The U.S. media and entertainment industry is expected to reach $632 billion in 2017 up from $479.23 billion in 2012. Technological developments, films popularity, and rising individual income level are all fueling industry growth. In this article, three companies from the industry are adopting various strategies like screen expansion, acquisition, and technology updates to keep pace with the growth. Let’s discuss them in detail.
Television production growth and new films expectations
For this, it established a relationship with Netflix, Inc. (NASDAQ:NFLX) for streaming the debut of ‘Orange is the New Black.’ The company is also making a comedy series for Hulu and Amazon.com, Inc. (NASDAQ:AMZN). It will receive higher licensing fees on these series compared to series sold to cable networks.
Further, the company expects its television segment to produce 60% more programming hours in this fiscal year, compared to last year. The diversification is expected to accelerate its TV production business revenue to $480.2 million this fiscal year and $569.4 million next fiscal year compared to $379 million last year.
The company has slated 13-16 films this year compared to 20 films last year. Lions Gate Entertainment Corp. (USA) (NYSE:LGF) has higher expectation from the release of its film — Catching Fire, a sequel to Hunger Games, in November, which is expected to generate gross revenue of $900 million worldwide, up 22% from the $690 million generated last year.
The other films are Ender’s Games, expected to be release in November, which could generate $36 million profit, and Divergent, expected to release in March 2014, and has the potential to generate profit of $130 million.
Despite the lower film slate this year, the company’s operating income will rise to $331.9 million this fiscal year compared to $273.1 million last year. The increase in operating income will be due to lower promotional expenses, as the upcoming film is a sequel of the successful Hunger Games released last year, and will require less promotion.
International segment growth
Cinemark Holdings, Inc. (NYSE:CNK) has good growth prospects in its international segment due to increasing mall development and improving infrastructure. It has international presence in Latin America and is the largest theater chain with 169 theaters and 1,343 screens in 13 countries.