Bargaining power of suppliers

The movie production industry are controlled by a few large media and entertainment conglomerates. And since they are not just producing, but also maintaining most of the value chains themselves, then it favours the media and entertainment industry when it comes to bargaining power towards the suppliers.

An example could be The Walt Disney Company which has been able to handle most of the value chain by itself. The Walt Disney Company both produces the movies and programs, distributes them, market them and even the newly assigned deal with Apple’s iPod division, sells them directly through iTunes to end users and viewers around the world the same day as they premier in TV.

Thereby there is not many suppliers left to have any bargaining power towards Disney, since they have most of the value chain in-house, and thereby there is a low bargaining power, since they are maintaining the vital parts by themselves.

One supplier segment that could be stronger than the rest is the actors performing in the company’s production. They know that they can attract an audience, and movie-successes often can depend on their performances(Parkes 2003). Furthermore Since a success in either TV programs or movies gives a natural incentive to make sequels (when dealing with movies) or new seasons (when dealing with TV programs), then it is also necessary to use the same actors as the prequels and first seasons. This places the actors in a great bargaining position, since future revenues on a large scale can depend on whether or not actors want to appear in sequels and new seasons.

Thereby the total bargaining of the suppliers are more diversified, with product suppliers with a low bargaining power, and actor bargaining power on a higher level. But it is still not threatening to the industry, since the salaries is expected to have certain levels, and often the big players of the industry sign for a multiple movie contract with the actors, also to minimize future bargaining power of the actors.