What Is an Entertainment Company in 2021 and Why Does the Answer Matter?

In the 60s, Theodore Levitt, a professor of economics and a resident in the 1960s, at Harvard Business School unveiled his theory of “marketing myopia”. He argued that many companies are defined by their products instead of what need(s) they satisfy (this theory has been widely transposed into the “job to be done” approach). This attitude exposes companies to disruption and displacement. The most prominent example is the petroleum sector, which has been unable to access geothermal, solar, nuclear, and more due to its focus on fossil fuels. Another example focuses on the largest railway companies of the beginning of the 20th century, who could not access automobiles, buses, and trucking. Its focus was on railroads and not transportation.

The theories of management are put through the ages and are never entirely discarded. The 1990s were especially harsh on conglomerates. A majority were struggling to demonstrate the advantages in the direction of their strategy. Synergies seemed reasonable, and marketing myopia was a terrible idea. However, in the end, blue-chip firms delivered better results for shareholders by focusing on their business instead of tackling difficult (if sometimes unsettling) adjacencies. The advent of the internet has made conglomeration more well-known (e.g. Amazon); however, in most cases, the market leaders are usually specific (e.g. Facebook, not Google+, Shopify and Stripe not Amazon Pay, TikTok not Instagram, Tinder not Facebook Dating).

These ideas are intriguing in light of the present-day entertainment business. In the past, we have defined an TOF entertainments company based on its core offerings. Marvel was a comic book publisher, Mattel a toy company, ESPN a sports network and many more. People think about the iconic Disney flywheel — one that Walt himself designed in the 1950s and is the most popular choice of all Hollywood executives in the present They usually misremember the flywheel’s central point to be “IP”. It was, in fact, “Creative Talent of Studio / Theatrical Films”. Then Walt himself described Disney as a film production company.

It’s now clear that the company’s definitions don’t work anymore. The studio geared towards theatrical productions is among the best of its kind in the entire world (it was able to generate nearly twice the revenues and triple the profit margin of the second player in the year 2019). But, the parks division of Disney produced more than twice the profits and revenue that its studio department. The future of Disney relies on a direct to the consumer video platform, which is primarily growing through TV shows and rather than a feature films.

Hasbro bought one to support and grow its product lines like G.I. Joe, Transformers and Battleship into a cinematic universe that is constantly expanding that span film and TV. Mattel is, in addition, developing adaptations of its best brands, such as Barbie, Hot Wheels, and Magic 8-Ball. The majority of major sports leagues believe that NFTs and betting on sports as the main reason behind their expansion, and casinos are developing and buying companies that publish lifestyle content. Marvel and DC aren’t comic book-centric businesses for more than 30 years.

Leave a Comment