Competitive Strategy in Movie Exhibition Industry

This report is a case study that deals with the challenges faced by the movie exhibition industry and provides a business strategy model to overcome them.

Running head: COMPETITIVE STRATEGY
COMPETITIVE STRATEGY
Name of the Student
Name of the University
Author Note

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Executive summary
This report is a case study that s going to deal with the movie exhibition industry. The paper
is going to provide a brief summary of the case and talk about the challenges that the industry
has been facing that has negatively impacted the industry. The paper provides the business
strategy model that will help the industry make effective changes that will pave way for the
success of the industry and help the industry overcome the challenges.

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Table of Contents
1. Introduction........................................................................................................................3
2. Discussion..........................................................................................................................3
2.1 Brief summary of the case...........................................................................................3
2.2 Strategic issues in the movie exhibition industry........................................................5
2.2.1 Dominance of Studios over the Exhibitors..........................................................5
2.2.2 Digital investments...............................................................................................5
2.2.3 Decline in the appeal of films and cinemas.........................................................5
2.2.4 Technological substitutes.....................................................................................6
2.2.5 Availability of content..........................................................................................6
2.3 Relevant strategy models and theoretical concepts.....................................................7
Conclusion..................................................................................................................................8

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1. Introduction
Strategy model is basically a strategic plan that is designed to develop and improve the
process. Strategic models are widely used by all types of business in order to improve the
functionality and the operations to meet the desired goals of the business. The
implementation of strategic models in an organization or any industry helps in making
effective changes that align with the goals of the business. Strategic models help a business
by offering abstract and concrete plans (Albers, Wohlgezogen and Zajac 2016). This paper
sheds a light on the movie exhibition industry and talks about the challenges faced by the
industry and the probable changes that the industry can make in order to generate profits.
2. Discussion
2.1 Brief summary of the case
This paper is going to talk about the movie exhibition industry. The domestic box office
has been declining since there is a decline of movie goers. The increase in ticket rates has
become one of the biggest reasons for the decline of movie goers. The movie industry has
invested about 2.4 billion US dollars to convert the movie halls from films to digital
projection in order to enhance the visual experience of the movie goers. In order to increase
the sales and to influence movie goers to watch movies in the theatre the motion picture
industry has gone through considerable amount of changes in terms of their content and the
technology used. The motion picture industry consists of the three primary stages that is the
distribution, production and the exhibition of the movies. Studios these days put emphasis on
fewer projects with high budget in order to generate profits however it is a risk that the
studios these days take because it is not certain that a movie or a film is going to generate
profits because of the investment made on the moves. However it has been seen that movies
produced in the studios have generated profits not in the domestic box office but globally.

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Domestic box office previously was the only distributor present in the industry these days
studios demanding remuneration. The sales in the global context have influenced the studios
in internationalizing their content and have made them less dependent on the domestic
exhibitors that have had a negative impact on the domestic exhibitors as the studios have a
bargaining power over the exhibitors. The exhibitors usually generate revenue by selling
tickets and by concessions. The studios in America had dominance over the exhibitors that
resulted in the poor sales of the domestic exhibitors. Later the concept of multiplexes came
into existence that had negatively impacted the single screens that were prevalent during that
time. Exhibitors highly depend on the frequent movie goers and the concession as that are the
means of their income and help in generating revenues. However movie theatres are
considering other means that will help them in generating revenues because of the dominance
of the studios over exhibitors however this is an additional cost that the exhibitors need to
bare for the development and to fulfill the long term goals. The exhibitors are facing serious
challenges that are negatively impacting them. To make the visual experience better for the
people the exhibitors in USA have made investments in digital technology however all films
are not made for 3D viewing and people get confused to choose between 3D or 2D. The
experience that the viewers were getting from going to the movie theatre is slowly
diminishing. The factors that has resulted in this is the options of watching movies at home,
the cost of watching movies, the advertisements and the small interruptions. The most
important factor is the latest technology and substitution and other online streaming platforms
like Netflix, Hulu, Popcornfix and many more have garnered the attention of the people
where they get access to content they want to consume at any hour of the day. There are
several new initiatives that the exhibitors are considering in order to bring significant changes
that will not have any substitutions and that will attract the people in coming for movies like
coming up with new projection innovations, introduce new concession initiatives like cinema

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dining, waiting lounge and many more, dynamic pricing and reserved seating. This case
clearly shows how the exhibitors and the single screens are suffering in the movie exhibition
industry because of the dominance of the studios and because of the rise of the substitutes in
the market.
2.2 Strategic issues in the movie exhibition industry
The movie exhibition industry has been declining and is going to the lowest level. The
movie exhibition industry has been facing many challenges especially the exhibitors that are
resulting in the decline of the industry in the US. The strategic issues in the movie exhibition
industry are the following:
2.2.1 Dominance of Studios over the Exhibitors
The exhibitors since a long time were the only distributors of the movies. Films and
movies these days appeal to the global market and has crossed the language barrier that has
impacted in the sales and the pricing of the tickets. Studios these days demand profit shares
from exhibitors that has been negatively impacting the exhibitors as they have to pay a fair
share of the amount o the studios that are making the movies.
2.2.2 Digital investments
The exhibitors are making digital investments in order to satisfy and enhance the visual
experience of the people. The exhibitors have introduced 3D to attract people so that they
come and watch movies. However all moves that are being produced and made are not meant
to be watched in 3D. People have become very choosy while selecting the movies they want
to watch in 3D. The advancement of technology is bringing constant change in the industry
and it becomes difficult for the exhibitors to constantly make digital investments if the returns
are not fruitful.

