The Economics of Information, Communication, and Entertainment
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1 The Economics of Information, Communication, and Entertainment The Impacts of Digital Technology in the 21st Century Series Editor Darcy Gerbarg President, DVI, Ltd. Senior Fellow Columbia Institute for Tele-Information (CITI) Columbia University Business School New York, NY, USA For further volumes:
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3 Paolo Sigismondi The Digital Glocalization of Entertainment New Paradigms in the 21st Century Global Mediascape
4 Paolo Sigismondi Annenberg School for Communication & Journalism University of Southern California Los Angeles, CA, USA ISSN e-issn ISBN e-isbn DOI / Springer New York Dordrecht Heidelberg London Library of Congress Control Number: Springer Science+Business Media, LLC 2011 All rights reserved. This work may not be translated or copied in whole or in part without the written permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed is forbidden. The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. Printed on acid-free paper Springer is part of Springer Science+Business Media (
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7 Foreword For those looking to understand how media entertainment has been changing, this book offers an insightful analysis. Employing a variety of techniques and processes, economic, academic, and journalistic, Sigismondi builds convincing arguments for the evolution of content programming and poses important questions about the worldwide hegemony of Hollywood s media content. This book is both a synthesis of and a jumping off point for understanding the complexities of how digital technology and ICT impact high-production value content and the media companies that produce it. By providing a background of economic data and with a focus on evolving content genres, Sigismondi seeks to address both the business and the cultural impacts of media evolution. Sigismondi reviews for us the myriad ways in which the media entertainment establishment has fought change, from television through video standards to net neutrality, only to have been the beneficiaries of these technological innovations. He posits that the ICT revolution is a game changer in the evolution of the global entertainment landscape. All of us who enjoy media entertainment in one form or another, and who does not, are along for the ride. This book is full of insights and interesting tidbits of information. New York, NY Darcy Gerbarg vii
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9 Acknowledgments I would like to take the opportunity to thank the many individuals, whose contributions were key in the development of the book you are about to read. I am indebted to the ongoing academic conversations within the intellectual community of the Annenberg School for Communication & Journalism at the University of Southern California, and I am particularly grateful to the leadership of the school, the Dean Ernest J. Wilson III, and the Director of the School of Communication, Larry Gross for their support of this project. The book is based on research conducted for my Ph. D. dissertation at the University of Southern California, analyzing the global digital media landscape at the intersections of different strands of inquiry. I am deeply grateful to the committee chair Tom Goodnight and the other committee members, Sarah Banet-Weiser and Ellen Seiter, for their insightful comments and feedback in the different stages of the dissertation, to Rick Jewell of the School of Cinematic Arts for our conversations on the evolution of the Hollywood studio system over the years, and to Omar El Sawy of the Marshall School of Business for our discussions on the communication technologies evolutions and their impact on the entertainment industry. I presented ideas and preliminary research on the topic of the Digital Glocalization of Entertainment at the annual conferences of the International Communication Association and the National Communication Association, and in the courses I teach, in particular the undergraduate courses Global Entertainment, Global Strategy for the Communications Industry, and the graduate course Case Studies in Digital Entertainment. I am thankful to the participants, the chairs, and the respondents of these conferences, and to the students of these classes, as they helped me through their feedback to clarify, define, and explicate the concepts presented in this book, to Briana Lassig for her research assistance in the final revision of the manuscript, and to Sebastian Grubaugh for his assistance with the tables in the book. Also, I would like to thank the industry veterans with whom I had the pleasure to talk about this project, especially Larry Auerbach, Gaspare Benso, Marlise Malkames, James Person, Lisa Vebber, and David Weitzner, for their insights and perspectives. It was a real pleasure working with the professionals at Springer to turn this project into a book. I would like to thank Darcy Gerbarg, Editor of the series ix
10 x Acknowledgments The Economics of Information, Communication, and Entertainment, for her support, suggestions, and feedback throughout the process, Nicholas Philipson, Editorial Director, Business/Economics, and his team, including Charlotte Cusumano, for their commitment to this project and their continuous professional support in all the phases of its development. We are living in transitional times, ushering in significant changes in the way we communicate with one another, access, and interact with information and media entertainment at a global level: This book offers a contribution to shed light on some of these changes, as they unfold. Los Angeles, CA Paolo Sigismondi
11 Contents 1 Introduction: The Evolving Twenty-First Century Global Mediascape The Ecology and the Dimensions of the Global Mediascape Theoretical Framework A New Perspective on Global Entertainment Organization of the Book... 9 References Part I Hollywood s Global Primacy 2 Hollywood s Global Economic Leadership Hollywood, Defined Hollywood s Economic Leadership Economic Analysis of the Hollywood System References The Drivers of Hollywood s Competitive Advantage The Economic Drivers of Hollywood s Global Competitive Advantage Factor Conditions Relating and Supporting Industries Strategy, Structure, and Rivalry Demand Conditions Hollywood s Global Primacy: An Interdisciplinary Analysis The Potential Threats to Hollywood s Global Primacy in an Evolving Landscape References xi
12 xii Contents Part II The Global Rise of Non-Scripted Entertainment 4 The New Wave of Non-Scripted Entertainment A Twenty-First Century Global Media Success Story The Category of Non-Scripted Entertainment: A New Genre? The Dark Side of Reality TV : Issues and Concerns Stemming from the Rise of Non-Scripted Entertainment References The Dynamics of Non-Scripted Entertainment: Formats and Local Adaptations A Global TV Commercial Success: The Big Brother Format Global, Local, and Glocal Factors The Reality of Global TV Formats References The Stars in the Non-Scripted Entertainment Galaxy Endemol FremantleMedia Other European Entities Operating in Non-Scripted Entertainment Hollywood and Non-Scripted Entertainment Non-Scripted Entertainment as a Potential Threat to Hollywood s Primacy References Part III The New, Digital Shelf Life of Entertainment 7 Technologies of Entertainment Technological Revolutions as Potentially Disruptive Changes in the Entertainment Landscape Hollywood Meets Technology The Regulatory Environment and Issues in the Digital Media and Entertainment Industry The Rise of Non-Authorized Diffusion of Entertainment Content in a Digital Environment References The Impact of the ICT Revolution on the Entertainment Industry The Magnitude and the Areas of the ICT Impact Digital Content Conduits: Changes in the Delivery Platforms New Business Models References
13 Contents xiii 9 New Pardigms in the Next-Generation Media: The Digital Glocalization of Entertainment Digital Entertainment: Threat or Opportunity? The NBC 2008 Olympics Coverage as Digital Glocalization of Entertainment An Evolving Digital Entertainment Landscape The Contradictions and Complexity of the ICT Revolution in the Twenty-First Century Media Landscape References Conclusion: The Entertainment Industry at a Crossroads Does Hollywood Still Rule the World? New Challenges and Opportunities Unfolding in the Global Entertainment Landscape A Path Toward Sustainable Innovation in Digital Media From the Catalina Bison to the Digital Glocalization of Entertainment: A New Ecology of the Global Mediascape References Index
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