AMC Theatres: Global Growth, Technological Advancements, and Market Challenges Essay

Executive Summary

The motion picture industry is lucrative, but the existing movie theatre chains have failed to meet consumer demands. America Multi-Cinema Holdings Inc. (AMC) is among the movie theatre chain businesses that have dominated the industry. The company was originally founded in 1920 in Kansas City, Missouri. Throughout its growth and history, AMC has acquired various companies, putting it on a global level. The firm operates in the United Kingdom, Germany, Spain, Italy, Ireland, Portugal, Sweden, Finland, and Saudi Arabia.

AMC has integrated various film technologies, such as Dolby Atmos and IMAX, to remain attractive to its consumers. The company’s SWOT analysis shows that stiff competition and lack of technological integration are the major weaknesses of AMC. Meanwhile, an existing broad consumer base and an excellent brand reputation are crucial for increased profitability. Therefore, AMC has adopted effective leadership and management, product promotion, and expansion approaches to remain sustainable in the industry.

Introduction

The entertainment industry is becoming more lucrative as technology advances. The need to watch movies and productively spend leisure time is on the rise worldwide. America Multi-Cinema Holdings Inc. (AMC) is one of the global corporations that has taken advantage of technology to offer more interesting movies and other entertainment services.

The company was originally founded in the U.S. and has expanded worldwide. Production promotion and differentiation are the strategies adopted by AMC to dominate the entertainment theatre industry. The company enjoys the benefits of an existing loyal consumer base. However, stiff competition from other companies puts the company’s profitability at stake. Although AMC theatres have remained competitive in the entertainment market, stiff competition and the threat of new entrants encumber its growth.

Company Overview

AMC is one of the biggest companies that dominate the movie theater chain in the U.S. and the global market. The company is often referred to as AMC Multi-cinemas and its headquarters are in Leawood, Kansas. The firm’s ticker symbol is AMC, and it is listed on the New York Stock Exchange (Hossain et al., 2022). AMC was originally founded in Kansas City, Missouri, before expanding to other cities in the U.S. (AMC Theatres, 2019). The company has the largest share of the American theater market ahead of its competitors: Regal and Cinemark Theatres. The organization acquired Odeon Cinemas, UCI Cinemas, and Carmike Cinemas in 2016.

AMC has a definite management structure that limits the voting powers of the highest shareholders. The company’s highest shareholder is a Chinese conglomerate, Wanda Group (AMC Theatres, 2019). The latter firm is a private property developer owning companies such as Wanda Cinemas and the Hoyts Group. In 2018, the company received an investment of $600 million from a private equity firm called Silver Lake Partners. Although the latter investors have the largest stake in AMC, the organization is structured to allow Wanda Group to control the majority of decisions made. AMC is one of the companies affected by the COVID-19 pandemic, reducing the power of Wanda Group to control it.

Company History

The history of AMC dates back to the early 1920s. Maurice, Edward, and Barney Dubinsky were the founders of AMC. In 1920, the three traveled to the Midwest for a melodrama performance in collaboration with Jeanne Eagels (Hossain et al., 2022). The three purchased the Reagent Theatre in downtown Kansas City, Missouri. The company was named Durwood Theatres upon the Dubinskys’ change of their name to Durwood. The Durwood Theatres had other theatres in St. Joseph, Jefferson City, Missouri, and Leavenworth and Topeka, Kansas (Vasileiou & Tzanakis, 2022). The company operated under the same name, offering theatric experiences of drama performances.

The Durwood Theatres started experiencing fundamental changes in 1945 when Edward’s son, Stanley, left the U.S. Air Force to join the company. Stanley convinced Edward to transform the business by offering drive-in theatre experiences to their clients. His idea was actualized when the company built drive-in theatres in St. Joseph, Jefferson City, and Leavenworth (AMC Theatres, 2019). The service was unique, attracting many Americans to the firm. In 1947, the company received another expansion experience upon acquiring Liberty Theatre in Kansas City. Moreover, the company won an anti-trust suit, allowing it to acquire all other cinemas in downtown Kansas. The acquisition made the company more competitive and financially capable.

