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The Movie Exhibition Industry Final
The Movie Exhibition Industry Final
Exhibition Industry
By:
MGMT 7012
Aditya Mubarkapuram
Case Analysis
Deemah Gabarty Under the supervision of:
Inas Abdou Prof. Osita Nwachukwu
Nahla Abdelhay
Content
- The Movie Picture Value Chain
- The Business of Exhibition
- The Major Exhibitor Circuits
- Trends in the general environment
- Five competitive forces analysis
- Challenges for Exhibitors
- Recent Exhibitor Initiatives
•https://www.youtube.com/watch?v=QvrnH
LOXABc
•Since 1995, domestic box office receipts
overall declined 5.2% to $10.36 billion as admissions
declined to their lowest level.
The three main stages which form the motion picture industry THE MOTION PICTURE INDUSTRY: CRITICAL ISSUES IN PRACTICE, CURRENT
RESEARCH & NEW RESEARCH DIRECTIONS 2004
Studio production
• The main core of the industry.
•Studios focus on 12-24 year olds -18% of the U.S. population - this group purchases 30%
of all tickets.
•There are main 6 studios which are responsible for 81% of the box office receipts. (20th
Century Fox - Warner Bros. Pictures - Paramount Pictures - Universal Pictures - Sony
Pictures Entertainment - Walt Disney Studios)
•In 2014, the top 6 studios produced 99 major pictures, down from 110 in 2000.
•Over 71% of U.S. studio revenues are now international.
Distribution
•Regal is the largest with 7,367 screens in 574 domestic theaters -focuses on mid-size
markets using multiplex and megaplexes - average nearly 13 screens per location.
- https://www.youtube.com/watch?v=XTiTpKPJTXM
•AMC is the second largest domestic exhibitor with 4,931 screens in 345 theaters -
average of 14 screens per location- Concentrating on urban areas near large population
centers- Focusing on 3D, IMAX, and other premium viewing experiences.
The Major Exhibitor Circuits
•All revenues for exhibitors come from three sources which are box office receipts,
concessions, and advertising.
•Box Office Revenues: Ticket sales has the biggest share as they constitute two thirds of
exhibition business revenues.
•Concessions: At an average of $4.36 per admission, concessions constitute 30% of
exhibitor revenues.
- Concession are not only boxed candy, popcorn, and soft drinks now include a variety of
food, drink.
•Advertising: The most attractive source of revenues for the exhibitors.
- Constitutes just 5% of exhibitor revenues.(highly profitable and growing)
The Major Exhibitor Circuits
● The rental fees varies and it depends on size of the circuit and the time and seat
commitment made to a film.
● Cost of film gradually decreases by each week.
● In the first week the cost of film would be around 80-90%
● It gradually decreases to 10-20%
● Costs are influenced by purchase volume.
● Bigger chains are able to negotiate better prices on everything such as from popcorn
to sodas.
Trends in the general environment
● Largest audience for movies is from 14 to 24-year old making up 18% of population, and
30% of total ticket purchasers
● 10% of population are frequent moviegoers who constitute 50% of all ticket sales
Trends in the general environment
● The movie production costs are increasing even faster than the inflation since the use
of special effects being massively increased
● Dynamic Pricing
Trends in the general environment
● Legal: when the theatres threatened that they may boycott Universal studio features.
The plan was scrapped due to the theatres threats
● Political: the threat that exhibition business faces when governments ban movies that
could have increased the box office revenue
‘’The Interview’’
Trends in the general environment
● Cost, interruptions such as cell phones, expensive concessions & ads prior to show
● Online streaming lead movie rentals to expand into physical DVD channels with
subscription such as Netflix and Amazon Prime; at home viewing option
● Type of service or product offered especially that films cross cultural and language
boundaries and appeal to a global market where over 71% of U.S. studio revenues are
now international
Trends in the general environment
● Conversion to digital screens reduced the exhibitors’ costs and increased revenues
● Studios have eliminated the costs of film print. However, film rental fees,
● 3D movies add more to the ticket price with the introduction of 3D content
Trends in the general environment
● Over 71% of U.S. studio revenues are now international; domestic receipts average
annual growth rate of just 2%, while international growth rate is 11% annually
● The movie industry is a highly concentrated and requires huge amounts of capital
● AMC, Cinemark, Carmike and Regal theatres are positioned in geographic markets that
● Top ten studios form more than 90% of box office receipts that gives the studios more
power in negotiating and pricing
Five competitive forces analysis
● Home viewing technology available at affordable prices. So, buyers became more
powerful
● Netflix and Hulu subscriptions, consumers have even more power to choose between
different options
Five competitive forces analysis
● Netflix and Amazon offer HD formats and started to offer content in the 4K format
These substitutes threaten the market share of major exhibitors because they have a direct
● There is little differentiation in the offerings of exhibitors where prices differ little, the
same movies are shown at the same times, and the food and services choices are
nearly identical. Competition between theatres can include distance from home,
The Home Viewing Substitution The Home Viewing Substitution − Technology Home viewing- Content Availability &
Timing.
lower cost, avoidance of In 2014, 77% of U.S. these streaming services are
pre-movie advertisement households had at least one becoming a direct
and the interruptions by HD television allowing for competitor to both studios
cellphones. very high quality visual and exhibitors as they move
images and audio and into content development.
speaker components Netflix, for example, is
packaged as low cost home producing both television
theaters series and original movies.
Recent Exhibitor Initiatives
Projection Innovations
-IMAX format utilized film that was 10 times the size of that used in
standard 35mm projectors. IMAX is typically offered at a premium of $3 to
$7 per ticket.
This expanded in-lobby dining causes Many theaters have adopted an in-theater Several circuits are targeting the high end of the
many theater lobbies to resemble mall dining format where orders are placed theater market, focusing on the experience of the
food courts. Some theaters now configure from the seat in the theater by a wait staff. theater with luxurious settings and upscale food.
the lobby around a bar, with expanded and Theater chain iPic offers perhaps the most
upscale fare, beer, and alcohol service. luxurious theater experience available outside of
a private screening room, complete with
reclining leather chairs, pillows, and blankets.
- Advertising Initiatives - Multi-Entertainment Venues