MOVIE THEATERS

OVERVIEW
History
First-release retail market for films
Primary medium for watching movies on large,
wide screens
Delved into Cinerama and CinemaScope before
IMAX

5000
Admissions (millions)

WWII
4000
Migration
3000
2000 Great
Depression
1000
0
1920 1930 1940 1950 1960 1970 1980 1990 2000
Year
 FIVE-FORCES ANALYSIS
Substitutes Barriers to entry
HDTV's, VOD, pay-per-view, VCRs Remain high
and DVDs, online streaming Overbuilding of multiplex
Games, books, internet browsing cinemas in the 1990s
Buyers Rivalry
Majority is still 12-24 years old Very high due to expensive
Changing over time barriers to exit
Suppliers Three models: (1)low-cost,
Major and minor production (2)quality and (3)cost-efficincy
studios
12-24 years 25-39 years 40-59 years more than 60

3% 7%
100%
11% 10%
17%
75% 26% 25%
33%
50% 28%

25% 60%
43% 38%
0%
1975 1990 2005
 STRATEGIC ISSUES
Little Bargaining Power
More channels for studios to distribute films to
No control over the window between theater release and video
release

Sensitive to substitutes
Hard to differentiate from home cinema industry
Competing for attention

Diminishing value for customers

High price of complements to offset low profits
Focusing on wrong target audiance
 OPTIONS FOR GROWTH
Differentiate themselves
Cater to niche segments
Use smaller theaters for other purposes

Continue conversion to IMAX

Relatively low conversion costs
Advantage over home cinema

Better understand core market

Target more mature audiences
Broaden business focus
 OUR RECCOMENDATION
INTRODUCE SUBSCRIPTION MODEL

Reason
Bring in more customers
Stabilize revenue stream

Implementation
Create pricing structure dependent on time of release
Would work best for small-town, independent theaters

Risk Mitigation
Discount concessions to encourage sale of complements
Introduce nights for classics or movie marathons