Question

Disney, Universal, and MGM, among others, have movie studios in Hollywood. Each of these major studios also has one or several subsidiary studios. Disney, for example, has Touchstone. What market structure best describes these movie production companies? Why would cach studio have subsidiary studios? Consider the movies that have come out under the Disney name and those that have come out under Touchstone. Are they different?

Short answer

Provide examples of movies produced under different subsidiaries that differ in content, themes, and target demographics.

Step-by-step solution

Market structure

The market structure that best describes movie production companies is oligopoly. An oligopoly is a market structure in which few large firms dominate the market. In this case, Disney, Universal, and MGM are large movie studios that dominate the movie production industry in Hollywood, with their subsidiary studios also producing films. #Step 2: Explain why studios have subsidiary studios#

Subsidiary studios

Major studios have subsidiary studios for several reasons, including diversifying production, targeting different audiences, and mitigating risks of market fluctuations. By having subsidiary studios, parent studios can produce films under different brands to cater to different viewer preferences and demographics, strategize their brand positioning, and allocate resources effectively. #Step 3: Analyze examples of movies produced under different subsidiaries#

Movie examples

To understand if the movies produced under different subsidiaries are different, let's look at the example of Disney and its subsidiary, Touchstone. Disney primarily produces films targeted at families and children, such as "The Lion King," "Frozen," and "Toy Story." On the other hand, Touchstone has produced films targeting a wider audience, including more mature themes, such as "Pretty Woman," "Armageddon," and "The Sixth Sense." These movies differ in content, themes, and target demographics, showing that subsidiary studios enable parent studios to cater to a wider range of movie-goers. In conclusion, the market structure of movie production companies can be best described as an oligopoly due to the dominance of a few large firms in the industry. Subsidiary studios provide benefits to their parent companies by allowing them to diversify their film production, target different audiences, and manage risks more effectively. The types of films produced under parent studios and their subsidiary studios differ in content, themes, and target demographics, as evident in the examples provided.