These categories in motion pictures each have their own unique parts to play in the industry. Each has a connection to the producer, distributors and audiences.

Participant Category 4: Retailers and Licensed Media

Motion Pictures Production ParticipantsThe fourth participant category in the motion picture business are the retailers and licensed media category. These include the theater circuits (exhibitioners), home entertainment and rental sales, streaming and downloads from the Internet, television video on demand (VOD), streaming VOD (SVOD), and Internet Protocol Television (IPTV), television premium cable networks and major free television networks, and free television syndication participants.

These groups represent a large and separate industry with their own conventions and associations, specific and unique audiences that they deliver. They all, however, rely on producers to deliver entertaining movies and distributors to build the brands of those movies.

There have been significant changes in market dominance in recent years. The past powerhouses of retail rental spaces like Blockbuster and Hollywood Video in the US continue to recede in income and storefront space. The largest growing sector is Internet Streaming and Distribution venues such Netflix in the US and Movie Mail in the UK. Additionally, kiosk style access like Redbox in the US has enjoyed much success and growth, although it is slowing now due to market saturation.  Predictions are that the most dominate method of distribution in all global territories will soon be through the Internet, both in streaming and physical delivery sales and rentals.

Movie rentals are rising while retail sales are dropping. This is predicated by a consumer attitude that is not interested in owning movies anymore, and instead prefers the ease and convenience of renting, as well as appreciating the lower cost of renting vs. buying. In 2009, DVD and Blu-ray sales were down 13.5% from the previous year. Numbers from 2008 were already down 12.7% from the peak period of about $16.6 billion in 2004. In contrast, VOD/SVOD and IPTV transactions grew by 135% in 2007 and will quadruple by 2012. Apple’s iTunes and Microsoft’s Xbox Live Marketplace represent nearly 80% of these transactions.

International Territories

This category includes the audiences, distributors, retail media and other rights purchasers in the territory outside the primary distribution area.  International territories yield about 60-70% of the earnings of most motion pictures created by U.S.-based producers. This amount varies depending on the genre and the above-the-line talent of the movie.

Financing Participants

This category represents the banks and venture capital funds. They offer debt financing guaranteed by collateral. Collateral can be production incentive programs, cash flow distribution contracts, and presale contracts or sales estimates of the value of certain territories. Financing participants can also include studios and distributors that act as financing or production partners. Governments can also be included as they sometimes provide financing with production tax or cash rebate programs. Private investors, postproduction and CGI houses, law firms, private attorneys, accounting firms and accountants who work on the pictures and assist in the management of finances can also be included in this category.

Distribution Subcontractors

Included in this group are the sales and licensing specialists, media planning and buying companies, advertising agencies, and campaign creators and producers. Additionally, this category incorporates the manufacturing and duplication companies that handle the production of DVDs and Blu-rays and any new generation of consumer technology.

Production Talent and Subcontractors

These are all the actors, writers, directors, crew, dreamers, producers and suppliers, and all the agents, managers, attorneys that they employ on their behalf.

Ancillary Media and Licensees

This group represents the electronic games, publishing, printing, merchandising, sound tracks/music publishing and clothing associates with licensed rights. This category contains also the income generated from licenses with Hotel and Motel chains, in-flight and Ships-at-Sea screenings and other free audiences like prison systems, Indian reservations, and schools. Although typically a small percentage of a movie’s earnings, some occasionally out-earn other income categories, in particular in the electronic games division.

Major Consumer Brands

These participants are brands that link their products and names to a movie to advance the picture and their product by that relationship. They usually fall into two types of relationships: the first relationship is brand exposure where the company pays for the exposure it gets or lends the product to the producer, and the second relationship involves the brand using the picture to advertise or promote its product.  The types of companies that typically employ this type of relationship are fast-food chains, beverages, autos, computers, and mobile phones.

These companies are usually used to create reality and authenticity for the film’s audience. Their participation often offsets production costs; especially by the added advertising they contribute around opening. Some even become a source of income or powerful advertising alliance for the producer.