Lo1 workbook

BTEC Extended Diploma in Creative Media Production
Unit 7: Understanding the Creative
Media Sector
Learning outcome 1:
Understand the structure and ownership
of the media sector
Name: _ _ _ _ _ _ _ _ _ _ _ _ _ _ Liam Allan _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Understand the structure and ownership of the creative media sector
Use this workbook to help you with this learning outcome. There is some guidance
and further notes which you should read and then remove, replacing it with your own
answers.
Provide a definition of the following different types of ownership and
provide an example of a company which is owned in such a way.
Private Ownership
Private ownership is a business that is not funded publically but rather funded by the private citizens who run
them these are often smaller groups due to funding. Private ownerships tend to have more competition with
others meaning they may put money over quality in some cases. Some privately owned companies issue
stocks however these are not offered publically and are often harder to determine than stocks that are traded
and offered publically.
A well known example of a privately owned business is Bloomberg L.P. who are a company that work in
financial news such as stocks, activities etc.
Public service broadcasting
A Public Service Broadcast is one that is more aimed at public benefit as appose to just commercial/financial
gain which means that the media they release can target a larger amount of smaller social groups to build
their audience. A great example is the BBC for instance BBC News every night they first focus on
Nationwide news then focus on different areas of the UK which are picked up in these places. The BBC also
do not sell advertising time, this was introduced by Lord Reith who was the first director at the BBC, his
introduced policies then branded the BBC as Public Service Broadcasting.
Multinationals
A multinational company is one that operates in many different companies all
over the world meaning they are able to pander their products to a wide range of
audiences across different countries and cultures.
An obvious example is the Japanese company Nintendo that have been
multinationals from as early as 1985 with the release of the NES console in
America, and are still operating worldwide today with consoles such as the 3DS
and WII U being sold across the globe. By being a multinational this requires the
companies workers in different countries to shape the product to fit cultures for
instance Nintendo games are needed to be translated from Japanese to x
language.
Independents
Independent companies are those that do not receive any government funding or
influence, this can be good in some cases and bad in others, for example:
Rooster Teeth are a media company based in Austin, Texas and due to their
huge following they are able to carry on through selling of merchandise and
crowd funding. Whereas companies such as Eurocom (video game developers)
failed due to their small following and lack of money to carry on.

Conglomerates
Conglomerates are two or more corporations under one name that own
businesses across multiple industries. An example is Lotte which is a South
Korean conglomerate that works across a very diverse amount of industries from
cinemas to and own over 60 businesses in South Korea, Lotte has also
expanded to different countries such as Poland, America, etc.
An advantage of this is that if many owning many businesses means that trends
can be met very easily meaning plentiful profit.
Voluntary or not for profit organisations
Non-profits organisations are ones in which the aims and maintaining the
organisation are the only concern as appose to profit, collected funds go into both
the cause/aim and the maintaining the organisation. This is mostly common in
charities such as Oxfam and Wikipedia. Non Profit Organisations receive their
funding via the government and supporters. Non Profit Organisations are also
much easier to maintain due to all workers not requiring pay.
What are some of the challenges faced by independent media companies?
Mojang are an independent Swedish video game company that faced multiple
problems with their work load for instance, their biggest hit game is Minecraft and
they were currently working on porting it from PS3 to PS4 however the PS4
version was delayed for 5 months as Mojang had to focus on additional content
for Minecraft on both PC and Xbox. Not meeting deadlines is a common problem
with Independent companies.
Another example of this is Winterkewl Games, who were developers that were
founded to create the game
Yogventures!
“The project was proving too ambitious and difficult for them to complete with their six -man
team” - http://www.forbes.com/sites/erikkain/2014/07/17/cancelled-kickstarter-game-yogventures-
raised-over-500000-in-crowdfunding/
The project also failed due to poor use of the games budget as around 500
thousand pounds was raised on kickstarter yet the project still failed. A way
Winterkewl could have avoided this by employing more people to work on the
game to minimize the workload. Because Yogventures! Was their first project
Winterkewl then shut down without even creating a single product.
What are some of the challenges faced by multinational media companies?

