LO1- Understanding media products and the institutions that create them.

Hi, my name is Ellis Sullivan and as I am doing work for the media company 'Education Wise', I am here to explain my understanding of media products and the institutions which create them.

Ownership

For this unit I've chose to focus on the conglomerate '20th Century Fox'. A conglomerate is a large company which in turn is made up of various other smaller companies, known as subsidiaries. In this case, 20th Century Fox is a conglomerate but it's parent company (21st Century Fox) is also a conglomerate. 21st Century Fox is in turn owned by this guy(right), Rupert Murdoch. He's been around for a while and in that time has made himself a Net Worth of around £8.7 billion. He's been working for this since the 1970's when he became the primary founder of News Corporation, one of the world's biggest media groups. In 2012, News Corporation split it's assets between 'News Corp' and '20th Century Fox' who now own all their media outlets. These are all commercial companies meaning they're out to make a profit.

Warp Films are a Sheffield and London based company, founded by Warp Records in 2004. This is an independent company, which means it owns all it's own assets and does not work for anyone else. In 2010 their film 'Four Lions' made almost £7 million at the box office, in comparison 20th Century Fox's  Avatar made £1.8 billion at the box office in 2009 and is still the highest grossing film of all time (as of September 2015).

Cross media ownership is when one company creates multiple media types, these companies are generally conglomerates as they are able to own subsidiaries within various media sectors. Cross Media ownership is very useful to companies because it reduces loss of profit. In the production of a film, for example, 20th Century Fox would be able to use a subsidiary which is also owned by their parent company to produce the audio rather than paying a separate company, such as Dolby. This also means when promoting their films they can use affiliated companies. In this case related subsidiaries include The Fox Broadcasting Company to advertise and promote their films.

Without cross media ownership, a company might have to go in to joint-venture to make their product. This is when two companies work together by contributing assets and sharing equity. For example, when making the film 'Penguins of Madagascar' DreamWorks worked in joint venture with 20th Century Fox who distributed the film.

21st Century Fox's main assets include the Fox Entertainment Group, STAR TV and their 31.4% stake in Sky plc. These subsidiaries enable the company to use cross media ownership as well as providing coverage across various continents. Other subsidiaries include Hulu, and Fox Sports.

Operating Model

An Operating Model shows how the company does business in order to operate. The film production cycle explains the uses of both horizontal and vertical integration in order to produce, distribute and exchange their product.

Film Production Cycle

In the film production cycle, 20th Century Fox are able to use both horizontal and vertical integration. Horizontal integration means various subsidiaries all work together to cross-promote the product. Another kind of horizontal integration is joint venture, Disney and PIXAR are well known for being in joint-venture when creating animations, most notably was Toy Story in 1995 because PIXAR were able to animate the film but because Disney are a conglomerate, they were able to distribute the film worldwide. This co-operation between two companies is also known as synergy.

Vertical Integration is when a company covers the whole production cycle alone to create their product. This means they distribute, produce and exchange the film. This can only be done by conglomerates because independent film companies can not afford to do this and would need somebody to distribute their films, for example Warp films often go in to joint venture with Film 4 to control the distribution of their films

 Film Production Process

The film production process is the process in which 20th Century actually plans, creates and edits it's product. This begins with pre-production, this is the planning stage so it includes the writing of the scripts, creating storyboards, moodboards and other collages, sourcing cast and crew, creating a list of assets, a work plan, location scouting, and discussing a budget.

After the film has been planned, the production stage can begin. This starts with creating all the props and sets which may be needed on set. All assets must be obtained and ready for use such as props, costumes, make-up, sets and prosthetics. Then of course the scenes must be filmed, which can only begin when the film director and director of photography are ready. Other things which may be needed for production are pyrotechnics to control any on-set explosions or fires, Chroma keying can also be very useful which is the use of green or blue screens to layer two images together.

The final stage of the film production process is post-production. This again includes Chroma keying and any CGI which needs to be created. In the film 'Avatar' this was an essential part of the production process as the majority of the film used Chroma key or CGI



 Product

 Because 20th Century Fox are a conglomerate, they are able to focus on distributing their products worldwide. Warp Films are a small, independent company so they generally focus solely on the UK market who can identify with their social-realistic films. As a conglomerate, 20th Century Fox can access the worldwide market so this does not put as many boundaries on the way they choose their target audience.

One of 20th Century Fox's most well known products is Family Guy. This animated sitcom is directly aimed at adults with most of humour based around American culture. The show is produced by Fox Television Animation, 20th Century Television and Fuzzy Door Productions. Fuzzy Door stands out here as it is the only one not owned by 20th Century Fox and is in fact the production company owned by Family Guy's creator, Seth MacFarlane. As 20th Century are a mass media company, they were able to broadcast Family Guy directly after Fox's broadcast of the Super Bowl in 1999. This means that Fox were able to persuade a mass audience to watch the show through the use of 'hammocking', this is a technique where a broadcaster places an unpopular or new show in between to popular shows to attract a larger audience. The show has faced an enormous amount of controversy but since it's debut 13 series have aired as well as a spin-off show and have even parodied Star Wars.

