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Explaining the structure and ownership of the media sector

Task 1 Understand the structure and ownership of the media sector. P1, M1, D1

+Types of ownership: private ownership

Private ownership is when a company is owned by a private individual or organisation. The funding is provided by advertising and there is an element of creativeness about the content they create because it is channel/audience specific. For an example. XFM is a private owned company, owned by Global Radio that plays music suited to the indie audience. The funding is generated by adverts that play between songs.

+ Types of ownership: private ownershipBenefits of private ownership

-Owned by one company/individual

-Content is aimed at a specific group of people

Negatives of private ownership

-Rely on advertising to fund

-Under pressure to deliver content that the audience likes or the company will disband

-Typically less money than public ownership

-Doesn’t cater for all audiences

+ Types of ownership: public service

Public service is used by companies such as the BBC where everyone pays a TV license to fund the company to create and deliver content. There are no adverts because this is all funded by the public, and there is something for everyone. The BBC has multiple channels on terrestrial TV, multiple radio stations across the UK and overseas in different languages too.

+ Types of ownership: private ownership

Benefits of public service-Something for everyone as we all fund it-For the company it is sustainable as we all are made to pay a TV license

Negatives of a public service-No creative control because it has to please everyone

+ Types of ownership: multinational

When a company is owned in more than one country, with headquarters in multiple countries rather than just one.

This is seen as a type of growth, by investing assets in another part of the world to boost their name and promote their products.

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For each one look at benefits and weakness Benefits

Investing in another country to boost name for long term development of the name in that country/continent.

Weakness

Will take a long time to break even with investments usually being in the millions, recuperating all that money back may take a long time and is only useful for conglomerates with a sustainable and powerful brand. E.g. Disney

+ Types of ownership: independent

Independent film studios are studios that are not owned by a rich individual or company and it is funded by such funds as the lottery fund and channel 4

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Benefits of an independent -More original ideas an content as they have to compete with conglomerates.

Negatives of an independent-Not much resources in terms of budget -Hard to distribute because popular cinema chains only feature large hollywood blockbuster movies

+ Types of ownership: conglomerate

A conglomerate is a collective group of companies that are owned by either one rich individual or a company.

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Benefits of a conglomerate-More money and more resources-Can buy the rights to popular and famous stories (story rights)

Negatives of a conglomerate-Less original ideas-Audience can be perceived as sheep as they still watch content that does not have as much thought or care than the independent

+ Types of ownership:Horizontal IntegrationHorizontal integration is when a product is dependant on 2 or more companies to keep the ball rolling and make the product work.

An Example of a product developed by the use of Horizontal integration is the X Factor. Owned by Sony, SyCo and ITV.

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Benefits of Horizontal Integration

-Use as many companies as you like

-Share the risks

-For the consumer better because it works out cheaper as there is competition

Negatives of Horizontal integration

-Control is shared between the companies

-Profits are shared

-Companies rely on each other

+ Types of ownership: Vertical IntegrationVertical integration is when a company only depends on itself and doesn’t need any other sister companies helping it to develop or create a product

An example of a company who work with this integration is Apple

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Benefits of Vertical Integration

-No other companies used so only has to depend on itself

-Complete creative control over the final product because its just the one company

-All profits are kept within that one company and not shared

Negatives of Vertical Integration

-They have to share 100% of the risks and downfalls associated with products developed by them

-It is a negative for the consumer when there are no other rivals and the prices of the product inevitably increase or stay at a high price

+ Cross Media Divergence

Cross Media divergence is having one main product have that product spread across all different medias and merchandise. For example the movie Frozen by Disney was originally a movie, which then had a soundtrack release. A theme at Disneyland resorts in Paris and Orlando for it. It had Princess fancy dress clothes released along with branded T-Shirts and other generic merchandise (All Patented by Disney)

+ Synergy

Synergy is a simultaneous release of different products to boost a main product. An example of this process is the creation of a film. For when it is released on DVD, a CD soundtrack will also be released on the same day. This is to cover the two largest media sectors on the same day to create a buzz about the main product (In this case film) and helps sell it more to the public as it has maximum exposure on the same day. Conglomerates have the capacity to do this a lot, mainly ones such as Sony who own different large media sectors. Such as Films, Music and Games