Square Enix are a product of both companies Square and Enix. Both Square and
Enix were formerly competitors, however Enix were suffering due to high
development costs Enix wanted to merge with Namco however Enix had a major
blow when a game they invested in stocks for Dragon Quest Monsters 2,
however this game was delayed causing a loss in profit for Enix by almost 90
percent. Square were also suffering due to the box office failure of Final Fantasy:
The Spirit Within. This caused Square and Enix to merge in order to both recover
after their financial troubles.
What is cross media ownership?
Cross media ownership are companies that function across different areas of
media as appose to just producing content for one area. This can be very
beneficial in most cases as more people can be reached, for instance if someone
only listened to the radio and never watched TV they can still be reached via a
radio station x company opened.
The most obvious example of this is the BBC who own 8 TV channels in the UK
alone, they are: BBC 1 through 4, BBC News, BBC Parliament, CBBC and
Cbeebies as well as BBC Radio 1 through 6. There is also BBC online which
covers every area of news available from sports through to Politics. Overall this
means the BBC are well known to everyone due to their huge cross media
spread.
What is diversification?
When a company becomes diversified it means they are literally diverse in means
of other markets such as transport, video games, music etc. this can be either
beneficial or fatal to companies as their reputation depends on these separate
areas of sale being excellent and one slip up could lead to a potential loss in
customers. Another potential disadvantage is that if interest in the area which a
company has spread to plummets then obvious loss in profit will occur, however
this can also go the opposite way as if the company spreads to an area that is
vital and or currently of public interest then this will lead to a rise in profits.
An example of a diversified company Is Samsung which is renowned for its
electronics but also focuses in many other areas.
“The business currently has around 350,000 employees and in 2011 reported revenues of $220
billion and economists estimate that Samsung's revenues account for about 20% of the value of
South Korea's economy” - http://www.tutor2u.net/blog/index.php/business-studies/
comments/samsung-the-worlds-biggest-diversified-company
This is as mentioned before an example of why spreading to areas that are vital
and or of public interest can be extremely beneficial. Samsung have spread to a
vast amount of different areas from Life Insurance all the way to running a Theme
Park.
What is horizontal integration?

Horizontal integration is where a company will buy out their competitors on the
same level/ market they are in eg. A larger games company buying out a smaller
one.
The most well know company who does this is Disney, they quite recently bought
out Lucasfilms and are in production of three more Star Wars films. Disney also
bought out Marvel back in 2009 and have been making Marvel movies ever since
which have been major successes examples include the Iron Man films which
made around 400 million with its first film which goes to show horizontal
integration can be very beneficial to a company.
What is vertical integration?
Vertical integration is the opposite of Horizontal meaning it is where a company
buys out companies on levels different to their own and have
them work form them in different areas of their production.
Apple are a vertical company as they are based in Chicago
and design their products there however as stated on the
back of every IPhone (right) “Assembled in China” This is
because Apple has purchased companies such as Foxconn
to gather and assemble the parts for Apple’s phones.
What are some of the advantages of these different ways of structuring a
company?
By using vertical integration the cost of products can be lowered due to interior
transactions between companies being simple to conduct due to both having
central management which is cheaper to use. Quality is more likely to occur as
the product goes through more than one company so any rough edges can be
noticed and removed more efficiently.
Advantages of horizontal integration can include a build in both audience and
income, returning to Disney again, they have helped build a much vaster
audience in certain franchises for example their purchase of Marvel not only
brought in former Marvel fans to Disney but added to the Marvel fan base, this
can be shown when comparing the gross from the X-men films:
X-men The Last Stand came out before Disney and made $249,359,555 whereas
X-men Days of future past is the latest film in the series made with Disney and it
brought in $514,472,870.
Use the following table to show how the Disney Company is structured.
Production Walt Disney
Studio Motion
Pictures
Walt Disney
Animation
Pixar
Animation
Distribution Walt Disney
Studios Motion
Pictures
Disney Media
Distribution
Touchstone

