Introduction
In the recent past, the international film industry has faced continuous battles among the most competitive states. The battle has been mainly between America, Europe and the Asian countries. The main cause has been control of the market and the revenue collected for the home countries. The battle has been felt in terms of the quality and the price and policies for the market. America has however stood the ground that film industry be guided by the free market forces. This perception has favored America as the American film industry has become a commercial and a private venture. There is freedom as to the kind of products to produce. America has conquered this battle as it has managed to manufacture quality products given the stiff competition between the private and the public businessmen. The quality has further led to increased revenues for the country. This study underscores the significance of film export to the American economy. Film export is done to most of the countries worldwide. This is based on the spread of English language as the main language and as an international language. However, film exports to Europe plays a greater role in the economy. The study further seeks to find the percentage of box office revenues this export plays in the entire entertainment industry. Through the study the public will understand the importance of supporting this industry as it plays a huge role in the revenue collection.
Hypothesis
Film export is a significant business for the US economy.
Objectives
This study seeks to find how significant film export to Europe is to the American economy. The study also finds out the percentage of box office revenue in US.
Research questions
Among the questions to be answered include:
- How significant is American film export to Europe?
- How is the film export fairing on internationally?
- Who is the main competitor to American film export?
- Which is the main film export to Europe?
- How is box office fairing in terms of the revenue collected?
Literature Review
Film industry has emerged just like other innovations (Low and Manvell 126). As the initial method of industrialized entertainment, film industry is all-encompassing. Before the eighteenth century, entertainment used to be informal, risky and non-commercial. The artists could travel and entertain people along the way. Showmen, clowns and musicians carried the day. There were arranged fairs where magicians, dancers and sword swallowers entertained people at a cost. Very few cities harbored genuine theaters. These were under the authority of the regional and national leaders. Thereafter, America began to deregulate the film industry. This enabled more entrepreneurs to start businesses and invest more in formal theaters. This led to business, formalized and regulated entertainment. Traditional forms were also eradicated. There was increased growth due to liberalization, and innovation. The regional and national entertainment markets led to international openings. This further increased productivity as innovations took the major part of entertainment. Creativity led to quality work and increased competition.
Innovation process assumed three characteristics (Krugman and Obstfeld 9). There is the international invention, the existing combination of technologies and the fact that it is rapidly and globally recognized. Beginning the nineteenth century, film industry has had great profits as tickets have been sold to regular customers. This is due to the fact that cinemas were the greatest form of entertainment in that period. It rose to assume the fourth position in export business before the First World War. By then the sale of tickets rose to more than a billion annually (Krugman, 89). However the great depression affected the lives of the public as film industry dropped to tenth position. In the second industrial revolution, things took a different turn. There were reduced working hours, more disposable income and urbanization. There was also improved transport systems and population growth. This led to increase in the demand of entertainment. Increased live entertainment led to industry configuration. Presently, cinema has increased in demand. However, automated tradable entertainment is slowly destroying it as entertainment is now internationally recognized.
In the early nineteenth century, the American market grew at the same rate as the French and the British (Bakkerb 32). Cinema tickets were charged at around five to ten cents. This however changed as there was increase in demand of the cinemas and the locations drifted to smart city centers. Sound also gave way to exogenous increase in costs and quality. This further increased revenues of films by 65% from 50% (Krugman and Obstfeld 105). This was felt mostly in modern towns than in ramshackle regions. Cinemas were used to give spectator hours. For instance, a one hour film could give five spectator hours. This further led to demand of the films in foreign markets such as Britain, French and Europe. Within a week the rent for a cinema hall would cost around $1,200. This sold more than 39,000 spectator hours, making a profit of more than $260.
There are many factors that affect the industry (Bakkera 31). There is the issue of government policies and culture. Using its power and influence, America has increased its role of freedom to venture into the global cultural market. This has led to free trade agreements between member states. The main objective of coming up with this form of policy is to introduce fair competition. Through these free trade agreements, the American culture has been adopted in most of the market states.
