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Entertainment Industry in China – Porter’s Five Forces Strategy Analysis

  • February 2014
  • -
  • Aruvian's R'search
  • -
  • 20 pages

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China has one of the fastest growing entertainment industries in the world. The global entertainment industry is expected to show an annual growth of 10% in the next four years and that growth will be driven by China – movies, theme parks, media, etc. This growth in entertainment gives rise to many issues, including distribution, licensing, intellectual property, contract and investment.

Movies are very popular in China and there are approximately 15 movie studios in China, among the most famous are Shanghai studio, Beijing studio and Changchun studio. But the movies that are most popular are not produced by these studios, but come from foreign sources including the U.S. Despite a variety of administrative measures by the Chinese central government, imported films represent a major share of the Chinese market. It is estimated that revenue from ten imported films was responsible for 70% of the market with the remaining 30% for 100 or more domestic films.

Aruvian's R'search analyzes the Entertainment Industry in China in Michael Porter’s Five Forces Analysis. It uses concepts developed in Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro-environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.

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