Screening Disney Channel Cinemas Radio stations
(Disney music)
What different ways can ownership are shared out?
Most if not all companies sell stocks on the public which are shares out the
company’s ownership to those who invest, these investors will often keep their
share until it’s value has increased greatly from when they first purchased it and
then sell it off to other investors which will help the company at hand to share out
ownership.
What is a merger? Why would companies merge together?
A merger is where two companies will consolidate into one this can be for many
different reasons such as cutting costs, reaching wider audiences, etc.
An example of a merger Is Bandai Namco Games. Bandai were a toy
manufacture in Japan however they claimed to be losing profits because:
“the number of children has been decreasing due to declining birth rates” -
http://www.gamespot.com/articles/bandai-namco-to-merge/1100-6123385/
With less children this would mean that market trends would completely move
away from toys meaning Bandai would no longer be in business so they took to
becoming a merger with a gaming company due to Japans large gaming market.
What is a takeover? Why do companies take each other over?
A takeover is where a larger company will buy out and technically “take over” a
company for many reasons, mostly financial reasons, a recent example is with
Mojang who was bought out by Microsoft for 2.5 billion dollars, this was due to
the founder, Notch, not wanting the large responsibility of Minecraft as it has
grown from a small game to a global success. An example of a takeover for
money is when Facebook bought the company Oculus, this is down to Facebook
making an investment as:
“Facebook acquired Oculus Rift because it believes virtual reality could be the next big thing
after mobile.” - http://www.technologyreview.com/news/525881/what-zuckerberg-sees-in-oculus-
rift/
Facebook has become the worldwide social network and has purchased almost
50 different companies in the past so they can remain at the forefront of social
media, as the quote says “big thing after mobile” the mobile is the go to social
media platform so if VR takes off in the way mobile has Facebook will be the first
there, however this could also go the other way if VR does not become as big as
mobile Facebook will have lost 2 billion on the investment.

What is cross media regulation?
Cross media regulation is the method of making power in media be put into
lesser hands. The 20/20 rule is one method that is practiced in cross media
regulation which means that any newspaper that possesses more than 20
percent of market shares are not entitled to a radio station which is why most
newspapers will only stick at 20 percent. Another practice Is that no political
parties are allowed to own/run a TV station but are allowed to run advertisements
on other stations.
Should we have restrictions on the amount of media outlets people can
own?
I think that certain areas of media should have regulations while others should
not.
Firstly I believe the rule about political parties not possessing their own TV station
should be imposed in order to keep a fair competition with election as this does
not mean the party who receives the more publicity will be the party with the most
money to pay for advertising methods. On the other hand the possession of a TV
station could be extremely beneficial to the smaller and lesser known political
parties as a more mainstream way of advertising their party to potential voters. In
conclusion I believe that this system would be a good idea at first but would then
only be overused by larger parties with a larger amount of money, and would also
clutter up the amount of TV stations available and put people off wanting to view
any.
I also strongly believe that the 20/20 rule which prevents newspapers from having
a radio station should they possess more than 20 percent market share is a very
sensible one as this prevents one company bombarding every platform available
to them as if this rule was not in effect technically one company could keep
growing and growing until they are available on every platform and theoretically
takeover said platform so by keeping a tight lid on ownership is a very well
thought out idea. However on the other end of the spectrum are smaller, lesser
known companies that would grow their audience more by expanding to different
platforms but by doing so they must reduce their market share, so all they can do
is advertise on the platform as appose to operate on it.
In conclusion I am very much for restrictions of media ownership as this will only
lead to overuse of platforms by bigger companies/organisations which will
inevitably lead to the loss of client’s interest in said platform. While I do agree this
would potentially help smaller companies/organisations to build their audience
their presence on this new platform would eventually be drowned out by the
larger groups in this area.
You should select an organisation to work with to help you answer the following
questions. It can be in any media sector. Researching your company in detail will
help you produce stronger answers.
What income streams does your chosen company have?

