Macro Environment Factors on Cinema

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CONTENT
Content ……………………………………………………………………………………………. 2 Summary ……………………………………………………………………………………………. 3 Introduction …………………………………………………………………………………….. 4 Discussion ………………………………………………………………………………………… 4 Conclusion ……………………………………………………………………………………….10 Appendix ………………………………………………………………………………………...12 Bibliography ……………………………………………………………………………………14

SUMMARY
This report explores how macro-environment forces can influence the strategic management of XX Organisation Holdings, a leading Singapore multiplex cinema operator. Three key forces and their potential impact on XX’s operations over the next decade will be discussed and from future trends in technological, social and economic developments, the key drivers of change can be identified. Lastly, the report summarises an operational synthesis of these key drivers. Statistics for cinema screens, attendance, and seating capacity are shown in the appendix.

INTRODUCTION
With the support of several government agencies, Singapore, predominantly an import exhibition market has ambitious plans to develop its film and cinematic capabilities over the next decade (Singapore Media Fusion, accessed 21 May 2010). The local cinema goer has become more discerning as consumer expectations remain high. Patrons are now spoilt for choice when deciding which film to watch and where to watch it. One of the biggest attractions of a Cineplex is that it is a social experience. As such, it is important for multi-screen cinema operators like XX to be creative and resourceful in developing innovative ways to enhance the movie going experience. There are many macro-environment factors that can shape a company’s strategic direction. They are not easily distinguishable, neither are they mutually exclusive nor equally applicable in all situations. However, three key forces that can exert the greatest influence on XX’s future operations are technological, social and economical. Specifically this report looks at the onset of digital cinema, a redefined cinematic culture of consumerism, and domestic market scale affecting box-office success. DISCUSSION

Technological Influence
The concept of digital cinema refers to “the distribution and exhibition of feature films to cinemas for theatrical screenings…[that is] material that was originally shot on film and subsequently transferred into digital form” (Hanson, 2007: 370). What this offers to the patron is an improved image quality over the current 35mm film prints. However Belton (cited in Hanson, 2007) argues that digital projection is merely something that is potentially equivalent to that found in celluloid image. As Culkin and Randle (2003) point out, the advantages in transitioning from film to digital cinema involves more than just better image quality. Digital technology ensures that the image quality does not degrade over time since its duplication and projection processes are vastly different from that used in celluloid based media. A digital distribution system allows individual theatres to run the movie simultaneously on additional screens on demand. Theatres could also show alternative content such as sporting events, documentaries and other digital programming in real time. Furthermore, if a movie is in bits and bytes, it can be compressed, and transmitted via satellite or broadband technology, thereby lowering storage and distribution costs. The costs of shipping and acquiring multiple 35mm new or old prints, by contrast, can be prohibitive. A secure encryption and decryption system makes it less vulnerable to piracy (Culkin and Randle, 2003). While there is a lot of savings to be made distributing and exhibiting movies digitally, it is costly to convert a conventional theatre into a digital one. According to Husak (2004), the initial capital costs of such a conversion can be US$150,000 but eventually the payback period for the investment will be reduced with improvements to hardware. In addition, there are...
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