Operations Management of New Offering - Multiplex Cinema

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Operations Management of New Offering - Multiplex Cinema

  1. 1. APEX CINEMASOperations Management Project.Made By:- SYBBA- CName Roll NoAmman Saraf 123Nischay Gupta 148Palash Agarwal 151Ronak Mehta 157Tirup Patel 171Vivek Jhala 175Yajur Gupta 176
  2. 2. APEX CINEMASINDEXSR.NO TITLE1. INTRODUCTION ABOUT THE SERVICE2. CUSTOMER SURVEY3. CAPITAL4. PRODUCT DESIGN5. PROCESS DESIGN6. FORCASTING AND ITS TECHNIQUES7. STRATERGIES AND CONCLUSION 2
  3. 3. APEX CINEMASTHE CURRENT INDUSTRY SCENARIOIndias craze for films has not been fully exploited by the "Film Exhibition"industry due to the lack of screen density in the country coupled with thepoor quality of screens. "Multiplex Cinemas" offer an alternative to tap thispotential by providing a quality experience to the viewer as well aseconomies to the multiplex operator."Films" has been one of the integral components of the Indian entertainmentindustry contributing nearly 27% of the total revenues of the entertainmentindustry. Besides, films also contribute to other components of theentertainment industry like music, television and live entertainment. TheIndian film industry is one of the most complex and fragmented national filmindustries in the world comprising of a number of regional film industries likeHindi, Tamil, Telugu, Kannada and others. The Hindi film industry is the mostpopular among them. Though India produces the largest number of films inthe world (Approximately 1000 per year), it accounts for only 1% of theglobal film industry revenues. In spite of being over 90 years old, the Indianfilm industry was accorded the status of industry only in 2000. Over theyears, the Indian film industry has been highly unorganized as film financingwas dependant on private and individual financing at extremely high interestrates. Only recently, the industry has got access to organized finance. Withvertical integration taking place between producers, distributors, exhibitors,broadcasters and music company’s corporatization is now taking shape inthe Indian film industry. We believe, that corporatization, will bring abouttransparency, accountability and consolidation which will help to improve theoverall profitability of the Indian film industry as well as reduce piracy andleakages which presently account for 14% of the Indian film industrysrevenues.FILM EXHIBITION BUSINESS IN INDIATREMENDOUSSCOPEFilm exhibition forms the most important component of the Indian filmindustry. According to the - KPMG report domestic theatrical revenuescontributes 57% of the total Rs59bn film industry revenues and are expected 3
  4. 4. APEX CINEMASto grow at 17%. Overall, the Indian film industry is expected to grow at 16%.The main pockets for film exhibition in India are Delhi, Mumbai and SouthIndia. Due to various regional language film industries in the South, it hasbecome an important film exhibition pocket. Hyderabad and Bangalore are 2southern cities whereoccupancies are exceptionally high at around 70%-80%. Price-Waterhouse-Cooper prepared the report, which threw up some exciting figures thatincludes the truth that profits from Indian cinema has arisen by 17% between2004 to 2007.For the same period, the foreign box-office share stands at an incremental 9%,and the domestic video market has indicated outstanding growth of 30%.Experts think that the mixing of ancillary income sources and the increasingacceptance of Hindi cinema out of the country is responsible for this combinedchange.Ace filmmaker Yash Chopra said, “More and more overseas markets likeMauritius, China, Japan, Korea are being explored with each passing year.”Producer Bobby Bedi commented, “I think the market revenue is gettingdivided in an even manner. Be it home video or be it theatricals, theviewership is expanding.”The report also reflects an interesting estimation of a strong reduction in thedomestic box-office share in the coming time by as much as 70%.Thus far, with an entire ancillary world of cable and DTH TV, out of home videoand radio plus internet film-based content rapidly developing, Bollywoodsglobal reach is set to expand business and markets substantially.MULTIPLEXIndia currently has 11500 existing screens, 95% are standalone, singlescreens. These single screen cinemas are poorly maintained as the ownersfind it difficult to upgrade and renovate their facilities, due to unavailabilityof organized finance. The deteriorating quality of these cinemas dissuadedviewers and they started using alternative viewing options.Over the last few years, multiplexes have emerged as a trend in urban India."Multiplexes" are essentially cinemas with 3 or more screens. They provide aquality viewing experience and are generally located around shopping mallsto increase footfalls in these malls. Each screen in a multiplex has smallseating capacities in the range of 150-300 seats as compared to singlescreen cinemas which have capacities in the range of 800-1,200 seats.With around 11500 active screens, India is under screened. China, whichproduces far lesser films than India has 65,000 screens while the US has36,000. India’s screen density stands low at 12 screens per millionpopulations. There is a need of at least 20,000 screens as against the current 4
