The Movie Exhibition Industry 2011
Business Strategy 491BMAL
November 10, 2013
The Movie Exhibition Industry: 2011
What can exhibitors do to improve their performance? To reverse the downward trends in attendance? To improve their profitability at a time when the studios, relying on the box office more than ever, are increasingly looking internationally?
Let’s start with a SWOT analysis of the local exhibitor:
SWOT Analysis
Strengths
* Offer a product that is still relatively affordable for families and patrons * Product offers an “escape from reality” for consumers in a recessive economy * The “big screen” experience still cannot be duplicated at home * High profit margins on concessions and advertising * Lower cost digital versions of movies available from distributors
Weaknesses
* Theatre managers have little influence over revenues and expenses * Low operating margins * High operating expenses, i.e. labor and facility costs * Limited target audience of 12-24 year olds * Higher expense of digital and 3-D equipment * Customer complaints of interruptions during movies * Customer complaints of extended advertising prior to showing of film
Opportunities
* Large facility, can be marketed and used for other events * Lower concession prices and/or expand current offerings to promote higher sales * Introduce more independent films, lower cost, different target audience * Lower ticket costs for movies after a certain time period from release date to combat DVD competition * Customer Loyalty Programs * Promotional Packages – families, “date night”
Threats
* Home theater technology more affordable and common * Theatre release to DVD release windows are getting shorter * Studios putting investment into international market due to higher profitability
After the SWOT Analysis each theatre must decide on their strategy. This case analysis is made from the point of view of a multiplex or megaplex operation. For
November 10, 2013
The Movie Exhibition Industry: 2011
What can exhibitors do to improve their performance? To reverse the downward trends in attendance? To improve their profitability at a time when the studios, relying on the box office more than ever, are increasingly looking internationally?
Let’s start with a SWOT analysis of the local exhibitor:
SWOT Analysis
Strengths
* Offer a product that is still relatively affordable for families and patrons * Product offers an “escape from reality” for consumers in a recessive economy * The “big screen” experience still cannot be duplicated at home * High profit margins on concessions and advertising * Lower cost digital versions of movies available from distributors
Weaknesses
* Theatre managers have little influence over revenues and expenses * Low operating margins * High operating expenses, i.e. labor and facility costs * Limited target audience of 12-24 year olds * Higher expense of digital and 3-D equipment * Customer complaints of interruptions during movies * Customer complaints of extended advertising prior to showing of film
Opportunities
* Large facility, can be marketed and used for other events * Lower concession prices and/or expand current offerings to promote higher sales * Introduce more independent films, lower cost, different target audience * Lower ticket costs for movies after a certain time period from release date to combat DVD competition * Customer Loyalty Programs * Promotional Packages – families, “date night”
Threats
* Home theater technology more affordable and common * Theatre release to DVD release windows are getting shorter * Studios putting investment into international market due to higher profitability
After the SWOT Analysis each theatre must decide on their strategy. This case analysis is made from the point of view of a multiplex or megaplex operation. For
References: John A. Pearce II, R. B. (2013). Strategic Management. New York: McGraw-Hill. Theatrical market statistics 2012. (n.d.). Retrieved from http://www.mpaa.org/Resources/3037b7a4-58a2-4109-8012-58fca3abdf1b.pdf