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The Movie Exhibition Industry 2013 Case Solution
The Movie Theater industry has been moving towards downfall due to a significant drop in the people who chose to value the "the theater experience" instead of watching at home. This collapse can be attributed to a number of factors which individually impact the value chain of motion picture industry i.e. studio production, distribution and exhibition. The major occurrences which have led to this negative growth are increasing ticket prices, availability of cheap home viewing options, significant production costs, undifferentiated content and pricing, declining appeal of moviegoers to theater experience, content availability and timings, etc.
This case analysis will run through the strengths, weaknesses and opportunities available to this industry along with the reasons why this industry is experiencing rainy days. Lastly, the future strategic plans will be discussed which the exhibitors specifically need to maximize profitability improve performance and reverse the downward trends in attendance locally and internationally.
Following questions are answered in this case study solution
Case Analysis for The Movie Exhibition Industry 2013
2. Case Analysis
To begin with, production studios play a major role in the value chain but are less likely to suffer in detrimental ways like the Exhibitors will due to shrinking absence from their supplier i.e. studios. To further aggravate this, Exhibitors have been constantly losing targeted demographics due to increasing substitution by TV home theater systems and a myriad of online streaming options. Ticket pricing is another reason to blame for the downfall. This extends from the fact that the prices charged by the movie theaters are high compared to other alternatives like HBO, Netflix, etc. (Hitt, R. Duane, & Hoskisson, 2015).
The introduction of new home technology has enabled the cost driven customers to give up their trips to the theater and enjoy at home with LCD large TVS, 3D TVs and modern sound systems. Rivalry among the sellers is yet again another rationale behind the lost sales as there is weak competition amongst all. The products offered are homogenous with little or no differentiation at fairly similar costs. So the major reason for the consumer to choose one theater over another is the distance from the home, nearby dining options and seating quality (Kotler, 2013).
The Exhibitors have been the biggest to suffer as they are heavily dependent over the production studios for their existence. From the content being made to the to the marketing of the movie, its release and the percentage of box office sales, the production studios have maintained a strong hand over the powers of the Exhibitors. Finally, the digital conversion expense incurred has not been able to invite enough audience to the theaters in order to allow further conversion in future which has been becoming a worrying situation for the Exhibitors (Lee & Carter, 2012).
The Exhibition industry still possesses lingering strength which can enable it to rise again. Firstly, the digital innovations along with tapping new revenue streams like evening shows can bring in the spontaneous audience. 3D screens due to greater picture quality are preferred by many crowds and can create an opportunity to expand.
Lack of innovation and homogenous products offered by all theaters are the main weaknesses of the industry. Further to this, the industry has been relying too much on concession sales and in house advertising. Also, the exhibitors not only have to share the box office sales with many competitors, but it also has to count on the production studios to provide movies to make sales (Gil, 2008).
The opportunity for the industry lies in providing valuable customer experiences to ensure repeated visits, providing a larger variety of dining and concession items, targeting unusual audiences and expanding across cultural boundaries. Lastly, the threats mainly emerge from 3D TVs, home theater and sound systems, shorter release windows for DVDs and online streaming of videos.
As discussed above, the Exhibitors have been suffering mainly due to weak power they posses regarding driving business. To stop the market from shrinking further, there is a need to revisit the industry value chain and align them mutually in a manner that each part adds value to the other. The absence of innovation has been driving away audience from the theaters; therefore, there is a need to exhibit more to a wider frame of the audience by revising the content being shown in the new productions and that cater to a wider breed of cultural and age groups. One reason why people avoid visiting theaters is the in-house advertisement done by Exhibitors. These prove to be a frustrating interruption for the moviegoers and thus spoil their theater experience. This can be overcome by making use of creative advertisements that engage the audience and make the process enjoyable (Hitt, R. Duane, & Hoskisson, 2015).
Also, the theaters need to make greater use of social networking sites which are commonly used and followed by a greater proportion of general public to reach the potential crowd who still consider trips to Movie Theater worthwhile. Another solution which can compel the audience to return to theaters is to touch those topics of interests which not always related to glamour and elite classes. Instead, highlighting those issues which are faced by the public and projecting them in public places can revive the spirit of viewers to watch together (Keller, 2013).
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