Media Studies - Media Industry

This Blog Post talks about the processes of Vertical & Horizontal Integration, Cross Media Convergence, and Synergy.

Vertical Integration

Vertical Integration is the process in which media companies own multiple stages of the media chain. i.e. being their own producers, distributers, and exhibitors.

Example: The Hobbit was produced by New Line Cinema, Distributed by Warner Brothers Pictures, and can be viewed/is exhibited in HBO GO. All these companies are owned by Warner Brothers Discovery. This can be described as Warner Brothers vertically integrating the media chain into their company.

Advantages: 
- More freedom. Producers get to have more choice in what they want to make as they are not limited by the desires of the distributor, as they are the distributor as well.
- More profits. Owning all companies leads to being able to keep 100% of the profits, without having to split it with any other distributor, or exhibition company.

Horizontal Integration

Horizontal integration is the process in which companies own multiple companies in a singe stage of the media chain. i.e. owning multiple production companies.

Example: Warner Brothers Discovery owns Warner Brothers Animation (Animated Media Production), New Line Cinema, Rock Steady Games (Video Game Production), DC Comics (Print Media Production), etc.

Advantages: 

- Diversifies Risk. If one production comapny fails to make a successful product, you are still able to capitalize off of the idea and produce something else. (If movie fails, video game can still be made)
- Minimize Losses. No need to outsource VFX costs to produce VFX for a movie when you own a production company and a VFX company.
- Make the most out of 1 idea. If you make a good movie, profits can still be maximized by making a game based on that movie that can be sold and reach an even larger audience. An animated spin off/series can also be made as well, further making the most out of one good product.

Cross Media Convergence

Cross media convergence can be define as when a singular brand is promoted/showcased across multiple media platforms.

Example: Spiderman was originally a comic. Cross media convergence leads to spiderman being able to have its own show, animated spin off, and video game. This can also be an example of horizontal integration if one company own all the 3 productions of the different media platforms.

Synergy

Synergy is when 2 different media companies work together to create something that they originally couldn't have done alone. Synergy requires that both companies benefit from the collaboration (Mutually Beneficial Relationship)

Synergy in media marketing is one of the best 

Example: When Epic Games and Marvel collaborated to put Iron Man into the Fortnite video game. This leads to Fortnite and Epic Games making more money from the purchases of the Iron Man in game cosmetic, that could be purchased through In-App-Purchases, using in-game currency. Marvel also benefits as it provides promotion for their new movie and allows them to reach a larger audience.

Example 2: Lego and Batman Movie. Batman was originally a comic character created by DC Comics, and now has turned into a very popular movie franchise with animated series' and video games. To expand its target audience, Batman (Warner Brothers) Collaborated with LEGO, one of if not the most successful toy producer of all time, to produce a LEGO Batman set. This expands Batman's target audience to younger kids as Lego is usually a toy bought and played with by kids from the ages of 4-13, quite younger than Batman's (especially in recent years) target audience. Batman benefits by gaining profits from royalties for every LEGO Batman set sold, as well as gaining promotion every time the toy set is seen in LEGO stores. LEGO also benefits by having consumers of the Batman franchise go out and buy the LEGO set, which increases their profits. LEGO also benefits by gaining a majority of the profits from every LEGO set sold.

Example 3: James Bond and Heiniken. This example feature 2 companies which are not both media companies. The James Bond film franchise (Sony Pictures) collaborated with Heiniken Beer to release advertisements and promotion that benefited both companies. Sony benefits by getting paid huge sums of money to promote Heiniken in their movie by using their products, as well as being promoted in Heiniken advertisements. Heiniken benefits by using James Bonds' likeness to appeal to new audiences in their marketing campaigns, and gets more people to use their products, which leads to far greater profits.