1961, Edward Dubinsky died, allowing his son Stanley to take control of the company. The firm looked for sites outside downtown Kansas, building a 700-sit theatre. Since it was impossible to combine two theatres, they were built side-by-side, Parkway Twin. During that time, the company adopted the multiplex model: a movie theatre complex with multiple screens in a single complex (Vasileiou & Tzanakis, 2022). The latter theatres were successful, leading to the building of a four-screen theatre in Kansas.

Later, a six-screen theatre was built in Omaha in 1969, contributing to AMC’s exponential growth. Adopting the multiplex model, the company grew rapidly until 1968, when it was renamed American Royal Cinema. However, an injunction was sought, leading to the renaming of American Multi-Cinema, Inc. Later on, the company grew by acquiring other theatres in various countries to become the largest movie theatre chain it is known today.

Products and Services

AMC’s primary service is theatric experiences in its theatres located in the U.S. and across other countries. The company offers movie shows under various brand names across the U.S. and the world (Guaraná, 2022). Dolby Cinemas and IMAX are some of the company’s premium screens and features that are available at high ticket prices.

The Dolby Cinemas are large premium formats featuring dual 4K projectors (AMC Theatres, 2019). Dolby cinemas have special entrance tunnels with video walls displaying the movie on the show. Meanwhile, IMAX auditoriums are located in various areas, and some use traditional 70 mm analog projectors (Vasileiou & Tzanakis, 2022). The company has integrated products such as healthy snacks, meals, liquor, beer, and wine options, to maximize clients’ experiences when in the theatres.

Operations

Technological advancements have revolutionized theatric services, and companies have adopted the changes to gain competitive edges. AMC has integrated technology into its operations, giving rise to various auditorium experiences: Dolby Cinema, IMAX, Laser at AMC, Prime at AMC, and BigD (Vasileiou & Tzanakis, 2022). Laser at AMC utilizes laser projections, which improve contrast, maximum brightness, and vivid pictures, exceeding 2D projections. Prime at AMC features large screens with Dolby Atmos technology, recliners, and seat-mounted subwoofers.

The company started replacing Prime at AMC with Dolby Cinemas to attract more clients. Meanwhile, BigD auditoriums utilize a large screen format inherited from Carmike Cinemas chain. The business operations based on diverse products and services have allowed AMC to maintain a broad consumer base compared with its competitors.

Another aspect of AMC’s operations is the internationalization of its services. Although the company was originally founded in the U.S. to provide services to Americans, it has continually expanded its operations to other countries. Some of AMC’s countries of operations are the United Kingdom, Germany, Spain, Italy, Ireland, Portugal, Sweden, Finland, Norway, Denmark, and Saudi Arabia (Hossain et al., 2022). The company has over the United Kingdom, Germany, Spain, Italy, Ireland, Portugal, Sweden, Finland, Norway, Denmark, and Saudi Arabia over eleven thousand screens worldwide, with the U.S. having the majority. Globalization has given AMC a competitive edge in the international market, increasing profitability.

Vision

A company’s vision is crucial for its internal and external operations since it guides effective decision-making. A vision statement presents an idealistic emotional future for the business and its stakeholders (Jeong et al., 2022). AMC’s vision is to provide its broad customers with the highest quality and best movie-going experiences (AMC Theatres, 2019). The vision statement has been incorporated into the business leadership and management philosophies (Suriyankietkaew et al., 2022). AMC’s vision statement helps to set the foundations for broader strategic planning. The statement is central to helping the company focus on creating core competencies.

Mission Statement

Businesses adopt strategies that help achieve their future objectives. A mission statement declares the purpose of an organization and how it serves its customers (Vasileiou & Tzanakis, 2022). The mission statement serves various purposes crucial for internal activities and decision-making by business stakeholders (Jeong et al., 2022).

AMC’s mission statement, “We make smiles happen,” remains primal for its routine activities and business management strategies. To achieve its vision, the company has integrated modern technology and cultural values that make its theatric experiences worth happiness. Consequently, many clients who visit AMC Auditorium enjoy their experiences and remain loyal to the brand.

AMC’s mission statement serves as a strategic plan for its success in the movie theater business. The statement guides AMC’s employees when they encounter challenges at work. The employees remain proactive and generous to their clients to ensure they feel comfortable watching movies in AMC auditoriums (AMC Theatres, 2019).

