Competition Trends in the Movie Theater Industry (Essay Sample)

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Competitive Rivalry in the Movie Theater Industry
Entertainment has and will always be a principal aspect of the human race. In this regard, it is possible to assert and substantiate the fact that the movie theatre industry is one of the most magnanimous conduits for the dissemination and expression of artistic entertainment. However, the movie theater industry's position in the grand pyramid of modern entertainment is on choppy waters primarily because the industry continues to lose its clientele at an unprecedented rate. Consequently, the sustainability and general business dependability of the movie theatre industry is no longer assured. Conversely, this does not necessarily imply that the movie theatre will become extinct anytime soon.
The one constant factor in the movie theater industry is the competitive rivalry. The major bone of contention among players in this industry is clientele. The principal driver of this competitive rivalry is market control. The studio with the highest number of royal moviegoers gets to retain the largest market share as well as pockets substantial revenue percentages. For instance, household names such as Paramount Pictures and Walt Disney have effectively managed to wedge out the completion in their respective genres. The results of this competitive advantage include but are not limited to oligopoly and market domination.
Another factor which is driving competitive rivalry in the movie theater industry is technological convergence. Long gone are the days when initial or first releases of any film could only be seen in movie theaters. Nowadays, the proliferation of pay television, Video on Demand (VOD) services, home cinemas, and DVDs (digital video disc) are rewriting the rules of competition in the movie theatre industry. Movie theatres are now being forced to adapt to and adopt these technologies in order to retain and attract a larger customer base. Pursuant to Silver and McDonnell, the amount of revenue accrued from a theatrical release accounts for only 30% of the total revenue with the rest coming from DVD and VOD releases (n.p).
As a direct result of technological convergence, product differentiation is now a prominent factor when analyzing competitive rivalry in the movie theater industry. According to IBISWorld, competition in the movie theater industry is high and is on the rise (7). This fact has spawned off two forms of competitive rivalry, that is, internal and external competition. The question of ticket pricing and film offering plays a central role in internal competition and goes hand in hand with product differentiation. Renowned film companies such as 20th Century Fox Studios and Lions Gate Entertainment implement cutting edge product differentiation strategies which allow them to target different customer base with the same product but via different channels. On the case of the latter, the movie theatre industry faces competition from alternative methods of entertain