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Defining Studios by Their Distribution Infrastructure | bestnewshunt
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Defining Studios by Their Distribution Infrastructure

There are a finite number of major studios (i.e., Sony, Disney, Paramount, Universal, Warner Bros., Fox, and MGM), and the greatest power that the studio brings to a film is not producing. Rather, studios are financing and distribution machines that bankroll production, and then dominate the distribution channels to market and release the films they finance.

Accordingly, the most defining element of a studio is its distribution arm—this is how studios make most of their revenue, and is the unique facet that distinguishes a “studio” from a studio look-alike. Sometimes a company, such as Lionsgate or Miramax in its original iteration (when run independently by Bob and Harvey Weinstein), will have enough scale that it is referred to as a “mini-major.”

This somewhat fluid category generally refers to a company that is independent, can offer broad distribution, and consistently produces and releases a range of product; again, though, what largely distinguishes a mini-major from simply being a large production company is its distribution capacity. Any company, studios included, can arrange financing: there are plenty of people that want to invest in movies. In this regard, the film business is no different than any other business.

Is the production bank financed, risk/VC financed, or funded by private individuals? (See Chapter 3 for discussion of production financing.) What is different with studios is that they will not invest (generally) in a film without obtaining and exercising distribution rights. This is because they are first and foremost marketing and distribution organizations, not banks.

Sure, they buy properties, hire stars, and finance the films they elect to make; however, to some extent this can be viewed as a pretext to controlling which properties they distribute and own (or at least control). If the project looks like a hit, it is captive and the studio through its exclusive control of the distribution chain can maximize the economic potential of the property.

Suppose the property fails to meet creative expectations. In that case, however, the studio has options from writing it off and not releasing the property, selling off all or part of the rights as a hedge, to rolling the dice with a variety of release strategies. So beyond money, which anyone can bring, and creative production, which an independent can get, what is it about distribution that separates studios?

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