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2.2.3 Decline in the appeal of films and cinemas
The experience of going to the movies provides a big or a giant screen, an exceptional
sound and an opportunity to step out of the house as a recreational purpose. However, the
movie theatres do not have anything extra to offer the people that may attract people to come
to the theatres and watch movies. The needs of the people are changing with time and they
believe in consuming content in utmost relaxation and at a low cost. People these days watch
the latest movies at home and there are factors like the high cost of the movie tickets, the
small hindrances while watching movies like cell phones ringing the advertisements that are
shown before the movie starts has made people watch movies comfortably in their house
rather than going out to the theatres and spending money on the tickets and the concessions.
2.2.4 Technological substitutes
The advancement of the technologies has paved way for the invention of new technology.
In the age of digitalization people have become technology friendly and have been using
digital mediums to consume content for entertainment. There have been many significant
changes in technological devices. Televisions now come with larger screens, exceptional
picture quality and good sound quality that has attracted people and has paved way for people
watching movies and shows in the television in the house comfortably and by saving the
overall cost of going to the movies and buying tickets. The use of DVD’s and the systems of
downloading movies in computers and laptops have also had a negative impact n the movie
exhibition industry. People like to watch movies in their comfort zone in their houses and
these technological substitutes have helped people in consuming content without spending
extra money.
2.2.5 Availability of content
The availability of content at home has been flourishing and rising constantly. People
prefer consuming content at home and relax. With the introduction new online streaming
services like Netflix, Hulu, and Popcornfix and many more have attracted people to consume

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content and watch shows in the house. The nominal fee charged by these services has
attracted the people as these provide many movies and other different types of content. This
has helped people to view movies and different shows according to their preferred time.
People can choose the content they want to consume from the various contents that these
services provided to cater to the needs of the different kinds of people.
2.3 Relevant strategy models and theoretical concepts
The movie exhibition industry has been facing problems because of the decline in the
sales because of less people coming to watch movies. There are many other factors that have
led to this problem because of the changes in the society as well that have had a negative
impact on the movie exhibition industry. The movie exhibition industry needs to adapt to the
changes and make decisions in order to make changes in the operations of the business in
order to overcome the problems that will help the business to sustain. The industry needs to
implement business strategy that will help the industry make effective changes in the
operations for the fruitful results of the industry. Business strategy is mainly the process of
combining all the decisions and making effective changes that will help in fulfilling the goals
of an organization. In the age of digitalization it is important for the industry to implement
digital changes that will help the industry in attracting people. The industry needs to make
digital changes in the industry that will help in attracting the people and introduce innovative
digital transformation so that people will find difficulties in searching for substitutes (Hess et
al. 2016). The industry needs to have dynamic capabilities that will help the industry to adapt
to changes in the society and come up with new strategies that will help in the operations of
the industry (Teece, Peteraf and Leih 2016). Business strategies look into all the problems
and make effective decisions to curb the problems. One of the hindrances is the distraction
that is prevalent in the movie theatre that makes people not to come to watch the movies. The
industry needs to come up with strategies that help to manage the distractions so that people

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do not face minor problems like this in the movie theatre that resists them from watching
movies in the theatre (Hassoun 2016). Business strategy will help the industry to make
operational changes like introducing new means of concession that will not be available
anywhere else and attract the people to come and watch the movies there. Significant changes
in the concession that are provided by the exhibitors need to be changed and enhanced in
order to attract people (Rod et al. 2016). The industry needs to look at other factors that will
help the industry overcome the problems. Big data analysis will be helpful in order to assess
the current and the hidden patterns, preference of the customers and the new market trends to
help businesses take effective decisions to cater to the dynamic needs of the people (Akter et
al. 2016). Effective decisions taken by implementing the business strategy will help in
making decisions on the collaborative consumption (Perren and Grauerholz 2015). The
problem that has risen in the industry of the dominance of the studios over the exhibitors need
to be solved. However authors have argued with the fact that studios should demand
remuneration as the exhibitors are gaining profit from the movie the studios have been
making and producing and US has been supporting the dominance of the movie exhibition
industry in their country (Moody 2017). Business strategy will help to make certain relevant
changes that are required for the success of the industry in all the sectors from operational to
management.
Conclusion
The movie exhibition industry has been facing many challenges that have resulted in
the poor sales of the industry. With time the needs of the people are changing and the
industry needs to implement business strategies that is going to help the industry to assess all
the roots of the challenges in all divisions and departments of the industry as well as the
external market in order to make effective decisions that will help the industry flourish again
like it used to do before.

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Reference
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