While many people consider moviemaking art, it is still largely an industry and is, therefore, powered by the same principles as any other business is.
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Just as competitive and as dependent on internal and external factors as any other industry, moviemaking seems to be facing a number of problems at present, which is likely to result in a major crisis.
However, by introducing a flexible system of knowledge management and exploiting the latest technological advances for attracting the target audience, major movie companies will be able to survive the crisis successfully.
Control over product
One of the major business issues regarding the movie sphere concerns the uncontrollability of the product – or, to be more exact, the effect that the product is going to have on the audience.
Even after a careful analysis of the demands that the audience makes towards movie producers, it is hard to figure out if the movie is going to be successful among the general public, or be equally hated – or, which is even worse, neglected – by most of the viewers (Gove, Thornblad and Matherne 267).
One might argue that social trends are quite easy to track using modern media tools, such as social networking. However, what looks good as a stand-alone statement may turn into an unintelligible mess when transformed into a feature-length film.
Movies area different medium, and it takes more than an overview of current trends to transfer an original idea into this medium.
Control of the expense of the distributor
Likewise, it is comparatively hard for filmmaking companies to control the prices that distributors assign for the customers to pay in order to buy or download a movie.
While there is a fixed price, which moviemaking companies traditionally suggest for selling their movies, it is important to keep in mind that the costs for shipping and distributing to numerous stores presupposes taking costs, which a number of distributors make efficient use of.
Thus, filmmaking companies suffer impressive financial losses, having little control over the actions of movie distribution organizations.
IPR protection: yo-ho-ho and a bottle of rum
According to the recent statistics on free movie downloading, most modern movie making companies have a catastrophically weak IPR protection.
While the given issue cannot technically be considered as the one directly related to business, it still shapes the revenues of movie making studios, making the filming process less profitable and ripping movie directors, producers and all those involved into the process of production of their money.
Truly, a number of actions have been taken to protect the rightful owners of movies from having their rights violated, people still download movies for free.
With the advent of the Internet era, the given process has become even easier, and, as soon as people started using torrents, moviemakers started suffering great losses.
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Communication with investors
The last, but definitely not the least, the issue regarding the process of communicating with investors should also be given a proper mentioning.
To invest money into a movie project, one needs to know about the possibility for a movie to be successful – no one would like to spend money on something that is going to sink faster than the Titanic.
However, due to the lack of formal channels for investors and moviemakers to use for efficient communication, the latter are unable to get across their concept of the movie and, therefore, prove the possibility of its success.
As a result, fewer investments are available for filmmakers, which shrinks movie budget and, hence, the opportunities for creating something impressive (Building Sustainable Film Businesses: The Challenges for Industry and Government 15).
Possible Consequences: End of the Movie Industry?
It would be wrong, however, to assume that the aforementioned problems herald the end of filmmaking industry; even as far as the most impressive losses taken over the past few years go, the given industry is far too profitable to be abandoned.
However, in the light of the difficulties that most moviemakers of the XXI century have to face, a considerable downgrade in the number of movies released annually can be expected.
While the given phenomenon can be considered as a somewhat positive effect, since it will help filter movies better and allow filmmakers to deliver high quality work, it will undeniably block the way to movie industry for a number of talented people who are incapable of withstanding the crisis of such scale.
The Means to Address the Problems: Improving Knowledge Management System
Gaining control over distributing companies is relatively hard. As it has been stressed, shipping costs and the costs for advertising the movie to the end customer takes money, which is very favorable for distributors, since it allows them to control the end price.
However, when reconsidering their outbound logistics, i.e., minimizing the costs for transportation and paying these costs to the shipping companies, moviemaking organizations may take control over the situation.
Speaking of torrents, various downloading software and other programs that allow people to watch and swap movies for free, attempting at controlling it would be far too presumptuous even from major movie companies.
Taking torrent trackers down does not seem a possible way out, either – with every torrent tracker being defeated, two new ones appear.
Therefore, it will be reasonable to accept the fact that the Internet is an uncontrollable space and that moviemakers need to put their stakes on theater releases. In that sense, the adoption of latest technologies, which are inaccessible on the internet, such as 3-D, should be utilized in the industry.
The solutions provided above should not be considered the ultimate salvation for filmmaking industry. More to the point, these solutions will trigger the necessity to solve other problems.
For instance, the solution provided for the lack of cooperation between investors and movie industry will demand that the most efficient knowledge management approach should be sought.
As for fighting with torrents and other illegal means of information transfer, filmmakers will have to work on new means of attracting the audience so that they should buy original DVDs and attend movie theaters.
In addition, putting the emphasis on the technological aspects of moviemaking process may possibly affect such aspects of a movie as its plot, characters, etc. Finally, the changes in logistics will entail the necessity to consider new procurement, transportation and distribution strategies.
In the era of informational society, moviemakers have to compete with the power of the Internet, as well as the challenges that the lack of efficient communication with the investors and the end customers poses to them.
While these challenges are admittedly hard to cope with, they are still manageable. By incorporating efficient information management with investment in technology, moviemakers will have the chances to survive the changes that the industry is undergoing at the moment.
Building Sustainable Film Businesses: The Challenges for Industry and Government. June 2012. London, UK: Olsberg Spi. Web.
Gove, Steve, David Thornblad and Brett T. Matherne. “The Motion Picture Industry Value Chain.” Strategic Management Cases: Competitiveness and Globalization (10th Ed.). Ed. Michael A. Hitt, R. Duane Ireland and Robert E. Hoskinsson. Stamford, CT: Cengage Learning, 2008. 266–275. Print.