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Vertical & Horizontal Intregation
Transcript of Vertical & Horizontal Intregation
Benefits of Vertical Integration
Money can be saved!
If you don't have to pay for a studio space to film in or a distribution company to 'distribute' your film, the amount of money that can be saved is huge!
Smaller companies may feel that conglomerates have to much power and that their business should be distributed fairly.
Some conglomerates will use the profits that they make to buy other companies.
When 1 company buys another company, this is known as a takeover.
The Conglomerates can use these takeovers to increase their strength in the media market.
Imagine the media industry is a huge cake with lots of different layers.
Benefits of Vertical
If you are saving this much money, this will increase a conglomerates profit!
A conglomerate will also have full control over every stage of the process.
Disadvantages of Vertical Integration.
Independent companies feel this
system is very unfair.
This is the creation of a film
or TV programme. It involves
the making of the product
This is where the film
or TV programme
is screened. i.e on a
TV channel or in a cinema.
This is a company
who will make deals
with exhibition companies.
They will help a media
company get their product to
the intended audience.
Whether that be in a cinema
or through DVD's.
Vertical Integration is when
all those layers are owned by the same company.
They own the
production company, who make the film.
They own the studios for where
the film will be shot
They own a number of exhibition
They own a distribution company called 20th Century Fox Searchlight
This is where a company merges
or buys out its competitors.
Companies can increase
the profit that they make because they'll have a bigger share of the market.
You can have more synergy
(using 1 product to promote another product)
Lack of choice and
Could see the creation of 'unfair'