I have chosen the media company Rooster Teeth to research. Their primary
stream of income comes directly from their website www.roosterteeth.com in
which they run a sponsorship programme which costs users £10 every six
months and this entitles them to:
 Use the code "Sponsor5" for a 5% discount in the RT Store.
 Special Sponsor-only products in the RT Store
 New Sponsor-only videos every Friday
 Early video releases, so you can watch new shows before anyone else.
 Exclusive bonus content and behind-the-scenes videos.
 Extended cuts of video releases.
 No pre-roll ads on videos - http://roosterteeth.com/sponsor/
So despite whether or not a user is a sponsor Rooster Teeth will still make
money from them each time they visit.
Rooster Teeth are also on Youtube and are partners meaning advertisements are
run on their channel which will give them a tiny amount of money per view.
RT also has sponsors which are mentioned on the majority of RT content as ad
reads for instance in their podcast at the end of any random conversation there
may be an ad read from one of Rooster Teeth’s sponsors which have a discount
code for podcast listeners.
Rooster Teeth also has an annual event in Austin called RTX that started in 2011
and has gotten bigger each year:
Attendance
~600 (2011)
~5000 (2012)
10,000+ (2013)
~30,000 (2014) -
http://en.wikipedia.org/wiki/RTX_%28event%29
The ticket price in 2014 was around 80 dollars for a weekend pass which when
multiplied by 30,000 comes to 2,400,000 dollars showing that RTX is becoming
Rooster Teeth primary source of income each year.
What is product diversity? How diverse is your company’s product range?
Product diversity is a very literal term and means how diverse products sold by a
company are eg. Rockstar Games producing content across different platforms
and genres.
Rooster Teeth are very diverse with their product range. Firstly we look at the
Rooster Teeth store the categories are:
New, DVD/Blu-Ray, Shirts, Outwear, Music, Posters, Cool Stuff and Sponsor
This shows us that Rooster Teeth do more than just produce films and web
series but also spread outside of media with clothing, posters etc. The “cool stuff”
category contains a large range of items such as keyrings, mugs, bags etc. all

branded with Rooster Teeth and or their content.
Rooster Teeth are primarily known for their first project Red vs. Blue which is a
video game machinima set in the Halo games and continued making content in
video games for another 6 years until in 2009 Rooster Teeth released Captain
Dynamic which was RT’s first Live action production.
The success of Captain Dynamic led to the release of the Rooster Teeth Shorts
which was a sketch comedy show that ran from 2009-2013. Rooster Teeth had
employed Gavin Free in 2009 and in 2013 after the end of RT shorts they had
acquired Gavin Free’s YouTube channel the Slow Mo Guys which follows Gavin
Free and Daniel Gruchy filming events in slow motion.
Ever since the end of the shorts Rooster Teeth have been uploading a vast
number of live action series alongside their usual video game series.
Rooster Teeth also have their own animated series called “RWBY” which has
since become the first anime series to actually be exported to Japan. RWBY is
also getting its own video game developed by Rooster Teeth which was
announced at RTX 2014.
After 11 years of Rooster Teeth an announcement was made that RT would work
on producing a full length movie entitled “Lazer Team” and to do so they needed
to crowdfund the film to which they set up an Indiegogo campaign and raised
$2,480,099USD
raised of $650,000 goal - https://www.indiegogo.com/projects/lazer-team-by-rooster-teeth
The target goal was released within the first hour of the campaign starting and
shows the immense support of the Rooster Teeth community as well as the
amount of power Rooster Teeth possess.
Rooster Teeth’s diverse range of products comes from the philosophy of the
company:
“As YouTube and Twitch both know by now, video gamers like watching games as well
as playing them. But making money off of those eyeballs isn’t always easy.
Austin, Texas-based video studio Rooster Teeth, though, has a deceptively simple
strategy: Try everything” - http://recode.net/2014/05/01/a-year-after-machinima-split-rooster-
teeth-says-gamer-dudes-are-still-biting/
What advantages does this give your company in the market place?
By creating such a diverse range of content Rooster Teeth are able to reach out
to more than just the gaming community but to almost everyone as mentioned
before Rooster Teeth are going to “Try everything” from gaming to a full length
movie. Many films are realised and films show no sign of dying out as people
have been watching films for around 100 years so by adding to that market
Rooster Teeth have the opportunity to leave their mark on the film industry should
the film do extremely well at the box office the film could go down in history. Also
Rooster Teeth’s movement into live-action comedy attracts many different people
not just gamers who are interested in comedic content, people will visit YouTube
looking for humour and they can find it on Rooster Teeth’s diverse range of
content attracts almost every kind of person from Film fans to hardcore gamers.

