Media & entertainment industry - what makes it different?

Abstract

Abstract Media & Entertainment industry is in great form for the past few years. Booming economies and increasing spending on leisure activities have spelled dollars for this industry. This paper starts with a brief analysis of the sector as a whole. The main portion of this report is about what differentiates the organisational and managerial models of entertainment industry from the other industries. The key reasons for the existence of such differences are the extent to which creativity is involved along with the associated high level of uncertainty. For this, we draw upon the history of this sector, the various changes that took place over time and also, what the researchers across the world have mentioned. The key features peculiar to this industry are the following: • This industry is characterized by numerous small, specialist creative outfits at the content creation level. This is because creativity flourishes better in such settings. The production, financing, distribution, exhibition portions of the industry are featured by the existence of large, multinational media conglomerates. These structures help the firms to extract maximum from the value chain. Production/ Distribution/ Exhibition involve huge investments upfront. Besides, they provide huge economies of scale and opportunities for cross-leveraging when integrated. Hence, it became essential for the firms to consolidate and become media conglomerates. • CEOs in this industry prefer to follow the “top-down” approach of strategy formation as compared to “bottom-up” approach followed in most of the other big corporations. This is because this industry is characterized by high uncertainty and huge investments. The individual division managers can not take required decisions because the risk is too high for them to handle and the process would be slowed down if everyone from the divisions are involved in the planning stage. Hence, it requires greater participation from the CEOs and hence, belief controls are put in place. (It should be noted that a major reason for these differences in managerial practices and organisations flows from the fact that this industry is characterized by a high-incidence of creativity in its products. Hence, the peculiar features of the industry could also be found in other industries where creativity features to a large extent. However, since the scope of this study was only the Media & Entertainment industry, we have not explored the other creative industries.)