Competitive Rivalry in the Movie Theater Industry (Essay Sample)

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Competitive Rivalry in the Movie Theater Industry
Introduction
The film business has gone through major changes in the recent past. The business has come under tests especially from consumers who choose to watch movies from their homes as opposed to going to the movie theaters. It is clear that consumers have the power to choose how to acquire movies whether it is online or from a rental business point. Due to these deviations that have occurred in the business, the film industry needs to be appraised to understand the rivalry in the movie theater industry.
There are various forces that cause rivalry in the movie theater industry most of which can be covered using the porter five model of business competition. The buying power in the film industry is presently high, which means that the buyers have got a variety of choices from which they make their purchases. In this business, the buying power was once low when technology had not developed in the world. Today, online streaming and other automations that allow consumers to acquire the films easily have changed the competitive buying power of consumers (Movie Theaters in the US 6). When buying power increases, this causes high competition in the industry which in turn makes the industry to become unattractive for investors.
Another force that explains the plight of this industry is the power of suppliers in the film industry. The high supply power that has recently emerged means that movies can only be acquired from certain places and not others. This has made the industry to change because for a movie to be rented, it has to be acquired from the company producing it. High supply power means that the rental companies have to purchase from the same enterprise supplying the movie despite the policies they have put in place. This has elevated the competition within the industry which makes it unattractive for other investors.
An additional competitive factor in the movie industry is the threat of substitute goods. This is rather existent in the movie business because all movies are separate entities from one another. The movies can really not be substituted by others. The threat of substitution however, has come about with online movie providers which include: amazon, Hulu and Netflix (Hudson 1). All these sites provide movie download services that are somewhat less competitive. However, with the low threat of substitute services, the movie industry certainly has become attractive to business persons.
The threat of new entrants in the business is also low since there are many barriers that do not allow many business people in the industry. One of the major barriers that stands in the way of new entrants is the cost of beginning a movie supply business. The cost of making software and the ease of online streaming is a huge barrier to any new competition that can come into the picture. This low threat of competition therefore, makes it easy for many players to invest in the industry.
Rivalry in the movi...