Why is the profitability of a product range so important to a company?
An important range of products that is most important to Rooster Teeth is their t-shirts
which they release every “T-Shirt Tuesday” Rooster Teeth has a crew that
works on creating the t-shirts every week and the product must sell well in order
for them to carry on working. An example of a time a t-shirt didn’t sell well was
with the “Ryan the ___ Guy” shirt ( http://store.roosterteeth.com/products/ah-ryan-
the-guy-shirt ) The T-shirt was a lesser known joke amongst the Rooster
Teeth community and thus didn’t sell very well to because of the joke not being
well known, the shirt didn’t make it into the UK or Australian store. However an
example of a time a t-shirt selling well is the “People Like Grapes” shirt
( https://roosterteethuk.myshopify.com/products/peoplelikegrapesshirt )
This shirt is a quote to the Rooster Teeth Podcast in which Gavin Free said the
exact line and fans began using it as a joke so this t-shirt became an instant hit
and is still quoted in RT content.
The importance of sales with Rooster Teeth’s T-shirts are so they can be
released weekly for when “T-Shirt Tuesday” come around, this give a very
professional feel to the company as they are able to release a new product on a
consistent basis.
What advances or disadvantages are there in making big budget,
mainstream products?
A lot of fans have been with Rooster Teeth ever since 2003 and have always
seen them as a smaller independent company and now that they are attempting
to enter the mainstream movie industry older fans may see them as sell outs and
stop watching their content or have a lower opinion of them. Whereas there is
also the fact that Rooster Teeth can pander their audience to fans of separate
industries who would not necessarily look into a smaller company such as
Rooster Teeth. There is also the fact that if a company is going to be ambitious
and invest in a big budget project then there is far more to lose if it all goes wrong
if they stick to smaller projects.
What are some of the objectives of your chosen company?
Rooster Teeth is a creative production studio responsible for award-winning online videos such
as Red vs. Blue, the longest running web series in history; the reality gamer series The Gauntlet;
comedy series Rooster Teeth Shorts; the upcoming animated series RWBY; and Immersion, a
show that tests video game concepts in the real world -
http://roosterteeth.com/about/index.php
When Rooster Teeth was founded the idea of Red VS Blue was nothing but an
idea of Burnie Burns but now he has said multiple times that his philosophy to
entertainment is to “Make Them Laugh” and by doing so he has helped build
Rooster Teeth into a well-respected entertainment company.
Rooster Teeth also want to create a dedicated and immersed fanbase they have
done this with YouTube channels and shows such as AH Community and Game
Fails which is all fan submitted content, these have also lead to employment of

Community members at Rooster Teeth.
What are the advantages/disadvantages of taking part in a media
franchise?
Rooster Teeth have quite notably taken part in the Halo franchise, thanks to Red
vs. Blue, with providing voices for certain characters and even providing a full
back story for a DLC for a Halo game, this is extremely beneficial for both Halo
and Rooster Teeth as by doing this Rooster Teeth fans will want to buy Halo for
Red vs. Blue, Halo fans will be interested in Red vs. Blue and therefore Rooster
Teeth.
Disney have recently purchased Lucasfilms and plan on adding to the Star Wars
movie franchise the Star Wars films are undoubtedly all cult classics fetching
2,780,702,607 dollars over the years of 1977 – 1983. When the news came that
Disney would be making three extra Star Wars films the reactions were far from
positive as for most Star Wars fans the films were their childhood or fondest
memory and to see them remade almost 30 years on can be very difficult to
accept due to the amount of change that has occurred in film making. Also the
prequel series I, II and III are all very much laughed at by Star Wars fans for not
being anywhere near the originals, however only time will tell if Disney can revive
the Star Wars franchise but for now the general census points to them ruining the
franchises name.
What, if any, products does your company license?
Rooster Teeth do not license any external products, this is due to Rooster Teeth
wishing to remain an independent company and to give the sense they are
owned by the community as appose to other businesses to give the fans a sense
of connection with Rooster Teeth, this is also why Rooster Teeth have never
ventured into more mainstream activities and only stayed with Microsoft and
Bungie.
Rooster Teeth has however had one of their own products licensed and that is
RWBY which is an anime series worked on and distributed by Rooster Teeth and
has recently been licensed by Warner Brothers Japan making it the first anime to
ever have been exported to Japan.
Who is in competition with your company? How successful is your
company in comparison?

