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A comprehensive analysis of the five competitive forces
Movies have remained democratic in time despite the increase in number of competitors in the industry. Amongst these competitors include: motion picture industry, which set a record of $9.63 billion in the box office in 2007. This was a five percent increase from the previous year, 2006. The major contributor to these profits for the motion picture industry is the level of organisation of the industry, which involve studio production, distribution and exhibition. Through these stages the studio development is realised to have a high increase in the profit index. The other competitor is the paramount pictures, which set a record of $140 million for the iron man movie. Therefore, from the domestic box office it accounted for $318 million. Warner brother’s being in the list of the competitors set a record of $20million less giving a gross domestic box office of $44 million for their movie speed racer. Amongst these industries some perform distribution duties in collaboration with their competitors. For example finding nemo a co-production of pixar and Disney then the Disney’s Buena Vista handled the distribution duties. Hollywood being in the market competition it had offered the comfort of the summer heat. This was hard for people to realise and therefore capturing more audience at less expense.
The level of competition that can be anticipated amongst industry rivals
Since the industry competitors focuses on profit maximization, the four leading competitors have with time considered ticket prices as their major competition. The differences are base on the pricing, the same movies but different prices services offered by these companies are almost the same. The other factor that contributes to the increased competition amongst these theatres is the distance from home, location of the restaurants, and the parking convenience. Another factor that these theatres have captured in their competition is the geographic location of the markets and the size of the business to run. These businesses range from the mid-sizes to megaplexes.
The advantages and disadvantages of each of the top four competitors' situations and strategic approaches
Advantages involved in their market plan it focuses on mid-size markets while they use multiplexes and megaplexes. Another advantage is that is has the highest ticket price amongst the leaders in the industry thus maximizing on the profits within a short period of time with few audience. The major disadvantage is that it has high price tickets thus reducing the number of audience.
Their advantages include: they are located at large population centres, like California, Texas, and Florida. Another advantage is that they maximize on profits due to high population and proximity to the restaurants. The major drawback that AMC might face is limited parking for the audience thus discoursing them from visiting the theatres.
The major advantage is that it serves smaller markets dominating over 80 percent of the markets. Then, the disadvantages that the Cinemark might have to face is the population in these small markets, which would in turn contribute to reduced profit index due to less number of the audience. Another disadvantage facing the Cinemark is that it had the lowest average ticket price in the previous year, therefore amounting low income in relation to population of the region.
The advantages involved in with this competitor are, it has a wide coverage of the market from small to mid-sized markets. Also as it targets the small populations it has other entertainment options, which draws more customers for their services. The disadvantage involved with this competitor is that their average concession revenue is the highest being at $3.05 among the top competitors.
The financial considerations that affect the profitability of major movie theatre businesses
The three major drawbacks for these businesses are involved with the sources of revenue for the exhibitors. These sources of revenue include: concessions, box office receipts, and advertising. The concessions have an average of 25 to 30 of the total revenues, which makes the concessions to be high for the exhibitors (Vogel, 2010). Two thirds of the revenues come from the box office receipts. As a result of these box office receipts there is an increase in ticket prices and therefore flowing back to the studios. Pre-show advertising also contributes to revenue that the exhibitors have to pay. This contributes to 5 percent of the revenues.
The strategic options those are feasible given the situation facing industry participants
A multiscreen scenario acts as the option for the situation facing the industries, which ensures that the overall pricing are distributed amongst the movie attendees (Finney, 2010). This step should be accompanied by use of digital cinema which involves high resolution digital imaging.
Recommendations to improve their likelihood of future success
Everyone wants to improve the future of their business in the movies industry. Therefore the main focus that should be put into consideration is the image quality improvement (Waller, 2002). Secondly, there is a need to improve the size with quality as it has been projected to have high definition of 60 inches for the big screen and maintain the image quality.