Competitive Rivalry (Essay Sample)

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Competitive Rivalry in the Movie Theatre Industry
Competitive rivalry is an important aspect of the movie theatre industry. It can be considered from the internal business environment of the movie theatre industry (competition between individual players in the industry) and from the external criterion (competition between the movie theatre industry and other entertainment industry players). The movie theatre industry today has undergone major shifts in terms of the level of competition and the fairness aspects. It is one of the industries that have reached maturity as depicted by the slow growth, adaptability to technological changes and the wide acceptance of its products. The key components of competitive rivalry involved in this industry are the industry growth rate, product differentiation, and the customer’s buying power (‘IBISWorld Industry Risk Rating Report 51213’, pg 5). The manipulation of one or a combination of these elements determines the degree of competitive rivalry in the industry and the market position of the firms involved; the growth rate of the movie theatre industry will influence whether firms like Walt Disney and Warner Bros. will invest more funds and time in developing better products though it is every company’s dream to experience a positive growth rate of their industry.
As expected, the movie theatre industry has become a hub of competitive rivalry within itself and the external players like the cable/satellite TV. With the technology dynamism, Walt Disney and other players have had to incorporate innovation to maintain their market shares. They have integrated 3D technology in its cinemas to convey a better experience to their viewers. Hudson’s Is cinema facing its final curtain? shows that investment in quality equipment like projectors and better screen technology bring that competitive niche a company desires over its opponents. The key players in this movie theatre industry are the Walt Disney, Sony Entertainment, Warner Bros., Twentieth Century Fox Film, Paramount Pictures Corporation and the Universal City Studios. They have differentiated products considering the types of movies screened by each. Product differentiation enhances the competitive rivalry aspect, but these players also face off competition from the external factors.
Inclusion of these external players in the movie theatre industry brings with it a different competition aspect which if unchecked threatens both the growth and survival of the movie theatre industry. The external players like the online streaming sites, cable and satellite TVs ease accessibility of the films produced, a factor that has to be regulated in the movie theatre industry. To protect both the interests of the owners and stakeholders in the industry, associations have been formed to check and regulate certain aspects of the movie theatre industry. NATO and MPAA are just a few of such organizations. The National Association of Theatre Owners (NATO) provide guidance on federal policies concerning the film industry (‘IBISWorld Industry Risk Rating Report 51213’, pg 7). The Motion Picture Association of America, on its volition, is an activist of copyrights and protection of intellectual property. Advancements of these missions will at least introduce regulatory aspect in the movie theatre industry. Profitability in this industry may be a mirage, but sticking to the strategies drafted out by these associations would reclaim it.
Significant strategic factors determine the survival of the movie theatre industry. Over the past decade, statistics has depicted a low Industry Value Addition (IVA) for the movie theatre industry. The IVA depicts the industry’s overall contribution to the country’s GDP and can be used to measure growth. Duane Ireland explains how a slower growth rate impacts competitive rivalry. Slower growth rate depicts attainment of a prime market size. Many firms in the movie theatre industry have a set number of loyal customers with a pool/section dedicated for the swing customers. These companies would incorporate latest innovations and strategies to gain a major share of these swing customers. The key players have set the bar, and their established culture have been used as success stereotypes by the new entrants and smaller firms. Liaising with the major producers qualifies their product differentiation as they would get the latest films before official release to introduce satire in their marketing mix. This is a great tool as it usurps the public inquisitiveness on the type and details of the film prior its official release, for example, the cooperation between Hollywood and the Twentieth Century Fox Film Corporation. Subscriptions to these theatres have also been adopted as a strategy to maintain customer base (‘IBISWorld Industry Risk Rating Report 51213’, pg 6). The subscribers comprise the loyal viewers majorly and the revenue accrued helps keep the companies afloat. Though these strategies have been stereotyped, communication between the companies, the producers and the customers is key to their success.
Communications technology has become a blueprint for success in the movie theatre industry. Newer technologies like the Sound Retrieval System (SRS) hav...