Competitive Rivalry in Movie Theatre Industry (Essay Sample)

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Competitive Rivalry in the Movie Theater Industry
Introduction
At present, most of the movie theatre industries are facing fierce competition in the USA. The competition is driven by the need to have a large market share, maximize revenue and meet the consumer demand and taste. However, the overall barriers to entry in the movie industry are expected to lower competitions in the long run. The low revenue volatility is also expected to keep investors lured into the movie industry. The paper tends to examine the critical factors that have led to the intensified competition rivalry among the players in the movie theatre industry.
The barriers to entry in the movie theater industry are high due to expensive and sophisticated equipment required. The existing players, therefore, compete for market share and revenue maximization. These firms have come up with strategies aimed at generating more revenue compared to their rivals. Some firms have limited their operations to a specialization of certain genres. Specialization strategies enable them to meet the consumer demand as there are more flexible to adapt to the changing business environment. However, they are limited to some viewers; this gives their competitors a market gap. Much of the competition rivalries arise from both internal and external factors.
The internal competition by movie theatre industries is based on film offerings, ticket prices, auditorium quality, and the concession of offerings (). The demand for a given movie based on its popularity gives a certain theatre greater competitive advantage. The ability of such theater to secure licenses for the exhibition of the popular movie ensures that the theater gains more than its competitors. However, for any given theater to secure a slot to air a season hit movie, it needs to have a strong link between the distributing companies. Additionally, they also need to have advanced well in technology such as the ability to show 3D films. Since most movie theatres in the industry have access to these resources, there is a fierce competition for winning a bid to show a given season hit movie ( com). The firm that wins enjoys a greater competitive advantage compared to its rivals. It can maximize it revenue and generate a greater market share of moviegoers associated with it. Ticket pricing depends on the auditorium quality rather than the movie being exhibited. Theatres with a quality auditorium reap more on ticket prices compared to their rivals for the same movie. Firms have put up strategies to maximize their revenue when exhibiting movies such as selling popcorns and other refreshments during the movie session. Others give ticket discounts as well as customer loyalties to retain their customer base.
Movie theatre industries have faced external competition brought about by technological advancements and economic challenges. In recession periods, patrons spend less of their income on luxuries such as entertainment. The emergence of home-based entrainment and internet has also affected the sales turnover rates among movie theater industries. Most of the people now prefer home based entrainment with few visiting movie theatres on special occasions. The trend has made movie theatre industries to charge high prices when exhibiting a movie for the first time or even when a given movie is on demand.
The competitive rivalry has further weakened movie theatre industries with most of these theatres showing a given movie content in a different format (News.bbc.co.uk).It has made the theater lower prices to attract patrons. The rise levels of online content streaming have left movie theatres with a fewer customer base. Movie distributors continue to reap high even after theatrical exhibitions have been made. Most of the public watch a given movie using their smartphones and, via the internet as opposed to theaters and purchase of movie discs. As competition intensifies on market control, the movie theatre continues to face a decline in revenue. The industry is also faced with high barriers to exit. Movie theatres and cinemas have sophisticated building designs that are not easy to convert into other forms of business. Their equipment and machinery are also meant for the industry alone with few being converted to other usable forms. Thus, these barriers to exit have contributed to rivalry among the movie industry for the survival of the firms.
In conclusion, movie theatre industries need to develop reforms and strategies to reduce the competitive rivalry. They need to focus more on product differentia...