The Competitive Rivalry in the Movie Theater Industry (Essay Sample)

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Competitive Rivalry in the Movie Theater Industry
Introduction
The movie theatre industry is at the mature stage of the life cycle, demonstrated by slow technological change, slow growth and huge market acceptance. The rivalry in the movie theatre industry is high, and it is facing increased competition from emerging sources. An analysis of the competitive rivalry of the industry offers an in-depth view of the nature of the industry.
In the United States, most movie theatre companies have similar cultures in terms of marketing, ticket prices, movies exhibition, marketing and technology. For example, the three main movie theatre brands in the US: AMC Theatres, Regal Cinemas, and Cinemark have the capabilities for 3D and IMAX (IBISWorld 9). Although, in marketing, AMC Theatres is the top in the industry, Regal Cinemas and Cinemark have adopted inbound marketing through various marketing mediums. As the movie theatres move to 3D and digital technological systems, ticket prices are expected to increase, which allow the industry to raise its revenues. The advances in the communication technological systems have assisted in stimulating the demand for screening (IBISWorld 9). The communication equipment offered by IMAX and 3D systems offers an experience that consumers cannot experience at home. The capacity to display 3D films stretches the capacity of the movie theatres range of exhibition options may stimulate people seeking the 3D movie experience.
The most competitive elements in the movie theatre industry are the number of firms. In spite of the growth in box office revenues, fewer people are going to movie theatres. In the United States, the number of movie tickets sold has fallen from 1.58 billion tickets, in 2002, to 1.22 billion in 2011, which represents a dive of more than 20% (IBISWorld 4). The chief source of complexity in the industry is high competition. The industry is starting to compete with itself, by developing movies of different format at the same period. The high competition is forcing businesses to incur huge costs to distinguish their offerings, sustain low prices to stimulate demand or both. However, movie theatres will benefit from high barriers to entry, which shields the industry from high competition in the long-term by minimizing the ability of new companies entering the market (IBISWorld 7). The popularity of major films is a main demand determinant factor in the movie theatre industry. The ability capability of a movie theatre to secure a license to show biggest hits is a theatre key competitive advantage. Major associations with movie distributors, which have a solid schedule of film releases ensures that the theatre offers the most popular films (Vogel 19).
The digital revolution will devastate the film industry. External competition from satellite TV, cable, and online streaming platforms are increasingly gaining popularity and reducing the demand in the movie theatre industry (Hudson). The fast penetration of in-home entertainment equipment, for in