Herfindahl–Hirschman Index (HHI): The market share of each firm in an industry is squared and then all those numbers are added up to get the HHI.
Click here to get studio market shares from Box Office Mojo. The graph below shows the HHI for each year from 2000-2018. I included all firms each year which had at least a 0.1% market share.
The vertical axis starts at 800, so it exaggerates the trend a bit. Since the HHI has stayed below 1,500, it is a competitive industry according to the Justice Department. But my last post mentioned that the HHI will go up quite a bit with the Disney-Fox merger (Buena Vista is Disney's distribution company).
The table below shows the market share for the 8 companies that were in the top 15 every year from 2000-2018 (except Fox Searchlight & Lionsgate which just missed the top 15 in the year 2000). Anything less than 1% kept a studio out of the top 15, although less than 1% was sometimes enough. You can see that the market shares do fluctuate for these studios.
|Year||20th Century Fox||Buena Vista||Fox Searchlight||Lionsgate||Paramount||Sony/Columbia||Universal||Warner Bros.|
This chart shows the market share for these firms each year over the period. All the crisscrossing means that they are all going up and down each year.
Notes about other companies:
DreamWorks SKG-Were in the top 15 from 2000-2005 with two years around 10%. But not since 2005.
MGM/UA-In the top 15 from 2000-2009 with a high of 5.5%. Then got back in in 2018 with 1.4%
Miramax-In the top 15 from 2000-2009 with a high of 7.5%. Has not made it since.
New Line-In the top 15 from 2000-2009 with a high of 10.1%. Also made it in 2010 and 2012-2015.
Summit Entertainment-In the top 15 from 2008-2011, getting over 4% three times.
See Horizontal Merger Guidelines. But here is an excerpt:
"Based on their experience, the Agencies generally classify markets into three types:Related posts:
The Agencies employ the following general standards for the relevant markets they have defined:
- Unconcentrated Markets: HHI below 1500
- Moderately Concentrated Markets: HHI between 1500 and 2500
- Highly Concentrated Markets: HHI above 2500
The purpose of these thresholds is not to provide a rigid screen to separate competitively benign mergers from anticompetitive ones, although high levels of concentration do raise concerns. Rather, they provide one way to identify some mergers unlikely to raise competitive concerns and some others for which it is particularly important to examine whether other competitive factors confirm, reinforce, or counteract the potentially harmful effects of increased concentration. The higher the post-merger HHI and the increase in the HHI, the greater are the Agencies’ potential competitive concerns and the greater is the likelihood that the Agencies will request additional information to conduct their analysis."
- Small Change in Concentration: Mergers involving an increase in the HHI of less than 100 points are unlikely to have adverse competitive effects and ordinarily require no further analysis.
- Unconcentrated Markets: Mergers resulting in unconcentrated markets are unlikely to have adverse competitive effects and ordinarily require no further analysis.
- Moderately Concentrated Markets: Mergers resulting in moderately concentrated markets that involve an increase in the HHI of more than 100 points potentially raise significant competitive concerns and often warrant scrutiny.
- Highly Concentrated Markets: Mergers resulting in highly concentrated markets that involve an increase in the HHI of between 100 points and 200 points potentially raise significant competitive concerns and often warrant scrutiny. Mergers resulting in highly concentrated markets that involve an increase in the HHI of more than 200 points will be presumed to be likely to enhance market power. The presumption may be rebutted by persuasive evidence showing that the merger is unlikely to enhance market power.
The Herfindahl-Hirschman Index & The Anheuser-Busch InBev/Grupo Modelo Merger
Is The Airline Industry An Oligopoly?
How concentrated are U.S. industries?