 | The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject.(September 2011) |
Ancillary markets are non-theatrical markets for feature films, like home video, television, Pay Per View, VOD, Internet streaming, airlines and others. [1] [2]
Before television, studios played their films in theaters exclusively. However, in 1950 many studios began to sell all their pre-1948 features to television syndicators. The television syndicators then would use these films to fill in their programming schedules. [3] Back in the 1960s, the first domestic ancillary market for feature films was created. NBC was the first to practice the market on September 23, 1961, by programming "NBC Saturday Night at the Movies." After such success, ABC became the second network ever to program a series of prime time features in 1962. One of the other networks, CBS, followed and added a prime time feature program in 1965.
Today, feature films opens in motion picture theaters to establish its box-office value. After that is established, it is then released to ancillary markets in a particular order as follows:
The sequence is to maximize the full economic potential of each market.
Home video recorders were made public when Sony introduced the half-inch Betamax cassette in 1975. Following Betamax, the company JVC introduced the Video Home System (VHS). Marketed by RCA and manufactured by Matsushita, VHS soon became known as the video-cassette recorders (VCRs). VCRs, which gave the consumer the option of recording programs from television, were a new form of competition in the demanding consumer market. VCRs revenue contributed to the development of the ancillary market of video and DVD. By the 1980s, five million households owned VCRs. Major studios had not yet adapted to the new video technologies that were being developed for consumers. There were no anticipations of new markets or other opportunities to expand until an entrepreneur, Andre Blay, opened Hollywood film companies’ eyes. Blay wanted the license to transfer and sell their films on tape. After he succeeded and his approach was beneficial, film companies all around became a part of the video distribution. The film companies could not deny the fact that this new distribution would lead to a new revenue stream. [4]
As the VHS market saturated, multiple media executives and manufacturers liked the idea of utilizing other home video technologies. In 1993, the film industry upgraded their technology with the creation of several new formats including the DVD, or digital video disc. Many manufacturers such as the Japanese (Hitachi, JVC, Matsushita Electric Works, Mitsubishi, Pioneer, Sony and Toshiba) and the European (Philips and Thomson) collaborated to facilitate development of the DVD Forum. In March 1997, the US launch of the DVD systems went smoothly due to Hollywood's solidarity. Manufacturers and film studios alike together decided to avoid making the same mistake of the VHS format battles and agreed upon a universal standard of cooperation. When first introduced in 1997, DVDs sold at the low price of $20, for which they offered high-quality image and extra special features. Consumers liked the advantages of the DVDs and soon surpassed VHS sales. [5]
The first premium rate television services were Phonevision, Telemeter, and SubscriberVision, among others. None of them were successful, until the launch of Home Box Office (HBO) in 1972, considered the first successful premium-rate subscription television service. Other services were launched: Z Channel, Showtime, The Movie Channel, Cinemax, Spotlight and Home Theater Network.
Only HBO, Showtime, The Movie Channel and Cinemax survived through the 1980s. These premium rate services air features unedited, uncut, and commercial-free, the same way they were shown on theaters and/or home video.
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Out of the many ancillary markets out there, none were more effective and revenue rewarding than network television, and eventually syndication began. Amanda D. Lotz spoke on the radical change in her book titled Television Will Be Revolutionized (2008). She mentions how time went on and as the post-network era developed, that the limited ways there were for medium to be distributed was eliminated. What was expanding, and evolving was network television as a whole.<Lotz 85 [6] > At first channels were few, and very limited. But soon came the multi-channel transition, then on with the creation of cable TV. As that later expended cable began to see the 'cash cow' in that and began selling shares to different networks in order to air their studio programs. Not only did Network Television open up ancillary markets for TV, but other markets as well. The VCR then became a hot commodity, because the consumer wanted the option of recording. That slowly transitioned to the DVD that took out the VCR, and finally DVR. Which seems to be just that, a VCR and a DVD combined. Network television took a gigantic step when it later allowed programs to have different showing dates, and even multiple air times. This offered different networks to still be able to ear revenue off of an older film that already has left the box office.
According to McDonald and Wasko, Hollywood's interest in emerging medium of television dates from the 1920s and includes experiments with the developing technology, an alternative model of television as home theater, applications for television frequencies, as well as investments in broadcasting companies that were exploring television (Anderson, 1994; Hilmes, 1990; Wasko, 1994). The evidence suggests that studios clearly wanted to control the development and implementation of television technology. Securing that control required the assistance of the Federal Communications Commission, which regulated television's development by articulating technical standards and operating rules and through the FCC's exclusive right to license the use of television frequencies for experimentation or broadcast (McDonald and Wasko, p. 107).
