The Movie Exhibition Industry: 2015

 Perform comparative situation and strategy analyses for the four companies with
dominant market share. What are the advantages and disadvantages for each of
the industry’s top competitors?

An overview of the top four competitors' business situations and approaches

provides valuable insight for industry participants seeking to improve performance. The
following table presents a comparison of the market focus, facilities, pricing, costs,
revenues, income, and margins for each of the four companies which dominate the
market. A breakdown of international presence and the advantages and disadvantages for
each circuit are also included.

Regal AMC Cinemark

(w/ United Artists and (w/ Lowes and Carmike
(w/ Century)
Edwards) Wanda)
Market Focus Mid-size Urban Smaller Rural
# of Locations 574 345 335 274
# of Screens 7,367 4,931 4,499 2,897
Ave. Screens/Site 12.8 14.3 13.4 10.6
Ave. Ticket Price $9.08 $9.43 $7.02 $7.23
Attend./Screen 30,038 N/A 38,661 21,414
Revenue/Screen $272,924 N/A $271,409 $154,900

Regal AMC Cinemark

continued (w/ United Artists and (w/ Lowes and Carmike
(w/ Century)
Edwards) Wanda)
Admissions (as % of Rev) 67% N/A 63% 62%
Concessions (as % of Rev) 28% N/A 32% 33%
Exh Costs (as % Adm Rev) 52% 53% 56% 55%
Concession Costs (as % of
Concession Revenue)
13% N/A 16% 12%
Bldgs/Wages/Util/Other (as %
of Total Revenue)
57% N/A 46% 55%
Op. Inc. per Admission $1.39 N/A $2.87 $0.72
Net Profit Margin 3% N/A 7% -891%
International Theaters 0 153 160 0
International Screens 0 1,344 1,177 0
Advantages  Most power to  Located in  No competition,  Highest concessions
bargain with studios largest cities or 92% of markets as % revenue
& other suppliers population sites  Best price point  Markets have few
due to  Leads industry in  International entertainment options
organizational size operation of presence  Good price point
 Quality theater multiplexes  Highest operating  Lowest debt
setting assumed  Focus on 3D, income per
 Highest revenue IMAX, and other admissions
per screen and premium viewing  Greatest total assets
admissions as % experiences  Highest NP margin
revenue  International and operating income
 Largest domestic (Asian) scope per admissions
exhibitor through Wanda  Completely
 Lowest exhibition acquisition digitalized
costs as % revenue  Expanding  Best utilization rate

Movie Exhibition Industry - 1

 The Movie Exhibition Industry: 2015

rapidly  Strong financial

performance
 Low profit margin  Highest ticket  Capacity may  Small market size
 Highest debt prices exceed market size (pop’ns < 100,000)
position  Greater direct  High exhibition  Facility quality may
 High bldg./wage/ and indirect costs be inferior
Disadvantages util/other costs competition  High concession  Lowest utilization
 No international costs rate
presence  Low revenue per
screen
 Net loss in 2014

 Evaluate the revenue sources and major costs for movie exhibitors. Discuss how
the income structure of their business impacts their financial results.

A close look at the theater business model reveals that cinema managers have
limited ability to impact revenues with existing tangible and intangible resources. In
addition, restricted power or flexibility to control product, facility, and labor costs leaves
operating margins near just 12% across the industry. These constraints severely limit
financial control and profit potential for theater owners.

Movie Exhibition Industry - 2