Entertainment Industry Economics AGuideforFinancialAnalysis,TenthEdition Already among the most important sectors of the U.S. economy, the enter- tainment and media industries are continuing to grow worldwide. Fully updated, the tenth edition of Entertainment Industry Economics is the definitivereferenceontheeconomicsoffilm,music,television,advertising, broadcasting, cable, casinos, publishing, arts and culture, performing arts, toys and games, sports, and theme parks. Its synthesis of a vast amount of data provides an up-to-date guide to the economics, financing, accounting, production,marketing,andhistoryofthesesectorsintheUnitedStatesand countries across the globe. This edition offers new material on streaming services, the relationship between demographics and entertainment spend- ing,electromagneticspectrumforbroadcasters,andmusicindustrysalesas related to GDP. Financial analysts and investors, economists, industry executives, accountants, lawyers, regulators, and journalists, as well as students preparing to join these professions will benefit from this compre- hensivesource. Harold(Hal)L. Vogel,PhD,CFA,was theseniorentertainment andmedia analystatMerrillLynch&Co.,Inc.andhastaughtattheColumbiaBusiness School in New York and the Cass Business School in London. His books include Travel Industry Economics: A Guide for Financial Analysis, 3rd edition (2016) and Financial Market Bubbles and Crashes: Features, Causes,andEffects,2ndedition(2018). Downloaded from https://www.cambridge.org/core. University of Western Ontario, on 18 Jul 2020 at 11:19:50, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/9781108675499 Downloaded from https://www.cambridge.org/core. University of Western Ontario, on 18 Jul 2020 at 11:19:50, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/9781108675499 Entertainment Industry Economics A Guide for Financial Analysis TENTH EDITION Harold L. Vogel Downloaded from https://www.cambridge.org/core. University of Western Ontario, on 18 Jul 2020 at 11:19:50, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/9781108675499 UniversityPrintingHouse,CambridgeCB28BS,UnitedKingdom OneLibertyPlaza,20thFloor,NewYork,NY10006,USA 477WilliamstownRoad,PortMelbourne,VIC3207,Australia 314–321,3rdFloor,Plot3,SplendorForum,JasolaDistrictCentre, NewDelhi–110025,India 79AnsonRoad,#06–04/06,Singapore079906 CambridgeUniversityPressispartoftheUniversityofCambridge. ItfurtherstheUniversity’smissionbydisseminatingknowledgeinthepursuitof education,learning,andresearchatthehighestinternationallevelsofexcellence. www.cambridge.org Informationonthistitle:www.cambridge.org/9781108493086 DOI:10.1017/9781108675499 ©CambridgeUniversityPress2020 Thispublicationisincopyright.Subjecttostatutoryexception andtotheprovisionsofrelevantcollectivelicensingagreements, noreproductionofanypartmaytakeplacewithoutthewritten permissionofCambridgeUniversityPress. Firstpublished1986 Secondedition1990 Thirdedition1994 Fourthedition1998 Fifthedition2001 Sixthedition2004 Seventhedition2007 Eighthedition2011 Ninthedition2015 Tenthedition2020 Firstpublished2020 PrintedintheUnitedKingdombyTJInternationalLtd,PadstowCornwall AcataloguerecordforthispublicationisavailablefromtheBritishLibrary. 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University of Western Ontario, on 18 Jul 2020 at 11:19:49, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/9781108675499 Contents Preface pagexix PartI Introduction 1 Chapter1 EconomicPerspectives 3 1.1 TimeConcepts 3 LeisureandWork 3 RecreationandEntertainment 4 Time 5 ExpansionofLeisureTime 5 1.2 SupplyandDemandFactors 9 Productivity 9 DemandforLeisure 11 ExpectedUtilityComparisons 13 DemographicsandDebts 14 BarrierstoEntry 17 vii Downloaded from https://www.cambridge.org/core. University of Western Ontario, on 18 Jul 2020 at 11:19:49, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/9781108675499 viii Contents 1.3 PrimaryPrinciples 18 MarginalMatters 18 PriceDiscrimination 21 Public-GoodCharacteristics 23 1.4 Personal-ConsumptionExpenditureRelationships 23 1.5 PriceEffects 27 1.6 IndustryStructuresandSegments 29 Structures 29 Segments 30 1.7 ValuationVariables 35 DiscountedCashFlows 35 ComparisonMethods 37 Options 38 1.8 ConcludingRemarks 38 Notes 39 FurtherReading 46 Chapter2 BasicElements 48 2.1 PsychologicalRoots 48 2.2 RulesoftheRoad 49 LawsoftheMedia 49 NetworkFeatures 52 2.3 LegalLayersandLimitations 54 Layers 54 LimitationsandConcentrationIssues 55 2.4 TheInternet 56 AgentofChange 56 BigDataandAI(ArtificialIntelligence) 61 Long-TailEffects 62 2.5 Advertising 64 Functionality 66 EconomicandBusinessAspects 67 2.6 AccountingandValuation 70 Accounting 70 Valuation 70 2.7 ConcludingRemarks 71 Downloaded from https://www.cambridge.org/core. University of Western Ontario, on 18 Jul 2020 at 11:19:49, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/9781108675499 Contents ix Notes 71 FurtherReading 83 PartII Media-DependentEntertainment 87 Chapter3 MovieMacroeconomics 89 3.1 FlickeringImages 90 3.2 MaytheForcesBewithYou 92 EvolutionaryElements 92 Technology 92 Capital 95 PeckingOrders 96 Exhibition 96 ProductionandDistribution 97 3.3 UpsandDowns 99 AdmissionCycles 99 PricesandElasticities 100 ProductionStartsandCapital 102 ReleasesandInventories 104 Market-ShareFactors 110 CollateralFactors 110 Exchange-RateEffects 110 TradeEffects 111 FinancialAggregates 113 3.4 Markets–PrimaryandSecondary 113 3.5 Assets 117 FilmLibraries 117 Technology 117 UtilizationRates 119 InterestandInflationRates 119 CollectionsandContracts 121 LibraryTransfers 121 RealEstate 124 3.6 ConcludingRemarks 124 Notes 124 FurtherReading 132 Chapter4 MakingandMarketingMovies 134 4.1 Properties–TangibleandIntangible 134 Downloaded from https://www.cambridge.org/core. University of Western Ontario, on 18 Jul 2020 at 11:19:49, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/9781108675499