  5. 5. APEX CINEMAS11500. This gives multiplex operators enough room to grow as the traditionalsingle-screen theatres do not have the financial wherewithal nor do they enjoytax incentives.Where will you watch them?India is an entertainment hungry nation, and the major sources ofentertainment are cricket and Bollywood. More than 3.3bn tickets are sold inIndia annually, this makes us the most cinema going population in the world.Even then, there are only ~11,000 screens operational in the country.Secondly, 95% of these are single screen theatres many of which have poorquality ambience.Most of the single screen theatres are run by single proprietor, often withoutproper operational management skills. Moreover, because of the poor qualityof prints supplied to the single screen theatres in the rural areas, footfallshave been coming down. On top of it, these screens are not eligible forentertainment tax exemptions. These factors have eroded the viability ofthese screens resulting in poor infrastructure spend which further reducesfootfalls.People willing to pay for qualityWith the entry of multiplexes, which provide better quality movie watchingexperience at a higher price compared to single screen theaters, more andmore middle income group people are coming back to the theatres thusunlocking a latent demand. This is a classic case of leisure consumptionwinning over value proposition in India. As content supply booms, more andmore people will turn to multiplexes because of the rising willingness ofpeople to pay for such services.Enough space for more multiplexesWe believe that there is enough space for more multiplex projects given thequantum of demand and lack of supply in the sector. Our preliminaryanalysis suggests that at national level and considering only the urbanpopulation demand in the age group of 15-60 years, 662 multiplexes with 3screens per property i.e. ~2000 screens can operate at 35% capacity. All ofthe multiplex players combined are operating only ~500 screens at present,hence, we believe that even though there might be a case for overbuild insome pockets, overall there is enough scope for further screen supply.BREIF IDEA ABOUT OUR SERVICE.Our service is cinema theatre.This is to entertain people from their daily andtiring routine. Our theatre name is APEX CINEMA. We have targeted to mostlycollege going students but others can also come.our cinema will be located at 5
  6. 6. APEX CINEMASvile parle as there are more college going crowd. It will be unique experience inour theatre with much of facilities and people can enjoy movie and sitcomfortably .GROWTH DRIVERSAt a time when single-screen theatres are dying due to lack of footfalls,people are queuing up at multiplexes that sell tickets at almost 5 times theprices prevailing in single-screen theatres. This fact provides ampletestimony to the increasing prosperity as well as the Indian consumers’willingness to pay for superior-quality entertainment. Given the prevailingdemand-supply dynamics, we believe that the sector offers high visibility forsteady cash flows. KEY PLAYERS- 6
  7. 7. APEX CINEMASCUSTOMER SURVEYPlease take a moment to help us improve your experience watching movies ina theatre.NAME: Phone No.:AGE: Occupation:Email: Gender:How often do you go out for a How much do spend on going out for amovie? movie? □ Once a week □ 50-100 □ Twice a week □ 100-150 □ Once a month □ 150-250 □ Twice a month □ 250 and aboveWhat genre of movies do you Which language do you preferprefer? watching movies in? □ Action □ Hindi □ Romantic □ English □ Comedy □ Regional Languages □ Thriller □ Foreign Language □ Drama □ OtherWhat show timings do you prefer? □ Morning show □ Afternoon show □ Evening show □ Night show 7
  8. 8. APEX CINEMASAdditional Comments May we add you to our mailing list, which offs news and exciting promotions? □ YesThank you for your participation!IINFERENCE FROM THE SURVEYWe carried a survey on 20 college going students about their movie goingpreferences which would help us get a better idea of their choices. We wantour cinema Apex to attract more and more college going students as it is nearmany colleges and has a very good location.These are a few inferences that weextracted from the survey. 1) About 80% of the total people go for a movie once a week. Students go for a movie every weekend right after their college. They constantly need some source of entertainment and most of them said “what better tan a movie”. 2) A major portion of people spend around Rs. 100-150 on a single movie outing. Students tend to go more for morning shows as they are comparatively cheaper . 3) Action and Comedy are the most preferred genres as they are considered to be most entertaining. People want something that is an extravagant affair and larger than life. 8
