Entertainment Industry Pricing and Pricing Architecture in SAP CRM-IPM 7.0 with Enhancement Package 1
- by Maneesh Agarwal, SAP CRM Manager, Capgemini
- June 18, 2013
Learn about commonly used entertainment industry pricing models, SAP CRM-IPM pricing architecture, and royalty scopes. See how they support pricing calculations and user data entry, and discover potential gaps that you might encounter in the media industry, especially with television companies.
The entertainment industry has unique needs involved in pricing licenses sale contracts between licensors and licensees. You can meet most of these needs using an SAP CRM-IPM pricing solution built on top of SAP CRM pricing architecture.
An entertainment company’s primary business is to create and distribute intellectual property (IP) to its customers and generate license fees (i.e., royalties) from those licensees. This is sometimes referred to as IP exploitation because the same IP is being used repeatedly as long as it continues to generate royalties for the company that owns or distributes its rights. For example, a large media company usually creates and exploits feature films through a theatrical release, DVDs, premium television, cable television, and network television markets, in that order.
The entertainment industry follows different pricing models depending on the target market and the mode of IP transmission to the end customer. These models are different based on the food chain being referred to. For example, customers pay $10 to $15 for a theater ticket, but the theater company often pays the distribution or media companies a fixed fee based on the number of copies or tapes for the film. Alternatively, end customers pay $10 to $20 for a blue-ray DVD at a big box store, which often pays $8 to $10 per DVD to the media company.
Pricing models, especially within the television industry, use complex calculations and varied models. Newly evolving formats of delivering content over antennas, direct to PCs, direct to mobile devices, and newly created on-demand channels have created a need for a flexible pricing modeling tool.
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