The Movie Exhibition Industry Case Analysis

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I. Case Synopsis
Motion pictures are a key driver of the market for entertainment products, one of the largest export markets in US. Motion picture industry consists of three stages: studio production, distribution, and exhibition. The studios produce the lifeblood of the industry, the films that are its content. The biggest players at this level are the majors, big studios which integrate production and distribution, as do the slightly smaller mini-majors. The next stage is distribution. Distributors are the intermediaries between the studios and exhibitors. Distribution entails all steps following a film’s artistic completion including marketing, logistics, and administration. Distributors coordinate the manufacture and distribution of
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Competition between theaters often comes down to distance from home, convenience of parking and proximity of restaurants. Innovations by one theater chain are quickly adopted by others. The differing approaches of the theater chain companies are reflected in their cost of fixed assets per screen.
Concession sales and ticket sales are the two biggest sources of revenue for a movie theater but the exhibitors has limited control over both revenues and profits because those two are important aspects. Attendance allows for profitable sales of concessions and advertisements, but there are significant caps on the volume of concession sales per person, and selling price seem to have reached a maximum. Both continue to increase in cost to the consumers and may have reached a price point that is starting to drive consumers away from going to see a movie.
With the advancements in home entertainment systems, consumers are investing thousands of dollars into their own home viewing systems. They have several options to stream video content into the comfort of their own homes. Home entertainment systems have also made a large impact on the theater industry. In 2005, this technological advancement was the most sought after electronic system for new homes. It seems that consumers have finally said no to the rising price of movie tickets and concession stand snacks and beverages.
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