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Film studios: Their staggered plan for releasing films

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Film production and distribution

In the earlier part of this series, we learned about media networks. Now we’ll look at film studios, which follow a slightly different value chain than the other components of the media sector.

Content producers such as film studios create or participate in the creation of live-action and animated movies. They often enter into funding and licensing agreements with third-party content producers. They also acquire content from independent producers and other studios.

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Film studios primarily distribute movies through theaters, physical or online storage media, television, and Internet. They distribute movies directly to theaters or through distributors, which charge a distribution fee. Movies are often first shown in theaters and then released on a staggered basis on television and through other media.

Staggered release sequence

According to The Walt Disney Company (DIS), it releases movies on physical or online storage media three to six months after the movie is shown in theaters in particular geographic markets. Around the same time, it gives licenses for display of the movies on services such as VOD (video on demand) and PPV (pay per view). It also sells these movies for pay-TV viewing in several distinct cycles. These cycles last multiple years.

Other film studios, including those owned by Comcast (CMCSA) and 21st Century Fox (FOXA), often follow this staggered release of motion pictures through different distribution channels.

You can have an exposure to The Walt Disney Company, Comcast, and 21st Century Fox by investing in the Consumer Discretionary Select Sector SPDR Fund (XLY). The ETF held ~16% in these companies as of March 2, 2015. You can gain a more diversified exposure to these companies by investing in the SPDR S&P 500 ETF (SPY). The ETF held ~2% in these companies on the same date.

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