Video games are a rapidly growing ancillary market for feature films. Video game over-all gross income has consistently surpassed that of movie sales since 2004. Because of the increased interest in video games many major media and communication companies have begun to show interest in video games as a way to market, brand, and advertise for their product. Some movies that have benefited from this are the Harry Potter, Lord of the Rings, and James Bond series. Because the video game industry has been able to outplay and outgross many movies, video game manufacturers are beginning to look in the direction of producing their own movies as well. Microsoft's producers of Halo have decided to pass Hollywood studios and produce their own movie. [7]
Hollywood has shown interest in the video game industry as an ancillary market almost as far as video games have existed. The film industry's goal within the video game industry is to either seek control and therefore ownership of the video game market or to license products to video game producers. Once the video game profits are high, that is when Hollywood seeks control. On the other hand, when profits are down, that is when Hollywood offers the licensing. The collaboration had always been problematic since the film industry had been uncertain about the development of video games. Hollywood has seen video games as another promotional scheme for a film. [8]
Hollywood has had interactions with the recorded music industry that dates back as far as the studio system itself. The interactions between the two include three main periods; 1927-1957: recorded music as a form of promotion, 1957-1977: recorded music as cross-promotion and ancillary revenue, and 1977-1997: recorded music as cross-promotion, ancillary revenue stream, and means of spreading risk. In addition to music's promotional value, studios realized that, "A chart success was an effective way of generating additional revenue for their companies, both in terms of publishing and performance royalties and, of course, in outright sales." Recorded music proved to be of great value as an ancillary market to the film industry. [9]
TiVo Corporation, formerly known as the Rovi Corporation and Macrovision Solutions Corporation, was an American technology company. Headquartered in San Jose, California, the company is primarily involved in licensing its intellectual property within the consumer electronics industry, including digital rights management, electronic program guide software, and metadata. The company holds over 6,000 pending and registered patents. The company also provides analytics and recommendation platforms for the video industry.
VHS is a standard for consumer-level analog video recording on tape cassettes invented in 1976 by the Victor Company of Japan and was the competitor to the ill-fated Sony Betamax system.
Videotape is magnetic tape used for storing video and usually sound in addition. Information stored can be in the form of either an analog or digital signal. Videotape is used in both video tape recorders (VTRs) and, more commonly, videocassette recorders (VCRs) and camcorders. Videotapes have also been used for storing scientific or medical data, such as the data produced by an electrocardiogram.
S-VHS (スーパー・ヴィエイチエス), the common initialism for Super VHS, is an improved version of the VHS standard for consumer-level video recording. Victor Company of Japan introduced S-VHS in Japan in April 1987, with their JVC-branded HR-S7000 VCR, and in certain overseas markets soon afterward. By the end of 1987, the first S-VHS VCR models from other competitors included Hitachi VT-2700A, Mitsubishi HS-423UR, Panasonic PV-S4764, RCA VPT-695HF, and Toshiba SV-950. It has been standardized as IEC 60774-3 and IEC 60774-4.
THX is a suite of high fidelity audiovisual reproduction standards for movie theaters, screening rooms, home theaters, computer speakers, video game consoles, car audio systems, and video games. The THX trailer that precedes movies is based on the Deep Note, with a distinctive glissando up from a rumbling low pitch.
Cinemax is an American pay television, cable, and satellite television network owned by the Home Box Office, Inc. subsidiary of Warner Bros. Discovery. Developed as a companion "maxi-pay" service complementing the offerings shown on parent network Home Box Office (HBO) and initially focusing on recent and classic films upon its launch on August 1, 1980, programming featured on Cinemax currently consists primarily of recent and older theatrically released motion pictures, and original action series, as well as documentaries and special behind-the-scenes featurettes.
A video rental shop/store is a physical retail business that rents home videos such as movies, prerecorded TV shows, video game discs and other media content. Typically, a rental shop conducts business with customers under conditions and terms agreed upon in a rental agreement or contract, which may be implied, explicit, or written. Many video rental stores also sell previously viewed movies and/or new, unopened movies.
Original programming is a term used for in-house television, film or web series productions to which the exclusive domestic and, if the originating service operates non-domestic versions of the service outside of their home country, international broadcast rights are held by traditional and over-the-top content providers. The term was coined by HBO in 1983 when the premium service began producing its slate of in-house series and film productions. HBO initially branded the original series on the network under "HBOriginal" until 1986, and by 1993, the "originals" term had expanded to encompass most of its original productions. The term eventually expanded into use by various cable-originated television networks to identify their in-house productions. It also advertises them as being distinct from the acquired content offered to fill out the remainder of their programming schedule.
