Case Movie Industry Essay
If I am the person to answer the question, I would definitely say yes. The reason why people like movies is that I can have a couple hours off without any other thoughts in mind. I really feel relax when I’m watching a movie. However, in the case it calls the movie industry was a study in contradiction. In the case it listed out few points. First, the numbers of theaters is declining, but the number of screens is at an all-time high.
This shows that each theater that had remained now is getting egger and bigger, so that they are able to show different kinds of movies. Second, revenues are up, but attendance is largely flat. In the late sass, the average of a person attends to the film for a year is 28; today it is 6. This numbers shows that in nowadays, it’s really easy for people to get a movie without entering the theaters. Last but not the least, though the U. S. Population is increasing, however, the size of the market isn’t growing as fast as it is. The followings are the analysis and opinions.
SOOT ANALYSIS Strength Control of the tickets price Provides a entertainments
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Though people are getting bigger and bigger LED TV’s, but I believed there are still customers preferred to go into theater to experience the huge screen and the voices in relaxing mode. I am a person who likes to go into the theater; the reason is that I get to have a couple hours without any thoughts and noise but only the movie. I know that spending average 7 bucks for a movie sometimes is a luxuries thing for a student and I knew that all I have to do is to wait for a couple months you can see it Case 2 Movie Industry 2008 By Territories the movie is definitely different from having the movie on the TV.
The biggest weakness for the industry will be the declined of the tickets sales. According to the numbers given by the case, though the numbers for their target audience had a little growth, the numbers of the ticket sales is decreasing. I would say the reason is the rising of new technology. It’s really easy for people to get the movies with a cheaper price. The rise of the new technology would definitely be a threat for the industry. The companies should come out more strategies to win this battle Five Forces Bargain Power of supplier: The influence from the supplier is really high.
The reason is there are 55% of the box-ticket revenue will be send back to the studios. When filming a movie, the most money you spend would be the cast, equipment and the studio houses. Therefore, the bargain power of supplier in the industry is HIGH Bargain Power of buyers: The influence from the buyers is pretty low. The reason is that they couldn’t control the price but to follow the price that the theater’s set up. As I mentioned in the SOOT, though the target audience for the industry had a little growth on the number, however the attendance for people to enter the theater is decreasing.
In result, theater’s had to increase the price of ticket because of the flat attendance. Therefore, the bargain powers from the buyers are low. Threats of new entrance: The threats from new entrance will be low. The reason is that over 90% of market shares were controlled by the big 9 studios. Lacking of resources and capital couldn’t survive in the industry. Therefore, threats of new entrance will be low. Threats of substitutes: The threats of substitutes are high. The reason is due to the rises of the new technology enable to stream movies online. People don’t really need to spend the money to go and watch a movie.
Nowadays, TV shows is also showing movies too. Therefore, threats of substitutes is HIGH Rivalry: The rivalry in the industry is low. The reason of it is though there are lots of companies filming big and small movies, there are only few firms who can really produce economical movies to earn revenues. The exit barriers are low inside the industry. When the barriers are low, weak firms are more likely to leave the industry. Therefore, the competitions between the rivalries are low. Value Chain There are three stages for the value chain in the movie industry; studio production, distribution and exhibition.
Studio production, basically you can understand by word, it’s the producer of the movie. They mainly focus on providing the resources for the director to finish the filming by following the contract they sign. Studios in the industry are now controlled by 9 companies (such as Time Warner, Sony, etc… ) with over 90% of market shares. Distribution, in the case they call it the broker intermediaries between the studios and exhibitors. The categories they covered are marketing, logistics and administration. Exhibition is referrers to the place that shows movies such as theaters.
The case shows a interesting chart. It shows that from 2000-?2007, the numbers of theaters had decreased for over 15% however, the size of the theaters had increased all over 50%. PESTLE Economical: The rising of the operational costs In lowering the margin profits. I mentioned it on the paragraphs above, 55% of the box-ticket revenue were all send back to the studios. When the profits for the studios aren’t able to fulfill their costs, then they would start rising the tickets price. The rise of the tickets would influence Factors: There are ways to watch movies nowadays, no matter its legal or illegal.
People start to stream movies online, the TV companies is also showing the movies for the people. This is a benefit for those who really can’t afford to watch a movie in the theater; however, it’s a bad news for the movie industry. There is also some illegal website that provides the movies for people to download it. Therefore, I would like to say that this is the biggest issue for the industry. We all know how fast and innovative the internet technology is. What I would do is to support the legitimate movies and avoid the pirate movies. This is also a way to protect the intellectual property for the
Directors and Creators. SSP Before talking about SSP, I would like to define the industry into 3 parts, Studios, Distributors and Theaters. You could also call these three parts as the value chain. Studios: I would consider Studios as a Monopolistic Competition. There are the big 9 sharing over 90% of the market shares. Each of the firms do have their strength and weakness and also the movie styles they provided could be consider as product differentiation. The entry barriers aren’t that hard. It’s easy to recruit people with filming skills and the rest of it is to have enough capitals to support the filming.
Therefore I believed that studios can be consider as a Monopolistic Competition. Distributors: I would be likely to say that Distributors is an Oligopoly Competition. The information provided by the case shows that there is over 300 distributors in active now. However, they are all owned by few large firms because of the acquisition. However, despite the fact of owning by the large firms, we could also consider it as Perfect Competition. There are over 300 active distributors, low entry barriers as long as you had the skills and the equipment to finish post-production for the movie.
Therefore, I would say distributors are in Perfect and Oligopoly competition. Theaters: The case called it the exhibition, but I would prefer to call it Theaters. I would consider Theaters as Monopolistic Competitions. In the case it shows that there are four main companies owning the theaters. However, the percentage for the four companies owning the theaters was only about 20%. The entry barriers aren’t that hard, all you have to do is to have enough capital to build up the theater and make sure they operate smoothly and provide a good theater experience for the customers.
Therefore, I would say that Theaters are in a Monopolistic Competition. In 2014, I believed that the key to be success in movie industry is to make the film that creates high interest for the audience, such as IRON MAN, CAPTAIN AMERICAN, etc…. If I were the audience, I will definitely be attracted by these kinds of big movies and go in to the theater. When the box-ticket revenue is increasing, it means that all the value chain could have a greater chance to gain more profit. Therefore, I would like to say, the better you know how to catch the taste of the audience, the successful you will be.