Case Study Movie Exhibition Industry Essay

1529 Words Mar 28th, 2012 7 Pages
Strategic Analysis of Movie Exhibition Industry

By: Kim Saline
February 24, 2010

Objective:
To provide an analysis and make recommendations to increase revenue in the movie exhibition industry.
Overview:
Ticket sales for movie theaters are at their lowest point since 1996. With the core demographic group expected to grow slower than the US population and with technological advances growing at speeds faster than the industry can keep up, ticket sales will continue to decline if the current business strategy continues to be followed.
Concession sales and ticket sales are the two biggest sources of revenue for a movie theater. Both continue to increase in cost to the consumers and may have reached a price point that is starting
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They also initiate the contracts with the theaters and negotiate the percentage of box office sales they will receive. Many of the distribution companies are integrating with the production studios because the need for distribution is diminishing with the conversion to digital. This makes these suppliers a strong force.
On the concession side the bargaining power is weak due to economies of scale. Theaters earn most of their profits on concessions so they use their power to reduce their costs from their suppliers.
4. The bargaining power of buyers: The outlook for the target market isn’t favorable for the movie industry because it will not be growing as fast as the overall population. Buyer power is a strong force because of the target market and several other factors including: the undifferentiated product offered, switching to an alternative is simple and low cost, and customers can stay home and watch movies. The consumers are also complaining about concession and ticket costs, along with the advertisements before the film is shown.
5. The threat of substitutes: This is the strongest force of competitive pressure that the movie exhibition industry faces. Not only are they competing among each other but they have to compete with every leisure activity a consumer has to choose from.
Consumers are also investing in home theaters. TV’s are bigger than ever and have digital and 3D capability. As the costs of all the components go down consumers are

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