Speaking of animation, over the past decade their has been a noticeable increase of the use of Computer Generated Imagery, or CGI. 20th Century Fox's most notable films which are full to the brim of CGI include Avatar (obviously), the X-Men series and the Planet of the Apes series reboot. Rise of the Planet of the Apes not only has a lengthy title, which is irrelevant but an issue I felt worth addressing, it also has a crazy amount of awards for it's animation. The great thing about this film, compared to Avatar that is, is that the animated 'creatures' exist in the real world (minus their human-like abilities) so you get a great sense of the lengths the special effects team have gone to make it appear realistic. Compared to Family Guy there is obviously a huge budget difference. But this film isn't a controversial adult sitcom, it's a science-fictional epic drama set in a dystopian future with a well thought out narrative. So naturally the lead character, Caesar, cost a few extra quid to animate than Family Guy's Brian the talking dog.

If you feel like I'm luring you in with lollipops and fireworks to consume 20th Century Fox's products. Then fear not because this is where I tell you that they were not just responsible for the distribution for the first two Fantastic 4 films, but they also helped to produce the 2015 reboot. Though the original 2005 version was a commercial success, critics particularly disliked the film, which is a likely reason for the commercial failure of the latter. I cannot begin to compare any of these films to The Rise of the Planet Apes, though 2015's version of 'The Thing' thankfully doesn't resemble a lab accident between polystyrene and a packet of Wotsits. Judge for yourselves.

Market Position

Market Position means how successful the company is in their field

One way of determining a company's success is market share. As of September 6th 2015, 20th Century Fox rank 4th in terms of market share, this is according to Box Office Mojo so I'm hoping they've got their figures right. The site states that this rank comes from their 10% share in the market, which seems like a relatively small figure for a conglomerate but Warp Films don't even make the list of 126. This list changes throughout the year and is based on the total gross made from all their products, in the case of 20th Century Fox that's $772 million, which translates to £500 million in case you were wondering, and that money comes from 17 films in total. There's a lot of flexibility in market position between each year. For example, in 2014 both 20th Century Fox and IFC released 22 films, but the IFC's total gross of $32.7 million totally dwarfs 20th Century Fox's $1,790 million.

Another way of determining how successful a company might be, is their gross profit margin. The gross margin of a company shows how much money a company has, after accounting for the costs of goods sold. So in this instance, an independent company may be just as successful or more successful than a conglomerate. Ycharts gives a quarterly breakdown of 21st Century Fox's profit margin (below), it shows us a massive spike in January this year but other than that it has stayed moderately the same around the 12% mark. It's currently sitting at the 1.40% mark but they are expected to make 6.5 billion dollars in sales. I've no experience in business sales so I personally find all these figures quite overwhelming.

FOXA Profit Margin (Quarterly) data by YCharts

Competitors

20th Century Fox has quite a plethora of competitors, but it's most notable competitors are known as Hollywood's 'Big Six'. These include Warner Bros. Pictures, Walt Disney Pictures, Columbia Pictures (Sony) and Paramount Pictures. This information comes from Wikipedia which admittedly isn't the most reliable source but various other sources show the same six studios so I'm going to go out on a whim and say that this information is true. It also helps that these six studios are all recognisable to the general public. These six are only Major film production companies and do not include the mini-major film production companies such as Lionsgate.

The wiki page also shows the parent companies of these film studios all of which are competitors to 21st Century Fox. This list will constantly change as it is majorly based on the success and market share of a company, Metro Goldwyn Mayer,or MGM, are part of this list of major media corporations yet they completely dropped of Box Office Mojo's list of market shares in 2010 and are yet to climb their way back up there, despite once being the largest film studio in the world.

In this list of corporations, the only company who is not a Mass Media company is Sony who own Columbia pictures. Sony are classed as public kabushiki gaisha, I've absolutely no idea what that means but in terms of film they are essentially still a mass media company with cross-media ownerships. So the important thing for you to know about about 21st Century Fox's competitors is the fact that they all produce or have subsidiaries which produce various types of media.

The main thing which makes 20th Century Fox stand out from their competitors is their ability to make a profit. If you search for the 'highest grossing films of all time' you will find that most of these lists show Avatar and Titanic as first and second on the list, both are 20th Century Fox films and both were directed by James Cameron. The problem most people have with these lists with these lists is that they are not adjusted for inflation. But when you adjust the list for inflation, Avatar and Titanic both remain in the top 10 accompanied by another 20th title, The Sound of Music, so I guess 20th Century Fox regard that problem as irrelevant. The important thing to consider about these three films is that they weren't only a box office hit but they have won countless awards and are all critically acclaimed.If you like Johnny Depp films absent of any Burton-esque themes then you probably love Pirates of the Caribbean; the series fourth installment ,however, holds the record for the most expensive film ever made, yet has been slated for it's 'lack of originality' and it doesn't manage to enter that top 10 list at all. Whilst on the subject of Johnny Depp it may be worth stating that 20th Century Fox produced 1987's '21 Jump Street' and aired it on the Fox Network, this show is often cited as 'sparking' his career. Unfortunately for 20th, they were not responsible for producing or distributing the 2012 box office hit, nor it's hilarious 2014 sequel. 20th Century Fox do however have 3 upcoming installments to the Avatar series and at least one addition to the Planet of the Apes series. So as they build this legacy of visually stunning films using motion-capture and general CGI, I'm sure Columbia's taking over of the Jump Street series is not quite bring Rupert Murdoch to tears.