Rooster Teeth’s has many competitors due to their diverse range of products but
the two most obvious are Smosh and Pewdiepie.
Smosh started a year before Rooster Teeth in 2002 and are a site primarily
devoted to comedy sketches and series, much like the RT shorts, Smosh also
run a gaming channel, Smosh Games, which has 5 million subscribers while the
central Smosh channel has 18 million, this is considerably more than Rooster
Teeth who have 7 million subscribers. Smosh have a larger audience due to their
primary content being comedy sketches, comedy is universal content on the
internet as it can be understood by almost anyone whereas Rooster Teeth
primarily focused on gaming content for 6 years and in those 6 years gaming was
not as big as it is today so Rooster Teeth did not build as big of a fanbase as
Smosh. Smosh and Rooster Teeth possess no bitter feelings toward each other
in fact Smosh actually had a guest appearance in Red vs. Blue.
Every producer of gaming content is in competition with Pewdiepie and Rooster
Teeth is no exception. Pewdiepie currently has 30 million YouTube subscribers
making him the most subscribed channel on YouTube, Pewdiepie is only
operated by only Felix Kjellberg (Pewdiepie) and he creates gaming let’s plays
like Rooster Teeth, however while RT operates from Austin, Texas Pewdiepie
operates in Brighton and while RT have around 80 employees Pewdiepie has
none and does everything solo. Feelings between Rooster Teeth and Pewdiepie
are not by any means positive, Rooster Teeth have often joked about Pewdiepie
in their videos and podcasts claiming he is unfunny, unoriginal etc. Unfortunately
for Kjellberg these opinions have transferred to many Rooster Teeth fans
meaning hardly any people who like RT will like Pewdiepie; however this is
beneficial for Rooster Teeth as by preventing their fans from visiting Pewdiepie
they are more likely to succeed Pewdiepie.
Who are your customers?
Rooster Teeth’s customers are mostly fans of the gaming and YouTube
community I know this as previously stated Rooster Teeth have 2 YouTube
channels devoted to just fan made content. However Rooster Teeth also have a
lot of different companies watching and wanting to make sponsorship deals with
them this is how Red vs Blue become so big:
“There was one hit from Microsoft, then three or four then about a thousand hits from
Microsoft” - https://www.youtube.com/watch?v=JkHTJjrX2iQ 4:36
By having companies watching their videos Rooster Teeth are able to attain
sponsorship deals and or job offers examples include the company Onnit, they
are a regular sponsor of Rooster Teeth and often get ad reads on the podcast
almost weekly.
In terms of what sort of fans Rooster Teeth have, they are mostly built off the
Halo fanbase and age anything from 12-30 years old. For me personally Red vs.

Blue was a big part of me and my friends childhood as being Halo players we
used to watch Red vs. Blue each week then re-enact scenes when we would play
Halo together, and that is still the case with the current younger generation of RT
fans. Then there are also the older fans of RT who range from late teens to 30’s I
know this as when visiting the Rooster Teeth forums you can look at posters
forums and see their age. RTX is also a place to see the wide range of fans, RTX
panels are streamed online and often include a question section which sees fans
ask RT staff questions and from this you can see a small sample of RTX
attendees and therefore Rooster Teeth fans.
Which global media trends are affecting your company right now?
Rooster Teeth run advertisements on their YouTube channel however Adblock is
currently being adopted by internet users which does what it says on the tin and
blocks advertisements this is a very ill thought out idea as by doing this YouTube
channels and most independent sites aren’t making rightly earned money, a way
Rooster Teeth are tackling this is by posting videos to their website first so it
users wish to view content immediately they will watch via the website which runs
ads that are able to bypass Adblock.
Gaming has become an immense trend online with almost everybody creating
content mostly in the vain hope they can one day become famous, rich, etc.
However there are still many channels that produce very professional content
that can be on the same level or sometimes better than Rooster Teeth. To
combat this Rooster Teeth stick with their sponsors to promote their content to
their customers/consumers.

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