The Nature of Business

2. What forces are driving changes in the movie rental industry? Are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability?

My analysis will cover competition from substitutes and the change in buyer behavior and demographics. I will use the five forces model of competition and a SWOT analysis along with other sources of analysis. The information and recommendations that follow will provide you with the insight and building blocks to compete in the movie exhibition industry.

By mid 2002, the company had 349 screens in 31 locations and had generated a reported compound annual rate of return well in excess of 20% for its initial investors. 2-for-1 Wednesdays In the spring of 2001, Cinemex’s competitors began offering a special deal: any customer who purchased a ticket to see a film on a Wednesday (traditionally a slow day at the box office) would receive a second ticket at no additional charge. This ploy cut into Cinemex’s attendance figures (Exhibit 3). On five of the first six Wednesdays after the deal’s introduction, Cinemex’s attendance was less than in the same week during the previous year. Heyman faced a difficult decision. Should he offer his own two-for-one deal on Wednesdays? This might raise attendance, but since many tickets would be given away for free, it might also reduce ticket revenues. Or should he do nothing, hoping that the appeal of Cinemex’s customer service package would eventually bring customers back? Heyman’s first step was to review his attendance data. What made this difficult was that week-to-week attendance was highly variable, depending on (among other things) the time of year, the popularity of current films, local weather conditions, and the timing of holidays. The question was how to disentangle the impact of these factors from those of Wednesdays at Cinemex Page 2

In some cases Australian films do receive the budget it desires and a film can be advertised around the globe. “Australia” is a prime example – it was marketed so extensively that everybody felt they needed to see it as it would become a topic of conversation amongst all. However this movie for some film scholars proved to be a way for the tourism department to promote Australia.

4. Din, Yangon. (2007). Titled: The dynamics of the movie industry: Theatrical Exhibitions & DVD rentals. The University of Wisconsin.

Cineplex Inc is a leading Canadian entertainment company that operates a number of businesses such as food services, movie theatres, gaming, alternative programming and retail of apps for various electronics. The company has also entered into a joint venture agreement with SCENE which is currently a successful entertainment loyalty program in Canada (Cineplex, 2014).

The poor distribution of Australian films has made it difficult for the public to view these said films, due to the lack of theatres screening the actual pictures. This contributes to the community of the Australian public to collectively be unaware of these films and leads to the small number of tickets sold in cinemas. With this lack of money being spent on Australian films, the industry suffers due to with no return going into the

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.

2. What forces are driving changes in the movie rental industry? Are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability?

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.

The film industry has always been somewhat of a dichotomy. Grounded firmly in both the worlds of art and business the balance of artistic expression and commercialization has been an issue throughout the history of filmmaking. The distinction of these two differing goals and the fact that neither has truly won out over the other in the span of the industry's existence, demonstrates a lot of information about the nature of capitalism.

A market analysis was first taken out on Reading Courtenay; one cinema under the Reading brand name situated in Wellington. From this analysis, it became apparent that the Internet was one of the company’s largest competitors. Upon further research, the problem revealed to be at such a large level, one single cinema would not be able to control it alone. The view for the marketing plan had to be changed and instead would now support a company-wide view.

The costs, methods of distribution, and themes of Hollywood and Nollywood films reflect strongly their target audiences; how the target audience affects the production of a film and how the production of a movie is designed to capture a specific

In a theater, one can watch movies as soon as they are released without having to wait until

1. How might the reward program described in case exhibit 5 affect the movie and event –going behavior of major market segments? At retail, what is the average value of each reward structure for customer’s dollars spent – 5 %, 10%, 15% or 20%? Which reward structure would you choose? Why? (For the sake of simplicity, ignore the one-time fees and rewards)?