The Movie Exhibition Industry Case Analysis

The movie Exhibition Industry Case Analysis

Fiona Doda

Emmanuel College

The Threats of New Entrants 

The Movie Industry has changed distinctly through the years, but the threat of new entry is low and does not affect big exhibition movie theaters such as: AMC, CINEMARK, REGAL and Century. We have seen through time how small local movie theaters have closed the doors because they could not compete with the lifestyle business strategy and demands big movie theaters offered. It’s very costly to open a movie because of many equipment, operation and Information technology involved to keep the theatre running smoothly daily. Also, many movie studios require expensive payment to authorize any movie theater to feature their movies, and any start up movie theatre do not have the significant capital to buy the rights to show. The industry has high profits, many new entrants will try to enter into the market. However, the new entrants will eventually cause decrease in overall industry profits. Therefore, it is necessary to block the new entrants in the industry. following factors is describing the level of threat to new entrants:

• Barriers to entry that includes copy rights and patents.
• High capital requirement
• Government restricted policies
• Switching cost
• Access to suppliers and distributions
• Customer loyalty to established brands

Bargaining Power of Customers 

• The power of buyer its extremely high for the movie Exhibition Industry because their success is in the foot traffic and sale tickets sold. With the help of information technology many people prefer to not leave their house and spend a considerate amount of money to watch a movie where it will be on demand in a month of its launch or can find it online for free and no leave the comfort of their house. Maintaining a movie theatre is highly costly, which leads to a monetary increase on movie tickets. The buyer power is high if there are too many alternatives available. And the buyer power is low if there are lesser options of alternatives and switching. Following factors will influence the buying power of customers:
• Bargaining leverage
• Switching cost of a buyer
• Buyer price sensitivity
• Competitive advantage of company’s product

Bargaining Power of Suppliers 

This refers to the supplier’s ability of increasing and decreasing prices. If there are few alternatives o supplier available, this will threat the company and it would have to purchase its raw material in supplier’s terms. However, if there are many supplier’s alternative, suppliers have low bargaining power and company do not have to face high switching cost. The potential factors that effects bargaining power of suppliers are the following:

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