Exam Question; How can film studios use franchises to create synergy

Exam Question; How can film studios use franchises to create synergy?

In this essay I will be writing about how film studios can use franchises to create synergy.

Horizontal Integration is the process of expanding in to other sectors of one industry. This means that a company can produce one product and sell and produce it over a wide variety of platforms. This allows for the ability to share resources and products across many different forms. This is known as synergy. 

An example of a Horizontally-Intergrated company is Time Warner. Time Warner generates a heightened revenue through the theology of Horizontal Integration. They do this through their ownership of companies such as CNN, Cartoon Network, HBO, Warner Brothers and DC Comics. A good example of synergy is the Dark Knight trilogy. The rights for the characters were brought from DC Comics, in turn the films were financed by Warner Brothers film studios. Time Warner used its television companies to advertise the films, CNN and HBO being extremely popular channels so many consumers would see the advertisements. Time Warner also own magazine publications, Time Inc. and IPC Media, allowing the film to be even more advertised. When the film itself is released, merchandise such as toys and computer games are as well. Time Warner cleverly advertise these sort of things in channels such as Cartoon Network, as they can directly aim to their intended target audience. This way of promoting the film allows Time Warner to have an extremely large profit thanks to synergy.

Another example of a Horizontally-Intergated company is The Walt Disney Company. Disney branches out of a various array of media; television, movies, games, toys and other merchandise. They generate a vast amount of revenue through synergy. A simple model showing this would be this; The Walt Disney company film studio release a film. They advertise this said film on the many television companies they own, such as the Disney Channel and ABC news. This develops a more spread out advertising method that attracts more interest for the film. Merchandise paired with the film will be also advertised on these channels. Synergy is important for the sale of merchandise as Disney can reach for different platforms such as releasing action figures and video games. With all these different links being tied together The Walt Disney Company generate an enormous profit, in 2012 being over 44 billion dollars.