SIC 7822 Motion Picture and Videotape Distribution

Encyclopedia of American Industries | 2005 | Copyright

SIC 7822
MOTION PICTURE AND VIDEOTAPE DISTRIBUTION

This classification covers establishments primarily engaged in the distribution (rental or sale) of theatrical and nontheatrical motion picture films or in the distribution of videotapes and disks, except to the general public. Establishments engaged in both distribution and production are classified in SIC 7812: Motion Picture and Videotape Production. Establishments primarily engaged in renting videotapes and disks to the general public are classified in SIC 7841: Videotape Rental. Those businesses engaged in the sale of videotapes and disks to individuals for personal or household use are classified in SIC 5735: Record and Prerecorded Tape Stores.

NAICS Code(s)

421990 (Other Miscellaneous Durable Goods Wholesalers)

512120 (Motion Picture and Video Distribution)

Industry Snapshot

The U.S. motion picture distribution industry in the early 2000s was stratified into two distinct categories: majors and independents. Major studios control the lion's share of movie distribution revenues and show films in large multiplexes and community theaters alike, whereas independent distributors rely more heavily on smaller art houses and rarely achieve the box-office blockbusters enjoyed by the majors. In recent years, majors invested heavily in purchasing many of the leading independent distributors, such as Miramax and New Line Cinema, in a massive trend toward vertical integration. The remaining independents benefited from the unexpectedly robust box-office success and critical acclaims of a string of high-profile independent films, briefly breathing new life into this struggling market sector. However, by the early 2000s, independent distributors were once again struggling in the shadows of industry giants.

According to the Motion Picture Association of America (MPAA), in 2002 domestic box office returns equaled $9.5 billion, up more than 13 percent from the previous year's record. This represented the eleventh consecutive year of box-office expansion and was the greatest annual increase in 20 years. Admissions increased more than 10 percent that year, the greatest increase in 45 years. Ticket prices steadily increased during the early 2000s, rising from an average of $5.39 in 2000 to $5.66 in 2001 and $5.81 in 2002.

During the early 2000s, more than 93 percent of domestic box office revenues were attributable to the 10 leading distributors. A total of 467 films were released in 2002, down from 482 the previous year. Of these, 449 were new releases and 18 were reissued films. Major studios produced 225 of these, 29 more than in 2001, whereas independent distributors released 242 films, a decline from the 287 in 2001. Although these numbers seem to favor independent distributors, those films generally maintained very limited reach; in recent years, nearly 90 percent of all ticket sales were accumulated by the handful of leading major distributors. A landmark was surpassed in 1999 when for the first time two distributors, Buena Vista and Twentieth Century Fox, topped $1 billion in box-office receipts. In 2002, the average feature film grossed $21.2 million, up from $18.2 million in 2001 and $16.7 million in 2000.

World markets for films and television programs have long been critically important to U.S. producers and distributors. Over the past 30 years, foreign markets have generally accounted for about one-half of major U.S. producers' total sales in these industries. The success of American films and television productions in world markets is indicated both by industry trade balances and by comparisons with other film and television exporting nations. The United States has historically exported more than three times the total television programming exports of the next three leading exporting nations combined. For years, U.S. studios were limited significantly by a variety of barriers to trade in foreign markets. In the mid- and late 1990s, they welcomed the relaxation of such restrictions as a result of free trade agreements enforced by the World Trade Organization. By the early 2000s, the increasing adoption of the English language gave U.S. filmmakers an edge over foreign competitors. Growth in the pay television and home video markets were other factors benefiting the industry abroad.

Organization and Structure

The organization and structure of the motion picture industry has become concentrated in the major Hollywood studios who have taken control over its three major divisions: production, distribution, and exhibition. The organization of the industry into companies that have become fully integrated producers/distributors/exhibitors represents a structure that existed in the 1920s and 1930s but was disbanded under antitrust regulation and then rekindled during the Reagan Administration. This structure has hurt film distributors without established alliances or reputations, known in the industry as "independents," because many of the nation's prime theater venues have relationships with the major distributors who book...

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