Competitive Rivalry in the Movie Theater Industry Research (Research Paper Sample)

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Competitive Rivalry in the Movie Theater Industry
There is anxiety among players in the film industry. With each passing year, the number of people visiting the cinema to watch movies has been on the decline. The traditional sources of revenue in the industry continue to record increasingly lower returns than before. DVDs, a medium that most filmmakers have depended on for years as the main source of sales for their product are losing out on sales. Advancement in technology and changes in viewers’ medium preference have presented a challenge the film industry players. The result has been varied views on the best way forward with members of the various schools of thought promoting their stands terming them as the most logical in tackling challenges facing the industry. Better comprehension of the trends in the film industry requires an exploration into the effect of the gap between the release of films in the theaters and at home, medium of delivery and the adoption of modern technologies on the growth and performance of the industry.
Several elements contribute immensely to competitive rivalry in the film industry. One of them is the duration between home and cinematic release. Different production companies tend to lay out different strategies that aim to see them draw the greatest benefit from an optimum gap in the cinematic and home release events (Hudson par. 3). Some film production companies prefer sticking to the old time of about three-to-four months while some having already began exploring a shorter cinematic, home release duration gap. In the case of the former, the basis of their argument is that with a big gap, film companies cash in on income from cinema ticket sales. According to them, reducing this period means fewer people will be visiting the movie theaters resulting in low revenue and losses to the production firms. Those in support of a short cinematic home release gap argue that reducing the duration will lead to high DVD sales as most people will prefer buying the DVD’s and watching their contents from the comfort of their homes. Another crucial element is the inception of modern platforms of accessing films that are more cost effective. Mediums such as the television and the internet are associated with lower storage costs, less bulk, time-saving and convenience that ensure efficiency. With their adoption, film production companies have to find ingenious ways of surviving while avoiding losses.
The number of film films in the United States is high. However, there are a few major firms that tend to control the whole industry chocking out the small ones. Columbia Pictures, MGM, Warner Bros and 20th Century Fox, are among the biggest company (Gimmy and William 37). Others in the list that forms the top eight firms are Paramount Pictures, United Artists, RKO Radio Pictures and Universal Studios. America’s film industry (Hollywood) boasts of employing over nineteen million people as of 2013. With increasing competition, some of the large companies mentioned teamed up to form large conglomerates and take advantage of each other’s strengths while also benefiting from the resultant economies of scale. Their boards of directors consist of persons of great influence in government and the private sector who use their power to ensure biggest gains for their firms. Their respective companies have a significant impact on industry standards. They sometimes collude to make sure that their interests come first during policy formulation. Such big companies have recorded some degree of success despite the immense challenges facing the industry. The managements of the companies always strive to ensure that their companies receive recognition each time there are major events such as awards and political campaigns.
All the film companies face different risks that may affect them differently depending on their size and culture among other factors threatening to bring about a collapse of the movie industry. The risks fall into the categories of structural, sensitivity and growth risk. Structural risks result from entry barriers, a mature lifecycle and a generation that has embraced technologies that are relatively new such as DVDs, the Internet, personal computers and home theater systems (IBISWorld 4). With regard to growth risk, elements such as revenue amount, the size of the audience and number of persons that the film industry employs come into play. Recent years have not experienced much growth in revenue collection due to piracy, dwindling cinema audience, a decrease in cinema-home release gab ...