbulent environment, 125–126 TV Buying International, 8 Twentieth Century Fox Film Corporation, 18 Twenty-One, 51 Two-step creative process, 64 U United Nations Educational, Scientific and Cultural Organization (UNESCO), 2, 7 Universal City Studios, 18 Universality, 35, 76 User-generated content, 95, 99 V Value chain, 25, 26, 61, 100, 121, 122

135 van den Ende, Jop, 67 Variety, 45–47, 86, 94, 96, 109, 119, 122, 123 Veoh, 100 Video aggregators, 99 Video Cassette Recording (VCR), 10, 82, 84, 114, 115, 120 Video games, 11, 38, 94, 95 Video Home System (VHS), 85, 101, 125 Video on demand (VOD), 19, 89, 110 Virtuous cycle, 29, 32, 39, 40, 75, 127 VISOR, 102 W Walt Disney Studios Motion Pictures, 18 Warner Bros. Entertainment, 18 2waytraffic, 73, 74 Who Wants to Be a Millionaire, 45, 49, 51, 57, 60, 73, 74 Windows of exhibition, 19–21, 26, 37, 40, 63, 86, 99, 102, 103, 105, 123 Wipeout, 47, 69 Wireless, 88, 93 Writers Guild of America (WGA), 47, 54, 88 Y Your Truman Show, 95 You Tube, 37, 95, 98 Z Zip.tv, 95 Zodiak Entertainment, 73 Zone Vision Network, 47