Film and Movie Industry

Topics: Film, Movie theater, Strategic management Pages: 7 (1602 words) Published: June 4, 2013
Comprehensive Exam Case Study Fall Semester: 2012 / 2013

The Movie Industry in 2008 (Case A & B)

MBA Student: Waseem Hasan Ismail
Submit to: TAGSB Administration
27 February 2013

Table of Contents

Introduction3
The Movie Industry in 2008 (Case A)4
PESTEL Analysis – External Environmental4
Porter’s five Analysis4
Profitability Model for movie theaters4
Key strategic issues facing movie theaters4
Strategic actions that exhibitions might consider4
The Movie Industry in 2008 (Case B)4
Outlook for the movie industry improved by 20114
Strategic actions might exhibitors take in 2011 and beyond to improve their situation4 References4

Introduction

The movie industry had benefited from the technology development such as the digital camera and digital screens in the sense of suspense and excitement. However, this technology had become a big challenge to the management in the motion picture industry value chain. This technology encourages the moviegoers to experience watching a movie at house with the same picture’s quality resolution and the sound’s effects as the theaters providing for audiences. The management dilemma is at maximizing their revenue and profit which falls into two difficult components; the uncontrollable and unpredicted revenue and limited profit. Because of the ticket price exposed to competition and each chain is serving different geographic market, thus the ticket price can’t be increased more. Also, the revenue streams components are limited and ticket sales revenue is the main contributor in the business of exhibition. Moreover, the cost of producing the movie is becoming higher.

The value chain theatrical movie picture:

Consumption

Exhibitions

Distribution

Production

The Movie Industry in 2008 (Case A)

PESTEL Analysis – External Environmental

Political factors: the United States Government is encouraging the movie production using the incentives pay to the producers to encourage in-state production, these incentives came about in 1990 (1). The politicians in the USA are interested in Hollywood since 1930 when Franklin Roosevelt used the first real potential of Hollywood’s stars in a national campaign (2). The tax is applied under income tax no specific tax law applied on the producer or the industry.

Economic factors: continues recession will increase of unemployment rate and the decrease of the disposable income will decrease the demand of the household on the movies. The increase of the interest rate will raise the cost of borrowing making the production’s cost higher. The inflation will impact the average price of the theaters ticket.

Social factors: the US population is increasing, but the size of the market in the core demographic group (14-17 & 18-24) is growing more slowly, this will increase at 9% at 2025. Change in the customer sentiment will affect the demand; customers declining experience because of the overall hassle at the theater affecting the demand. People are less going to theater because less convenient in the theater. Distance from house, convenience of parking and proximity to restaurants.

(1) http://en.wikipedia.org/wiki/Movie_production_incentives_in_the_United_States (2) http://en.wikipedia.org/wiki/Cinema_of_the_United_States#Hollywood_and_politics

Technological Factor: affordability of the new HD LCD and home theater changed the customer sentiment to more tendencies to watch the movie at house especially since the time period between theatrical and DVD release has declined 40 present since 2000. The cable channel becomes widely subscribed and providing HD movies and HD channels. Environmental factor: The weather the climate changes affecting the sales of the tickets depends on the distance and convenience of traveling to the theater.

Legal factors: any project should involve a comprehensive preparation of several contracts and other legal arrangements. Also, requires a...
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