3 pages/≈825 words
Communications & Media
Rivalry in Movie Theater Industry (Essay Sample)
The paper was about competitive rivalry in the movie theater industry source..
Student’s Name Professor’s Name Subject DDMonthYYYY Competitive Rivalry in the Movie Theatre Industry Introduction Movie theatres have been the main source of entertainment for almost a century. In the recent past, the movie theatre has undergone numerous changes that were not only in technological improvement and movie diversification, but also in the venues (Hudson par, 7). The changes in the theatre industry have been majorly influenced by recent technological advancements and marketing (Chisholm et al. 132). The current changes range from stadium seats, impermanent arm rests and cup holders to online ticket sales, digital projection and surround sound format. At the same time, the level of competition in the industry is very high. This essay examines the extent of competitive rivalry in the theatre industry. Market analysis The movie theatre industry is currently facing overcapacity and heavy debt that resulted from overexpansion of the industry in late 1990s (Chisholm et al. 133). The high levels of competition in the industry resulted to enormous megaplexes expansion. The overall growth in the industry was driven by both the competitive positioning desire and economies-of-scale of new units (Hudson par, 20). Most of the new players in the movie theatre industry decided to build new megaplexes near existing theatres, which automatically affected the profitability of the old theatres. The diminishing cash flow from old theatres is a major problem facing the industry. This has resulted in several theatres shutting down, selling or down rating, which affected the value of the theatres. Furthermore, box office profits that used to be generated through ticket sales have been consumed by increased expenses resulting from overcapacity (Chisholm et al. 132). Moreover, movie studios get the larger portion of the revenues sourced from box offices; the availability of multiple showings has limited to the duration of showcasing of movies in theatres (Hudson par, 22). However, the recent scaling of most movie theatres has resulted to the competitiveness of the industry being stronger. Major players in the industry have consolidated their competitiveness through merger and acquisition enhancing their competitiveness. Risk overview The main business activities in this industry are (IBISWorld 2): Operating movie theatres Operating drive-in movie theatres Exhibition of motion pictures for airlines Exhibition of the film festival The main risks in this industry are sensitivity risk, growth risk and structural risk. Generally, the risk forecast of the movie theatre industry is expected to be low due to low revenue barrier and the barrier t...
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