As the demand for cinema increased, the demand for entertainment generally increased. This was also influenced by the culture of going to a cinema at least once a week for the Americans (Bakkera 28). More capital was added into the industry in forms of technology and film outlays. This further led to increase in entertainment industry. The table below shows the general growth of the film industry in the early twentieth century.
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This industry plays a number of major roles in the American economy. There was the productivity of the labor department. This was due to the fact that entertainment was partly tradable. This exerted competition on the non-tradable part, thereby increasing the efficiency in America. In order to measure the contribution of the film industry to the economy, social savings methodology will have to be used. Assuming that cinema was inexistence, and the demand for entertainment in spectator hours is to be met in live entertainment, the extra cost is calculated to society. Therefore, the saved amount in the film expertise is calculated to the society. This savings amounted to around $2.5 billion, which is at least 2% of the GDP (Low and Manvell 15). Another perceptive to incorporate the film output on the economy is through analysis of the consumer surplus produced by the cinemas. This approach assumes that film industry is a new venture. Hence the live entertainment could not exist without its presence. This technique is contrary to the social savings technique. For every consumer, surplus comes as a difference for the ticket price to be paid and the actual paid price. Using econometric method, this is estimated to be about one fifth of the entire entertainment expenses. The figure below illustrates the real cinema box office revenue, number of screens and real ticket price in America between the periods 1945 to 2002. The values are in dollars. The net consumer price deflator was applied.
Source: Adapted from Vogel 2004 and Robertson 2001.
Empirical section
This study employs qualitative and quantitative approaches of data collection. Qualitative approach is used to capture the numbers and the values of the revenue collection. Quantitative approach is sued to capture the historical background and the stages passed in the film industry. From the pilot project, interviewees are to be chosen from the film industry. There should be film producers, directors, economists and statisticians, cinema customers and the general professionals from the industry. Thereafter, advertisements will be made to invite volunteers to participate. They will thereafter be selected from the list of volunteers. This will be based on the gender, age, background and profession. The randomly chosen group will; give their perception on the course of study. Other than interviews, secondary sources of data will be used. This will assume the form of articles, journals, data reports, and web sources. Data will be analyzed through statistical tools, charts, and bars. It is expected to find that films are highly significant to the American economy and that the film export to Europe plays a major role in the economy.
Filming industry is the independent variable while revenue collection is the dependent variable. Filming industry will determine the variation in revenue collection. Europe’s consumption of America’s film products will be the major focus of the study. Pie charts, graphs and tables will show the correlation between the independent variable and the dependent variable. Intersection will show the value of the box office revenues. Increase in independent variable will result to a decrease in the dependent variable.
Conclusion
Demand plays a key role in the entertainment industry. Cinema development plays a significant part in the economy due to its high demand in international markets. The study has focused on film trade to Europe as American revenue. English as a language plays a major role in the demand of the American products. Other competitors employing English versions to their products for international consumption, for instance, the Asian film industry, feel this. Because of this competition from China and other Asian countries, it is advisable for America to improve other areas of the filming industry, such production of movie series. Export market should be widened to reach other areas such as China. From previous studies, it has been realized that English plays a chief role in the film industry. Additionally, stakeholders have heavily invested on the industry to realize great quality. This has brought huge profits for America.
Works Cited
Bakker, Gerben. American Dreams: The European Film Industry from Dominance to Decline. EUI Review: 2000: 28-36.
Bakker, Gerben. At the Origins of Increased Productivity Growth in Services: Productivity, Social Savings and the Consumer Surplus of the Film Industry, 1900-1938: Working Papers in Economic History. 2004. Issue 81.
Low, Rachael, and Manvell, Roger. The History of the British Film, 1896-1906. London: George Allen & Unwin. 1948. Print
Krugman, R. Paul and Obstfeld, Maurice. International Economics: Theory and Policy (6th Ed). MA: Addison-Wesley. 2003. Print