INTENATIONAL HOUSE THEATER

(ISLAMABAD)

1- Mission

International House is to give our customers a big city entertainment experience. Our customers will
relax in comfort and watch high-quality presentations of popular second-run movies, all within a
short walk or drive from home. This is a convenience that Falls River residents have had to do
without since the local theatre closed eleven years ago.

We aim to please the local community (who can wait a few weeks to see their favorite movies and
don't want to pay big city, new release prices). We will also provide our customers with satisfying
and reasonably priced snack foods and beverages.

Keys to Success

 Proper film selection for the audience and the theater's environment.
 Revenues from a mix of both traditional movie fare and other quality snacks and beverages.
 Careful management of internal finances to control costs.
 Great customer service.

1. Objectives
 Healthy sales in the first year, more than doubling by year three.
 Excellent revenues from concessions.
 Modest by stable profit margin by year two.

2. Company Summary

International House Theatre, a movie house with two screens and a capacity of 400, should be
located on Main Street of Islamabad. Islamabad population 1.2 million, has been with a local movie
theatre when the old theatre, The Kinnick, closed down due to not a best seating, environment and
screen displays and the lack of an interested successor. Since that time, interested movie-goers in
Islamabad have had to drive 45 miles to the Bahria town.

3. Company Ownership

The international house Theatre will begin operations as a sole proprietorship.

4. Start-up Summary

We will be the main investor and operator of the International House Theatre. I have been managing
a multiplex theatre in Bahria town for the past two years, gaining valuable experience while looking
for opportunity to own theatre.

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 INTENATIONAL HOUSE THEATER

(ISLAMABAD)

The building where the theatre will be housed has been vacant, except for the occasional rental to a
community group, since the closing of the former business. This has made the building's owners
anxious to collect a regular check, so they have agreed to rent the entire building for $900 per month
for the first three years. There are some repairs and upgrades needed, especially in the balcony and
snack bar areas. The founders will be responsible for those repairs and those estimates are included
in the start-up expenses.

Start-up Funding
Start-up Expenses to Fund $21,900
Start-up Assets to Fund $23,100
Total Funding Required $45,000

Assets
Non-cash Assets from Start-up $10,700
Cash Requirements from Start-up $12,400
Additional Cash Raised $0
Cash Balance on Starting Date $12,400
Total Assets $23,100

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0

Capital

Planned Investment
Owner $30,000
Owner $15,000
Additional Investment Requirement $0
Total Planned Investment $45,000

Loss at Start-up (Start-up Expenses) ($21,900)

Total Capital $23,100

Total Capital and Liabilities $23,100

Total Funding $45,000

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 PLAN AND PROS AND CONS

Counter/kitchen retrofit $2,000 Table:

Sound and Projection Equipment $500 Start-
Theatre repairs $12,000 up
Other $500
Total Start-up Expenses $21,900

Start-up Assets

Cash Required $12,400

Start-up Inventory $700
Other Current Assets $0
Long-term Assets $10,000
Total Assets $23,100

Total Requirements $45,000

Funding

Chart: Start-up

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $800
Stationery etc. $800
Marketing materials and Advertising $1,200
Insurance (8 months) $1,400
Rent (8 months) $2,700

1- Services

The international house Theatre will provide comfortable seating for its customers to view high
quality, second run movies. The theatre's management will be aided in movie selection by being able
to see how movies have fared in their initial run, especially those that have shown success in the
theatre's two target markets: families and young adults. With two theatres in which to show movies,
both markets can be targeted at the same time with minimal cannibalization.

A variety of quality, reasonably priced snack items and beverages will keep customers satisfied
during their movie experience. The founders understand that the entire experience can be
jeopardized by poor customer service and will seek to hire only the most customer service-oriented
personnel.
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 PLAN AND PROS AND CONS

2- Market Analysis Summary

The international house Theatre will be located in F-11 Markaz, the shopping and entertainment
center of town. This provides easy access for every resident of Falls River and a viable entertainment
option any night of the week. The local business community is showing great support for a theatre
since it would keep residents, and their spending dollars, in the community instead of one of the
surrounding communities. A typical family (there are about 2,300 in F-10 n F-11) can expect to save
approximately $48 for a night out at the movies by coming to a local theatre. This savings, along
with quality movie selection, should keep people coming back regularly.

3- Market Segmentation
 Families - this segment focuses on adults and parents with younger children who don't need to
see the latest movies on release and seek an inexpensive, quality, family-oriented entertainment
experience.

