Introduction
The Hollywood movie business is distinguished by a high economic concentration, with a few dominant major firms. This concentration significantly impacts the industry’s pricing and competition level. Due to high entrance hurdles, competition in the Hollywood film business is restricted. Since film production and marketing are costly, it is particularly challenging for new companies to join the market and compete with existing competitors. Large film studios may dominate the market and set pricing at a level that ensures maximum profit since there is no competition.
Influence of Competition and Pricing on Economic Concentration
Pricing plans are coordinated and may be anticompetitive due to the concentration of economic power in a small number of significant studios. To maximize their earnings, studios, for instance, can concur to set movie ticket prices at a particular level. This may reduce consumer options and raise costs for viewers. Also, the lack of variety in the films might result from the economic power being concentrated in the hands of a select few huge companies. Instead of taking a chance on smaller independent films, large studios may prefer to produce blockbusters with the largest box office returns. This can restrict the selection of accessible movies to customers and hinder innovation in the sector.
Economic Concentration and Its Influence on the Supply Chain
The concentration of economic power in the Hollywood film industry significantly impacts the supply chain since it results in a hierarchy of businesses collaborating to make and distribute movies (McKenzie, 2022). The big studios, which have a lot of influence over movie production and distribution, are at the top of the supply chain. These companies frequently have established connections with distributors and cinemas and have the means to produce and sell movies on a wide scale.
Various vendors, such as producers, authors, directors, actors, and crew members, may be found underneath the studios. Due to the concentration of power in the hands of the studios, these vendors are frequently contracted by the studios to work on certain projects, and they may only have limited negotiating. Also, the distribution and showing of movies are impacted by the concentration of power in the hands of big studios.
All things considered, the concentration of economic power in the Hollywood film industry has a big influence on the supply chain. Large film studios have a lot of influence over how movies are made and distributed, which may reduce suppliers’ negotiating power and make it more difficult for smaller businesses to enter the market (McKenzie, 2022). This concentration of power may result in vertical integration and more industrial consolidation.
Evaluation of the Factors of Production
Capital
The four main production components are land, labor, capital, and entrepreneurship. To differing degrees, each of the four criteria significantly influences the economic concentration of the Hollywood film industry. The most crucial element in influencing the economic concentration of the Hollywood film business is likely capital or the financial resources needed to make and distribute films (Song, 2018). The major studios can create films on a wide scale and make considerable investments in marketing and distribution because they have ample financial resources.
Entrepreneurship
Entrepreneurship is also significant in the Hollywood film industry, as it is highly inventive and creative and depends on producing fresh and fascinating narratives and characters. Yet, the concentration of power in a few powerful studios can stifle entrepreneurship by elevating profit over innovation and taking risks.
Labor
Another crucial element in the Hollywood film industry is labor, or the individuals creating and distributing films (Song, 2018). The major studios have tremendous control over the labor market by selecting actors, directors, and crew members for particular films. However, the highly skilled and movable nature of the industry’s work base can occasionally limit the authority of the studios.
Land
The physical resources needed to make movies, such as land, are likely the least significant element in determining how economically concentrated the Hollywood film industry is. The actual location of studios and sets is significant. Still, it shouldn’t be a major entrance hurdle for new businesses because starting a production firm anywhere with the necessary tools and resources is simple.
Predictions for Future Changes in Economic Concentration
The Hollywood film industry will soon change significantly as economic, social, and technological changes occur. For example, there is likely to be more competition from streaming services. In recent years, services like Netflix and Amazon Prime have created competition for Hollywood studios (Hadida et al., 2020). These services already make their own films, series, and TV shows and have streaming services to broadcast their productions.
There may also be changes to the policies of international markets. In recent years, this market has been generating large profits for Hollywood, which will continue to grow. Therefore, the film industry needs to meet the demands of countries such as China and Japan more, and if necessary, edit their films to pass censorship (Song, 2018).
Another prediction concerns the inclusivity and diversity of genders, races, and people with particularity in roles. Since Hollywood has recently received a barrage of criticism for its lack of female characters or people of a different race in its films, management needs to include more diverse characters in the creative process.
Conclusion
In conclusion, the Hollywood movie industry is a complex and dynamic ecosystem constantly evolving due to technological, economic, and cultural changes. The concentration of economic power in the hands of a few major studios has historically been a defining feature of the industry. As the industry continues to evolve, it will likely see significant changes in how films are produced, distributed, and consumed. These changes will create challenges and opportunities for the industry, the companies, and the individuals involved.
References
Hadida, A. L., Lampel, J., Walls, W. D., & Joshi, A. (2020). Hollywood studio filmmaking in the age of netflix: A tale of two institutional logics. Journal of Cultural Economics, 45(2), 213–238. Web.
McKenzie, J. (2022). The economics of movies: A survey of recent literature. Journal of Economic Surveys, 1(1). Web.
Song, X. (2018). Hollywood movies and china: Analysis of hollywood globalization and relationship management in china’s cinema market. Global Media and China, 3(3), 177–194. Web.