The movie industy is a huge industy with three groups of players in the value chain. First, the production studios who create the content. Second, the movie exhibitors who provide a place for movie goers to watch the content. Third, the distributors who bring the content from the studios to the exhibitors. Being lower in the value chain, the movie exhibitors bear the risk of poor movie attendance, and incur high cost of renting the content from the studios.
In this case study, the market exhibition industry is discussed, with recommendations on how the exhibitors can improve their financial performance and how they could fight the problem of declining attendance. In addition, included in the discussion is the strategy movie exhibitors should …show more content…
The studios faces pressure from various sources. First, the largest audience segment comprise of young people between the ages of 14 to 24, but its growth is lower than the population growth (19% vs 42% by 2050). The slow growth (average 3%) in the U.S. domestic market drives the studios to expand internationally (averaged growth of 13%). With 70% of revenue from international markets, studios needs to cater to different cultures and languages with internationalized content, often with known characters (e.g. Marvel heros) and special effects to increase the level of acceptance (Hitt, Ireland, Hoshisson, 2015). The challenges faced by the studios include managing and protecting content rights and royalties, fighting piracy, and controlling the increasing cost of talent (“Global Movie and Entertainment,” …show more content…
For example, Comcasts and Disneys make more money from their cable or consumer product lines than from box office receipts. As a result, studios are becoming risk adverse on movie projects as each project takes two to three years to get into production, and there is uncertainty on whether the story and the characters will still attract an audience after 12 to 18 months (Lang, 2017). Also, with digital camericas and editing software readily available, it is easy for aspiring directors to makes a movie. There are competitions from Netflix, Amazon, Apple, and PepsiCo to look for content to expand their business or to sell their products (Lang, 2017).
Third, the funding sources for the movies are reducing, some channeled to the works at the Silicon Valley, and others were fearful losing money. The new money from China for investing in the entertainment industry is also restricted by the Chinese authorities, though some venture capital is interested in emerging forms of popular entertainment such as virtual reality (Lang,
In this case study, the market exhibition industry is discussed, with recommendations on how the exhibitors can improve their financial performance and how they could fight the problem of declining attendance. In addition, included in the discussion is the strategy movie exhibitors should …show more content…
The studios faces pressure from various sources. First, the largest audience segment comprise of young people between the ages of 14 to 24, but its growth is lower than the population growth (19% vs 42% by 2050). The slow growth (average 3%) in the U.S. domestic market drives the studios to expand internationally (averaged growth of 13%). With 70% of revenue from international markets, studios needs to cater to different cultures and languages with internationalized content, often with known characters (e.g. Marvel heros) and special effects to increase the level of acceptance (Hitt, Ireland, Hoshisson, 2015). The challenges faced by the studios include managing and protecting content rights and royalties, fighting piracy, and controlling the increasing cost of talent (“Global Movie and Entertainment,” …show more content…
For example, Comcasts and Disneys make more money from their cable or consumer product lines than from box office receipts. As a result, studios are becoming risk adverse on movie projects as each project takes two to three years to get into production, and there is uncertainty on whether the story and the characters will still attract an audience after 12 to 18 months (Lang, 2017). Also, with digital camericas and editing software readily available, it is easy for aspiring directors to makes a movie. There are competitions from Netflix, Amazon, Apple, and PepsiCo to look for content to expand their business or to sell their products (Lang, 2017).
Third, the funding sources for the movies are reducing, some channeled to the works at the Silicon Valley, and others were fearful losing money. The new money from China for investing in the entertainment industry is also restricted by the Chinese authorities, though some venture capital is interested in emerging forms of popular entertainment such as virtual reality (Lang,