 Young adults - this segment is comprised of the 16-24-year-old age group. This group is
interested in seeing comedy and action/adventure type movies that are not directed at the
younger and family markets.
 Chart: Market Analysis (Pie)

Market Analysis (Pie)

Family

Young adult

Other

1- Service Business Analysis

Islamabad’s community has been in need of a local movie house since the failure of its only theatre 2
years ago. With the closest movie complex located 45 miles away, movie goers’ options are limited -
either a round trip drive of over 90 miles or in-home rentals. For people who enjoy the big screen,
neither offers a satisfying experience. The international house Theatre can satisfy those needs with
quality movies in a comfortable, old-style movie theatre.

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2- Competition and Buying Patterns

Competition for movie theatres comes in a number of different forms. In general, you can describe
the indirect competition as any entertainment alternative in the local area. Competition comes from
the local skate park, pool hall and various restaurants. Restaurants also present a potential
complimentary offering that we might exploit later through strategic alliances. As mention before,
the direct competitor is the movie theater located 45 miles from Islamabad. The inconvenience this
presents for Islamabad’s locals presents a tremendous opportunity for our theater.

3- Target Market Segment Strategy

These two market segments, families and young adults, are targeted specifically because they
comprise the two largest segments of Islamabad’s population. The international house Theatre is
determined to be a community-oriented business and seeks to serve as much of the population as
possible. With a small college in town, there is an ample student market, consumers who often have
limited transportation options.

4- Strategy and Implementation Summary

The strategy is simple: provide fair-priced, quality entertainment close to home for the two markets
that comprise the bulk of Islamabad’s population.

5- Competitive Edge

The international house Theatre has a distinct competitive edge in that it is the only movie theatre
within 45 miles of Islamabad. There are no plans at this time to build a theatre complex in the town
and, since the theatre will occupy the town's only building capable of effectively housing a theatre,
there is limited direct competition. Competition will come mainly from several multi-plex theatres
located in Bahria town, the closest being 45 miles from Islamabad.

6- Marketing Strategy

Islamabad is enough town that word gets around quickly. We anticipate that a buzz will be created
once the renovations begin. Excitement will build as the grand opening approaches. To encourage
that excitement, we will have a countdown to opening on the building's marquee. Concurrently,
advertisements in both the local newspaper and the college's daily will promote the opening with
coupons for free items from the snack bar. Since a large share of profits will come from concessions,
we want to let people know about our tasty snacks. Finally, we will use our website to keep our
customers, especially the more web sally college students, updated on the movie selection, which
will change every two weeks.

7- Sales Strategy

The international house Theatre will appeal to two segments of the market:

 Adults and parents with children who seek local, fair-priced evening entertainment aimed at the
whole family.
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 Young adults who are interested in seeing recent releases but are constrained by an inability or
unwillingness to travel.

The main sales strategy is to provide recent successful movie releases that appeal to both audiences.
With two theatres, we will be able to target both segments simultaneously.

Ticket prices will be $5 for adults and $3 for children under 12.

8- Milestones

We will begin the theatre's restoration in mid-January. I will still be working with the theatre in
Bahria but will be able to contribute as-needed. our work will start inside, repairing and upgrading
the facility as necessary. The main theatre's balcony needs reinforcement. Repairs and upgrades to
the concession area are also necessary. Painting will put the finishing touches on the interior of the
structure. Finally, the interior should be fully restored by mid-March, once the upholstery repairs are
finished.

9- Web Plan Summary

The website will be very simple. Its main purpose is to communicate to our customers what movies
are showing at what times with links to each movie's website and reviews. The design will feature an
image of the theatre along with the a list of current movies and those that are coming soon and will
be small enough to quickly load on most home computers. Since the movies will change every other
week, maintenance should be fairly straight-forward. Arrangements have been made with both the
local and college newspapers for links to our web site from theirs.

10- Website Marketing Strategy

The website address will be printed on tickets and it will be prominently placed on advertisements
that we will run in the local paper.

11- Development Requirements

Development requirements are minimal, since the site will only be a few pages. The site will be built
by a local website development firm. Once it has been created, the founders will be responsible for
updating it with the latest movie listing each week. It is expected that this will take no longer than 1
-2 hours each week.

12- Personnel Plan

We believe that the key to customer service is happy employees. We will invest in a good team by
compensating our part-time employees fairly.

Pros and Cons of Operating City-Owned Theaters

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Government-Run Facilities
Government departments and agencies often operate cultural facilities, and they can be very
effective as managers. Their orientation toward public service can provide significant benefits to
local cultural organizations in terms of cost and scheduling, including a relative guarantee of public
funding to support ongoing operations. And municipalities have various skills and resources that are
necessary and beneficial to the operations of a theater.