  9. 9. APEX CINEMAS 4) College going students are interested in both English and hindi movies and don’t mind going for any of the two if the movie is good. 5) Morning shows and matinee shows are more acceptable to the students as it is difficult for them to get out in night.CAPITAL(revenue, expenditure, budget)BUDGET-we have decided to come up with an initial budget of 100cr. Keepingin mind all the capital expenditure(i.e. one time expenditure).EXPENDITURE-Coming up with such an service with all the rivals very well settled will requirea very calculative expense sheet.The initial expenditure is going to be capital expenditure that will be oflicenses, land, construction of cinema, labour, and purchasing of other rights.The revenue share between multiplex exhibitors and producers is as follows:Pre-standoff Producers MultiplexWeek 1 47% 53%Week 2 36% 64%Week 3 25% 75%Post-standoff Movie earns < Rs. 17.5 Cr Movie earns > Rs. 17.5 Cr Producers Multiplex Producers MultiplexWeek 1 50% 50% 52% 48%Week 2 42% 58% 45% 55%Week 3 35% 65% 38% 62%Week 4 30% 70% 30% 70%We even plan to launh gradually a new concept on miniplexes(a multi-usetheatre with two screens, seating capacity of approximately 120 per screenand price point of nearly Rs90 per ticket). These miniplex operators haveaggressive roll out plans of having over 500miniplexes across the country in thenext few years. 9
  10. 10. APEX CINEMASPRODUCT DESIGN Apex cinemas 1. It is the main cinema hall. It has the capacity of accommodating around 350 persons per show. The screen of this theatre is a hi-def 3d-4d optical screen with a dolby surround sound system which makes every seat 10
  11. 11. APEX CINEMAS enable to hear even the minute audio details due to its unique architectural design. All the seats would be leather seats with the facility of slide backward seats for more comforting seating. There is 4 entry points and the same is used as exit points but with a different path of exit on its left. There is also 2 emergency fire exits in the theatre room which connects to emergency exit staircase and also an non-electric pulley system emergency lift. 2. It is a screen storage room, where all the past screens are stored with proper storage and holding facility. 3. These all are the food joints of the theatre where all snacks would be available just by stepping out of the theatre room. 4. Gents and ladies washrooms. 5. Staff discussion and daily work allocation. 6. It is the common lobby adjoining the theatres. 7. It’s a new concept of flexible theatre. It must be having all the features of the other screen. But in this screen mainly 4d movies would be played due to its unique design and also the screen would be on the ceiling with a slight dome structure for the convenience and the ultimate experience of film watching.(this concept is used in imax). 8. Backup projectors and music equipment room. 9. Play section for kids with various videogames. 10,11. Ladies and gents washroom. PROCESS DESIGNProcess Design is for services that deal with the processes by which they areproduced. It involves compiling and understanding the service’s requirements, 11
  12. 12. APEX CINEMASconverting the requirements into engineering specifications and producingplans that marshal the materials, equipment and people needed to make and.Heres the path a film usually takes to get to your local theater:Someone has an idea for a movie.They create an outline and use it to promote interest in the idea.A studio or independent investor decides to purchase rights to the film.People are brought together to make the film (screenwriter, producer,director, cast, crew).The film is completed and sent to the studio.The studio makes a licensing agreement with a distribution company. 12
  13. 13. APEX CINEMASThe distribution company determines how many copies (prints) of the film tomake.The distribution company shows the movie (screening) to prospective buyersrepresenting the theaters.The buyers negotiate with the distribution company on which movies theywish to lease and the terms of the lease agreement.The prints are sent to the theaters a few days before the opening day.The theater shows the movie for a specified number of weeks (engagement).You buy a ticket and watch the movie.At the end of the engagement, the theater sends the print back to thedistribution company and makes payment on the lease agreement.A particular cinema experience of a customer begins with him getting to thetheatre in his vehicle or by any appropriate means of transport. If he comes viahis own vehicle , he will have to park his car in the parking lot . He will thenmove to buy the tickets at the box office or the ticketing counter. Then hemoves to his respective screen where the movie is being screened. At theinterval he has snacks at the canteen. And then When the movie gets over , hemoves via the exit door to the parking lot . Gets into his vehicle and goeshome.PROCESS 1. GATES.Two gates,1 for entry and 1 for exit to avoid congestion during rush hours. 2. PARKING.We have our own parking space on the Ground floor and basement. parking isfor 4 and 2 wheelers.Parking sufficient enough for 60 4 wheelers and 80 2 wheelers. 3. BOX OFFICE. 13