Flix is an American premium cable and satellite television network owned by Showtime Networks, a subsidiary of Paramount Global operated through its Paramount Media Networks division. Its programming consists solely of theatrically released motion pictures released from the 1970s to the present day, interspersed with some films from the 1950s and 1960s.
The Movie Channel (TMC) is an American premium television network owned by Showtime Networks, a subsidiary of Paramount Global operated through its Paramount Media Networks division. The network's programming mainly features first-run theatrically released and independently produced motion pictures, and during promotional breaks between films, special behind-the-scenes features and movie trivia.
Pay television, also known as subscription television, premium television or, when referring to an individual service, a premium channel, refers to subscription-based television services, usually provided by multichannel television providers, but also increasingly via digital terrestrial, and streaming television. In the United States, subscription television began in the late 1970s and early 1980s in the form of encrypted analog over-the-air broadcast television which could be decrypted with special equipment. The concept rapidly expanded through the multi-channel transition and into the post-network era. Other parts of the world beyond the United States, such as France and Latin America have also offered encrypted analog terrestrial signals available for subscription.
The videotape format war was a period of competition or "format war" of incompatible models of consumer-level analog video videocassette and video cassette recorders (VCR) in the late 1970s and the 1980s, mainly involving the Betamax and Video Home System (VHS) formats. VHS ultimately emerged as the preeminent format.
A combo television unit, or a TV/VCR combo, sometimes known as a televideo, is a television with a VCR, DVD player, or sometimes both, built into a single unit. These converged devices have the advantages of saving space and increasing portability. Such units entered the market during the mid-to-late 1980s when VCRs had become ubiquitous household devices. By this time, the VHS format had become standard; thus the vast majority of TV/VCR combos are VHS-based.
A film distributor is responsible for the marketing of a film. The distribution company may be the same with, or different from, the production company. Distribution deals are an important part of financing a film.
Home Box Office (HBO) is an American pay television network, which is the flagship property of namesake parent-subsidiary Home Box Office, Inc., itself a unit owned by Warner Bros. Discovery. The overall Home Box Office business unit is based at Warner Bros. Discovery's corporate headquarters inside 30 Hudson Yards in Manhattan's West Side district. Programming featured on the network consists primarily of theatrically released motion pictures and original television programs as well as made-for-cable movies, documentaries, occasional comedy, and concert specials, and periodic interstitial programs.
Film commissions are quasi-governmental, non-profit, public organizations that attract motion media production crews to shoot on location in their respective localities, and offer support so that productions can accomplish their work smoothly.
Home video is recorded media sold or rented for home viewing. The term originates from the VHS and Betamax era, when the predominant medium was videotapes, but has carried over to optical disc formats such as DVD and Blu-ray. In a different usage, "home video" refers to amateur video recordings, also known as home movies.
Funai Electric Co., Ltd. is a Japanese consumer electronics company headquartered in Daitō, Osaka. Apart from producing its own branded electronic products, it is also an OEM providing assembled televisions and video players/recorders to major corporations such as Sharp, Toshiba, Denon, and others. Funai supplies inkjet printer hardware technology to Dell and Lexmark, and produces printers under the Kodak name.
A videocassette recorder (VCR) or video recorder is an electromechanical device that records analog audio and analog video from broadcast television or other AV sources and can play back the recording after rewinding. The use of a VCR to record a television program to play back at a more convenient time is commonly referred to as timeshifting. VCRs can also play back prerecorded tapes, which were widely available for purchase and rental starting in the 80s and 90s. Blank tapes were sold to make recordings.
A script market is the system in which a screenwriter and producer engage in the buying and selling of a script for the film and television industries. The process of selling a script may begin with the pitch, however since the end of the 1980s the ability to pitch a film to producers has greatly depended on the notoriety of the screenwriter. One reason attributed to this effect is that studios are looking for the next big hit, but scared to take a chance on a script that doesn’t meet a pre-established formula guaranteed to make money since no one knows what will work. The majority of scripts are read by studio interns and others, who give the scripts a “consider”, “pass”, or “recommend” status, with most scripts receiving a “pass” rating. However, an agent who's signed the Artists-Managers Agreement drawn up by the Writers Guild of America can submit scripts to producers directly. Agents try to create buzz in the script market using spec script. With everyone in the entertainment industry trying to pursue the million-dollar dream, and Hollywood so desperate for new material ideas, the script market functions and business practices have been pursued in the spec script manner.