On the other hand, there is always the risk of political interference in the operation of the facility,
particularly around programming choices. Government budgeting and procurement methods may
increase costs, while pay grades may limit the quality of candidates for key positions. And it is more
difficult to convince the public to donate funds to a government-run facility, as they believe their tax
dollars represent their contribution to operations. This is the biggest challenge, but there are ways
around that, including the creation of an arm’s-length foundation that raises money and helps
program the venue.

An Independent Nonprofit
In many cases, a new, independent nonprofit corporation is created specifically for the purpose of
developing and operating a theater. These mission-driven organizations are oriented to public service
and community impact, and because nonprofits are transparent operations, they allow for greater
public accountability. There is an organizational orientation to private fundraising, which can reduce
reliance on earned revenue and ensure greater curatorial flexibility. And a nonprofit can represent
the region (at least the private sector) and its interests. 

But there are challenges with this model, notably that nonprofit organizations must fundraise to
offset annual operating expenses and there are rarely guaranteed sources of contributed income.
Such organizations often end up competing with their users for ongoing financial support. Most
important, nonprofits are only as good as the boards that run them. There must be a deep pool of
community leaders willing and able to contribute their time, energy and financial resources to the
organization.

User-Run Facilities
In this variation on the nonprofit-run model, the principal user of the facility (often a nonprofit) is
the operator. This option is worth considering when there is one organization that is a dominant or
even a heavy user of a facility. That user of a theater is generally a credible local organization with
the support of leaders and funders. Because that user is in the theater so often, it guarantees a high
level of strong programming. And the dominant user also tends to know the venue better than
anyone else, making it more effective at caring for the facility. This is a popular model for
symphony halls dominated by a resident orchestra.

On the other hand, the dominant user has a conflict, being both the operator and the dominant
user, which often means that other users have a hard time getting favorable dates and services. There
is also a potential shortage of facility management skills, particularly around presenting and rentals.

School and College-Run Facilities

Schools, colleges and universities are increasingly interested in operating cultural facilities on behalf
of communities. They are typically skilled at operating all sizes and shapes of facilities. Educational
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operators are more likely to bring in more daytime activity, such as classes and rehearsals as well as
productions. And schools and colleges are generally skilled at raising money both to improve and to
sustain facilities.

What’s new is that schools, colleges and universities are increasingly interested in operating
facilities off the traditional school campus, where community groups and audiences are often
reluctant to venture.

But even when the venue is not on campus, there is always concern as to how a school-run facility
will provide proper access to community groups. And the operating policies of school-run facilities
are often restrictive for community and commercial users. It has been my experience that this option
only makes sense when we start with a school or college already identified as willing and interested
in considering the development and operation of facilities with a community, also open to different
locations.

Fee-for-Service Facility Managers

Finally, there are venues operated by professional facility management organizations. There are
generally two kinds of organizations that can be contracted by cities to run theaters:

1. For-profit facility management companies like SMG, AEG and Global Spectrum that operate
theaters, arenas, stadiums and convention centers for government and schools.
2. Nonprofit operators of existing performing arts venues in the same market area. This is a newer
trend, but one that we have seen work in several regions.

Commercial and other nonprofit operators are experienced at programming, marketing and
promoting events. At the same time, the facility can remain available to outside groups, including
nonprofit cultural organizations. There are efficiencies associated with hiring an operator with a
large, national network of venues, including advantages around programming and booking acts. And
the process to hire an outside operator is efficient and transparent, based on a “Request for Proposal”
(RFP) process. One RFP can attract both for-profit and nonprofit operators, and the city can retain
the right not to hire anyone if no suitable candidates are identified.

There are also some significant problems with this approach. Third-party operators are not naturally
inclined to manage access to facilities by local arts organizations, and there is often tension between
nonprofit users and a commercial operator. This is becoming less of a problem as these management
companies recognize the importance of working with local arts groups, but it’s still a difficult set of
relationships.

The success of this approach is often a function of the quality and care put into the bid and
contracting process. Cities must be very careful to have their goals and expectations translated into a
positive working relationship. And pursuing this option does not necessarily reduce the city’s
financial commitment to the theater, as an outside operator will demand a fee for services, as
opposed to paying rent.
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So why is it that when there is such a reasonable and rational set of options for operating theaters, so
many cities make bad choices and end up nursing empty halls with large operating deficits?

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