ObjectiveThe movie theater industry is currently experiencing a significant drop in attendance. What can be done to increase the amount of overall admissions?
General Environmental Analysis Industry Analysis Competitor Analysis Internal Analysis
General Environmental AnalysisTechnology Demographics• The digital age • U.S. & Canada – 65% currently • Gender – 83% by 2015 – Even split• 3-D equipped • Race/ethnicity – 12, 620 screens = 50% – 63% Caucasian – $580 million in additional – 19% Hispanic revenue – 12% African American• The IMAX • Age – Different kind of experience – 25-39 (23%) – 244 in the U.S. – 40-49 (15%) – 583 globally – 2-11 (15%)
General Environmental AnalysisEconomic Political/Legal• Increasing ticket prices • Online piracy – Currently $8.00 - NATO – Bit Torrent• Cheaper for families – 63.7% entertainment media – Theme parks $$ • Minor domestic impact – Sporting events $$$$ • International impact• Sale of concessions – Lack of movie theaters – Largest source of profit – Theatrical release windows – Attendance is key • Anti-trust lawsuits• Home viewing equipment – “circuit dealing” – $3 billion by 2013
General Environmental Analysis Socio-cultural Global• Consumer health Latin America – 1 large popcorn = 3 Big Macs• Increased labeling – Prepared foods – Movie theaters were exempt
Economic Impact• “People can now expect a home cinema experience from their TV. Technology that was once associated with the rich and famous is now accessible to homes around the country” – Mark Gabriel, Sharp Corporation• Content availability
New Entrants - Low threat - Established markets - High Entry Cost Intensity of Rivalry Bargaining Power of Suppliers- Medium to High - Medium to High- 4 main competing firms - Suppliers = Movie Studios- Same ticket prices Movie Theater Industry - Can charge basically whatever- Same products/services they want for new movies Threat of Substitute Products Bargaining Power of Buyers - Medium to high - Low - Can be hard to re-create the - Mainly consumers (12-24) “experience”. - Multiple options (AMC, Regal, - Growth of home theater etc) systems - Low switching costs - DVDs, Movies on TV, Internet
Regal Entertainment Group• They have 6,598 screens and 525 Theaters in 37 States• They are the #1 Chain of Theaters• Customers can Join The Regal Crown Club• 224 Million Annual attendees• Current Stock Price is $13.59
Cinemark• The third largest in the US• They have 3,878 screens and 297 theaters in 39 States• They also have theaters throughout Latin America• Ranked #1 and #2 in box office revenues in 24 of their 30 markets• Their current stock price is $21.05
AMC Theaters• Second largest Theater chain in the US• Strong use of Inbound Marketing - Movies News Page• They Sell advertisement space and offer theater rentals• Planning on returning to the Stock Market with $450 Million IPO
All Three• All three’s ticket and concession prices range in the same area• Locations have similar price variations• All three have 3D and IMAX capabilities• The main advantage appears to be having more screens and theaters• They have all adopted the usefulness of inbound marketing, however AMC is utilizing it best
SWOT AnalysisStrengths Weaknesses• Entertainment is always in • Profit Structure demand – Less $ to theaters as• Even demand during compared to studios recession • Advertising + concessions• A cheaper option for • Run by conglomerates families – Forcing small theaters to close• U.S.’s second largest export – Digital film + new technologies = $$$
SWOT AnalysisOpportunities Threats• International expansion • No longer a need to go to the – Latin America movies?• Different programming – Redbox – Sports, plays, musicals – Netflix – Online• Niche markets – Classic films, independent • Other forms of entertainment films, film festivals – Where will consumers spend their discretionary income?
Strategic alternatives Alternative evaluation Alternative choice