A Horror Show at the Cinemaplex : Strategic Management
A Horror Show at the Cinemaplex
Case Solution
By Cindi Earls and Daniel Engelken
Overview
Cinemaplex is a movie theater that has experienced changes due to technology advancements. The change has negatively affected the the attendance at the theater. Revenues have increased but only due to the inflated prices of tickets, concessions, and advertising revenues. Some of the technological advancements that have Cinemaplex concerned are; home theater systems, quick movie to DVD releases, video on demand, and internet streamlining.
Strategy
To earn revenue by selling concessions and showing sold advertisements to patrons who are drawn by the movie.
Problem
How can the Cinemaplex overcome the impact of new technologies on movie attendance?
1. Use Porter’s five forces model to analyze the profit potential of the movie theater industry and how to improve the competitive position.
Substitutions -Threats to the industry are the sudden emergence of the home cinema industry, such as big screen TV’s and home theater sound systems, broadband and video on demand, and quick movie to DVD release dates.
Buyers - Movie goers complain about theaters premium pricing for tickets and concessions. Movie goers are not happy with ringing cell phones, crying babies, loud talkers, sticky floors, and long advertisements.
Suppliers - Movie theaters are weak due to limited production of studio sources. Studio profit share has become unfair to favoring distributors in the early weeks of release.
Barriers to Entry - They are high in the theater industry. Theater start up costs is expensive and hard to obtain.
Rivalry- Barriers to exit are high because it is too expensive to convert to other forms of business.
Alternatives
1. Convert the theater to an IMAX experience. 2. Appeal to the older generation (the largest percentage of income holders) by serving adult beverages and mature movie selections. 3. Incorporate more of a comfortable home atmosphere in the theater.
Case Solution
By Cindi Earls and Daniel Engelken
Overview
Cinemaplex is a movie theater that has experienced changes due to technology advancements. The change has negatively affected the the attendance at the theater. Revenues have increased but only due to the inflated prices of tickets, concessions, and advertising revenues. Some of the technological advancements that have Cinemaplex concerned are; home theater systems, quick movie to DVD releases, video on demand, and internet streamlining.
Strategy
To earn revenue by selling concessions and showing sold advertisements to patrons who are drawn by the movie.
Problem
How can the Cinemaplex overcome the impact of new technologies on movie attendance?
1. Use Porter’s five forces model to analyze the profit potential of the movie theater industry and how to improve the competitive position.
Substitutions -Threats to the industry are the sudden emergence of the home cinema industry, such as big screen TV’s and home theater sound systems, broadband and video on demand, and quick movie to DVD release dates.
Buyers - Movie goers complain about theaters premium pricing for tickets and concessions. Movie goers are not happy with ringing cell phones, crying babies, loud talkers, sticky floors, and long advertisements.
Suppliers - Movie theaters are weak due to limited production of studio sources. Studio profit share has become unfair to favoring distributors in the early weeks of release.
Barriers to Entry - They are high in the theater industry. Theater start up costs is expensive and hard to obtain.
Rivalry- Barriers to exit are high because it is too expensive to convert to other forms of business.
Alternatives
1. Convert the theater to an IMAX experience. 2. Appeal to the older generation (the largest percentage of income holders) by serving adult beverages and mature movie selections. 3. Incorporate more of a comfortable home atmosphere in the theater.