Exhibition is often addressed as the retail branch of the movie industry. It involves the screening of the movie to the masses who are usually the paying customers. The exhibition sites are mainly devoted to the screenings of movies of different genres. The case study of the movie exhibition industry provides an in depth insight to the tenuous and uncertain outlook of the owners of the movie theatres. The report will focus on conducting a thorough analysis of the internal and external analysis of the movie industry and the changes in the value chain and operating variables that influence the profitability of the various exhibitors of US. The report will also pay attention to the initiatives undertaken by the movie exhibitors to ensure that they can cope with the existing environmental challenges (David et al., 2017).
The report would also intend to focus on the impact of the advancements in digital technology and the changes in the current trends that influences the decision of a consumer. The analysis would also focus on the constraints forwarded by the studio dominated business models that results in multiple clashes between the movie theatre owners and the distributors as well
The US movie exhibition industry is taking up strategies to keep up with the disruptive technologies and the environmental challenges. By conducting an industry analysis would allow in the better understanding of the powerful forces and their influence on their profitability and operations.
Threat of the New Entrants: The threat of new entrants is low in this industry. The already existing movie theatre owners have over capacity of screens and because of industry consolidation. In addition, the major competitors are placed in different geographic markets so the direct competition is not intensified. The preference of the people to watch movies at home also plays a key role in decreasing the threat of the new entrants (Dess et al., 2014).
Bargaining Power of the Suppliers: The bargaining power of the suppliers is identified as high. The exhibitors are completely dependent on the policies and decisions of the studio and because of that the studio is responsible for the low profitability of the exhibitors. Due to the control motion picture studios have over release and content development, thus they are being provided with high negotiable power.
Bargaining Power of the Buyers: The bargaining power of the buyers is moderate. The movie goers do not possess any cumulative bargaining power and neither their demands result in price changes. The buyers are only provided with the option of changing theatres if they have poor experience with the theatre.
Threat of the substitutes: The threat of the substitutes is high. The extensive availability of alternatives poses as a threat to the theatres. The availability of movies outside theatres reduces the demand of theatre experience in people.
Industry Rivalry: The industrial rivalry is moderate but the threat is growing at a rapid rate because due to the availability of substitutes and also because of increasing the theatre experience of the people (Chuchrova et al., 2016).
The environmental analysis of the industry is as follows:
The company AMC is dominating the US market in terms of operating movie theatres with over 10,000 screens globally. By conducting an internal analysis of the company, the understanding of the competitiveness of the company would be evident.
BCG matrix is a strategic tool which helps the analyst to evaluate the current position of the organization in the market as well as the performance of business units or product lines. It also helps the marketer to allocate the available resources effectively. This matrix consists of four quadrants and the analyst rank and places the business units in these quadrants based on the market shares and growth rates; which include cash cows, dogs, question mark and star. The cash cows have high market share and low growth rate; the dogs have low market share and low growth rate; the question mark has high growth rate, but low market share; and finally, stars have both high market share and high growth potential.
In case of the AMC Entertainment Holding Inc. it has been revealed that the organization is having the largest share of American theatre market. In 2017, it has been estimated that the organization has its total assets of US$9.806 billion. Further, it has also been revealed that the organization has acquired Odeon Cinemas, UCI Cinemas, and Carmike Cinemas in 2016, upon which action, it becomes the largest movie theatre chain in US as well as it is the largest movie theatre chain through the world (Edgerton, 2014). It has 2200 screens in 244 theatres in Europe and in total 8200 screens through 661 theatres in US. Therefore, the performance of the organization is indicating that it having high growth potential. On the other hand, total assets indicated high market share in US movie industry. Thus, this organization can be categorized as a “star” in BCG matrix, which is indicating its leading position in market.
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