Free Essay Sample «Movie Theater Business Case Analysis»

«Movie Theater Business Case Analysis»

It is difficult to underestimate the level of competition in the movie theater industry. With the development of video, audio and Internet technologies, which become more and more accessible for home use among the wide audience, the level of attendance in movie theaters is constantly decreasing. Movie theater managers make all possible attempts to attract people by providing video and audio of the highest quality, and extended social experience shared with other moviegoers. Though, there is still much work to do in the movie theater business.

The first problem the discussed business has is the development of mobile devices like smart phones and tablets. They have a comparatively big screen and resolution to make the process of movie watching a pleasant and a convenient experience. Of course, it can be called a compromise between quality and convenience. The quality of movies that are watched on such small screens has much to be desired, especially comparing to the quality delivered by movie theaters. Though, their quality can be called acceptable, which is enough for the majority of people. In addition, there is a possibility to watch movies everywhere and every time, when there is a free time. Such mobility is a great advantage of smart phones and tablets, which is one of the major challenges the movie theater industry faces.

Another technological challenge movie theaters have to deal with is the popularization of home theater systems. Nowadays, it is possible to watch movies at home in high definition, on flat screen and with surround sound. In addition, there are no such inconveniences like strange people around and obligation to go to another place to watch a movie. It is possible to enjoy the piece of art a person wants, and it does not matter what the time is and whether a movie is shown in the theater schedule or not. Home theater systems become more affordable for the majority of the US citizens, so they can be definitely called the constantly developing enemy of movie theaters. From a financial point of view, home theater systems can economize much money, because tickets to a movie theater cost quite a lot and the amount of films a person can watch for his/her money is strictly limited. At the same time, a person can buy his/her home theater once and enjoy thousands of movies for that sum of money.

Illegal downloading of audio and video content is another great problem the movie theater industry and film producing studios face nowadays. The active development of online video resources like YouTube and the growing popularity of torrents are the serious threats for the licensed movie industry. Not many people think that it is not right to download a movie from the torrent tracker and watch it at home, because the art is supposed to be created for their pleasure, but not for a never ending paying for copyright. The author of the case study compared the movie industry with the drug business, where producers are pushers of drugs and consumers have to pay more and more, every time they need another doze. Usually, when they need that doze, they come to a movie theater and pay for their visual drugs.

Going to a movie theater is inconvenient for some people, who prefer watching films in a comfortable atmosphere. According to the polls, conducted by movie theater managers, many people find seats in movie theaters uncomfortable, they do not like crowds and noise around them. In addition, they said that there are too many commercials and previews before a movie. All these issues lead to the fact that not that many people go to movie theaters nowadays, and it became a kind of “going out”, because it is easier to watch a film at home with the help of a tablet or home theater system.

All previously mentioned problems and challenges effect the movie theater industry greatly. In the case study, the statistics about ticket sales revenues from 2011 are shown. The economic crisis affected the movie theater business. People stopped going to a theater often, because they had to spend that money on more obligatory things like buying food, clothes and paying for children’s education. In 2011, the attendance rate in movie theaters decreased by 4.8%. Movie theater managers decided that it might be possible to increase the revenue from ticket sales in the future year by setting a higher price, luxury places in theaters and by showing the top-rate movies that will certainly attract people. Though, the experience of 2012 showed that their attempts were not productive and the attendance rate did not increase, comparing to 2011.

There are approximately 39,000 movie theaters in the United States nowadays. There are four major theater chains: Carmike Cinemas, Cinemark, AMC Entertainment and Regal Entertainment. The competition between these companies is extremely tough, because despite all innovations, the biggest part of seats in their movie theaters remains free. Nevertheless, there are certain issues that might be useful in a big movie theater chain and that might affect ticket sales rate in the future.

The first initiative that needs to be implemented is to lower ticket prices and advertize it. Movie theaters lack proper advertising, because it is considered that everyone knows about them without any promotion. Implementation of various discounts for children and students is also an advantage that might increase the level of movie theater attendance. The price of tickets needs to be reasonable even for the least sponsored teenagers. As the result, movie theaters will profit more than it used to be with the policy of high prices, because more people will buy tickets.



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