  14. 14. APEX CINEMASBox office is the ticketing counter. During Peak hours that is during Fridays andweekends there are 4 desks working whereas during weekdays exceptWednesday there are 2 desks operating. On Wednesday there are 4 desksworking as we expect high demand on Wednesdays as we have partnered withAirtel for launching a scheme on Wednesday movie tickets. At any given pointof time , there will be atleast 2 desks operating. Above the desks there are TVmonitors which display the menu of the films, classification and the remainingavailability of seats for each. It takes three monitors to provide the wholemenu. Each desk has a networked computer terminal and a ticket printer. Foreach customer, a screen code is first entered to identify and confirm seatavailability of the requested film. Then the number of seats required isentered, and the tickets are printed, but these do not allocate specific seatpositions. The operator then takes payment by cash or credit card and issuesthe tickets. These operations take an average of 25 seconds, and a further 5seconds is needed for the next customer to move forward and start the cycleagain. In this way, the peak capacity is approximately 120 transactions per deskper hour. – 240 transactions per desk per hour using two desks on weekdaysand 480 transactions per desk per hour using 4 desks at peak hours. themaximum seat sales per hour can be 360 easily within maximum expecteddemand levels The average number of ticket sales per transaction is 1.5. Alltickets indicate specific seat positions, and these are allocated on a first-come-first-served basis. We also have tie ups with online booking sites such asbookmyshow.com wherein a customer can book their tickets online and payvia credit card and can collect the tickets at the desk. 4. CANTEEN.We have canteens on all the floors. Canteens are a major source of income forthe multiplex.We provide snacks such as sandwiches, samosas, burgers, hotdogs, cold drinks,pop corns, nachos, tacos ,fries. Staff will take the orders from the customerwho need to be seated at their respective seats and the staff will get theirorder executed. Once the customer receives his snacks he can make thepayment. The whole idea is that the customers do not have to take the pain ofstanding in queues at the canteen and can order their food seating in theirpositions and enjoy the whole experience. 14
  15. 15. APEX CINEMAS FORECASTING METHODSModel Differences  Qualitative – incorporates judgmental & subjective factors into forecast.  Time-Series – attempts to predict the future by using historical data.  Causal – incorporates factors that may influence the quantity being forecasted into the model 15
  16. 16. APEX CINEMASTHEATER DISTRIBUTIONMARKET SIZE AND GROWTH 16
  17. 17. APEX CINEMASGROWTH OF MULTIPLEXESDRIVERS 17
  18. 18. APEX CINEMASKEY TRENDSStrategy and ImplementationThe strategy is simple: provide fair-priced, quality entertainment close to homeand customer satisfaction.  Marketing StrategyWe anticipate that a buzz will be created once the renovations begin.Excitement will build as the grand opening approaches. To encourage thatexcitement, we will have a countdown to opening or theatre. Concurrently,advertisements in both the local newspaper and the colleges daily willpromote the opening with coupons for free items from the snack bar. Since alarge share of profits will come from concessions, we want to let people knowabout our tasty snacks. Finally, we will use our website to keep our customers,especially the more web salvy college students, updated on the movieselection, which will change every two weeks. 18
  19. 19. APEX CINEMAS  Sales StrategyThe APEX Theatre will appeal to two segments of the market:Adults and parents with children who seek local, fair-priced andentertainment aimed at the whole family.Young adults who are interested in seeing recent releases especially collegegoing students.  Pricing StratergyThe pricing of ticketing will be Rs.90 for adults and Rs.50 for children agedbetween 3-7 years.Whereas on Saturdays and Sundays (weekends) as thenumber of public increases compared to weekdays the price of tickets will beRs.130 for adults and Rs.90 for children aged between 3-7 years. The pricingstrategy will be based on LPP(linear programming method) where it will bebased on the cost of expenditure ,the employees wages and the staff andsecurity.these will be our 4 main constraints.  Other Unique StartergyThere will be collaboration with airtel, service provider users on everyWednesday where the customer gets 1 movie ticket free on purchase of 1ticket.this will be beneficial to all airtel users.When the customer comes to buytickets from ticket counter the customer will get the food menu card so thecutomer can select its choice of food at ease and also gets variety of choice.Another unique stratergy to attract the customers is that we are going toshowcase OLD HIT MOVIES on every THRUSDAY with 4 shows. This we will bebasically targeting senior citizens and people of old aged.There will be NOQUEING on the canteen area as the qeuing system is not applicable in ourtheatre, APEX.As the customer is given the menu card along with buying oftickets ,the customer just needs to order their choice of food items to the staffwhich will be there in at yur doorsteps.You just order him/her and whenhe/she gets your things at that time you have to pay him/her the respectiveamount.CONCLUSIONTO CONCLUDE , OUR SERVICE OF OPENING APEX MOVIE THEATRE WILL BEGREAT SUCCESS AND WE SOON WANT OUR DREAM COME TRUE IN NEARFUTURE.AND WE HOPE THAT OUR SERVICE WOULD BE APPRICIATED BY THECUOSTMERS. 19
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