There truly is no business like show business, according to Tony Uphoff, VP-general manager and publisher of The Hollywood Reporter.
"The entertainment industry works like no other industry out there," Uphoff said. "The closest thing that comes to this business is Wall Street, because they both are fast-moving and driven by the latest buzz. Deals can be made or broken in a matter of minutes based on rumors and news."
Uphoff isn't just talking about Hollywood, either. The music and TV industries work in much the same way and, in fact, they're all moving quickly toward convergence. Take a look at who owns what—for example, Sony Corp.'s massive and diverse entertainment empire—and it's hard to separate these sectors. Add in Internet interests, the mobile explosion and a global hunger for American entertainment, and not only is this market complex, it's increasingly massive.
PricewaterhouseCoopers' "Global Entertainment and Media Outlook" report last year projected that global entertainment and media will grow into a $1.8 trillion industry by 2009. Movie box office performance declined in 2005—a 6.2% decrease from the year earlier, to $8.8 billion—but video, specifically DVD, sales and rental revenues are higher than ever, Uphoff said. Video sales are expected to reach $26.90 billion worldwide by 2009, and video rentals $9.60 billion, with online rentals making up one-third of rental revenues.
There's no slowdown in people's consumption of entertainment, just a major shift in how they do it, Uphoff said.
The same shift is happening in the music and TV sectors. ITunes and other digital download services have revolutionized how consumers buy and listen to music. Major record labels are projecting that 10% to 20% of their expected revenues will come from digital downloads and wireless platforms in the near future, said John Kilcullen, president and publisher of Billboard and the VNU Music & Literary Group.
On-demand programming and DVRs put viewers in control of when and where they watch TV. This creates a need for new advertising models, but many in this sector are excited about what's happening, Uphoff said.
All three sectors have struggled with this digital shift because of increased piracy concerns, but all have seen the writing on the wall and begun to embrace it, Kilcullen said.
Another significant difference between the entertainment industry and others is that it's project driven, Uphoff said. "In the film industry, the major studios are no longer responsible for everything that goes into a movie production," he said. "Responsibilities and tasks are farmed out to specialists—production companies, talent agencies, distributors, etc.—which come together for the project, then disband in a few months' time.
Projects in the music and TV business are increasingly done in a parallel way, Uphoff said, which can frustrate marketers that would rather approach a centralized operation.
Another frustration is the challenge of engaging an audience. They're a marketing-savvy bunch bombarded by messages every day. "They are in the entertainment business; they know bullshit from a mile away," said Vijay Chatta, CEO of VSC Consulting, a PR firm that targets the entertainment industry. "The pitch and opportunity must be real, and the audience needs to believe in them."
Additionally, the message must be on target, Chatta said. "Music execs have small budgets for new concepts, so price is a big factor," he added. "Meanwhile, movie companies like building long-term, loyal relationships, so the ability to deliver a quality product or service is a high priority."
A pat on the back
If you pick up a copy of Billboard, The Hollywood Reporter or Variety , a lot of the ads may seem self-congratulatory. "Our primary b-to-b advertisers are the studios and various production companies announcing completed projects, box office successes and awards considerations," Uphoff said. "Such advertisements send out the message that these companies are successful and others should do business with them in the future. And they work."
Billboard gets a lot of that type of advertising, too. "Our largest advertisers are the major labels," Kilcullen said. "We afford them an effective and direct channel to mass merchandisers, retailers and distributors. Their messages of support can help turn a budding artist into a chart-buster."
Marketers of more traditional b-to-b products and services can also gain traction by partnering with established media vehicles such as Billboard, The Hollywood Reporter and Variety . Uphoff sees a few key areas where marketers can really make a splash in this business.
The first, he said, is technology. The entertainment industry is just getting up to speed with innovations that improve business operations. "Technology affects the industry on all levels, from production to distribution to how it connects with its audiences," Uphoff said.
Financial products are also in high demand. "The industry has become enamored with all the different ways projects can be financed," he said.
Finally, any product or service that can help with globalization efforts will be very appealing to entertainment companies, Uphoff said. "The U.S. market is not always where the money can be made. For example, most people might think that the movie `Troy' bombed, but that was only domestically. Globally, it raked in more than $400 million in box office."