Moreover, the mission statement acts as a business decision guide for AMC. Consequently, most business decisions are anchored on improving their clients’ and employees’ experiences. For instance, an organization prioritizes diversity in its human resource operations, ensuring all employees are happy and satisfied (Mangaliso et al., 2021). Therefore, AMC’s mission statement is crucial for its success and effective internal operations.

Corporate Values and Culture

Corporate values and culture are significant to employment relations and customer-business relationships. Corporate values are a set of guiding principles that are fundamental in helping organizational stakeholders work together towards a common goal (Vasileiou & Tzanakis, 2022). Meanwhile, corporate culture involves a set of acceptable behaviors that are consistent with organizational goals (Jeong et al., 2022).

AMC has adopted various corporate values and cultures that guide its employees and significantly affect its clients. Workplace happiness is one of AMC’s corporate values, requiring all its stakeholders to ensure that all the employees enjoy their stay at the company (Mangaliso et al., 2021). The organization has adopted modern technology into its operations to ensure employees easily navigate complex activities. Moreover, good working conditions, including fair wages, promote workplace happiness at AMC.

Moreover, the company has adopted the value of inclusivity and diversity. The firm prioritizes diversity when recruiting its employees and other stakeholders (Foss & Klein, 2022). AMC employs people from diverse cultural backgrounds, generations, and workplace philosophies (Mangaliso et al., 2021). The integration of diversity and inclusion is to provide theatre guests with an out-of-home entertainment experience (Foss & Klein, 2022). Furthermore, AMC has adopted a culture of charitable giving to promote social and economic growth. The organization has supported needy students through the AMC Cares Charitable Fund to attend college. Additionally, the fund is used to help those facing disasters through relief food and other donations (AMC Theatres, 2019). Incorporating corporate culture and values in its activities has improved AMC’s relationship with the community and external and internal stakeholders.

Strengths, Weaknesses, Threats, and Opportunities

Technological and social developments have significantly influenced the movie theatre industry. The development of virtual reality technologies and 3D movie experiences has attracted many businesses to the entertainment industry (Geng, 2022). Moreover, the increased cultural empowerment and tolerance have enhanced the need to understand other traditions through movie experiences.

Consequently, there has been increasing competition in the theatre movie chain store businesses (Geng, 2022). AMC has various strengths and opportunities available for its exploitation. However, existing organizational weaknesses and threats are detrimental to its growth and success in the business. Therefore, AMC needs to maximize its strengths and opportunities to minimize problems associated with its weaknesses and threats.

Strengths

AMC is one of the oldest American movie theatre chains that has dominated the global market. Firstly, the company has an excellent brand image and reputation, attracting more clients to its theatres worldwide. AMC’s excellent brand image and reputation are due to its distinct corporate culture and values. Moreover, the organization’s involvement in producing the most entertaining movies has made it reputable.

Secondly, AMC has strong financial muscle, which makes it ready to invest in more profitable services. The company is the world’s biggest movie theatre chain and has increased profitability. For instance, in the third quarter of the financial year 2022, the company recorded a revenue of about $968.4 million (AMC Theatres, 2021). The revenue had increased by 27% compared to the earnings of the year 2021. Increased revenue makes the organization sustainable in the business.

Thirdly, AMC Theatres has built a sizable following of brand-loyal customers. Customers with distinct demands and preferences for theater are drawn in by the incorporation of various cinematic experiences. To keep its clients interested, AMC uses technologies like IMAX and Dolby Atmos.

Additionally, the customer loyalty programs have attracted and retained many clients. AMC’s consumer-based brand equity is excellent since many clients tag along with their friends and family members to AMC theatres. Lastly, the company has prioritized modernized technology to attract clients and improve their experiences. The company should take advantage of its strengths to increase profitability.

Weaknesses

Although AMC has various strengths augmenting its success, some weaknesses are detrimental to its growth. First, AMC’s investment in research and development is way below its competitors (Vasileiou & Tzanakis, 2022). Unlike other entertainment firms, AMC has failed to keep up with modern and advanced innovations. The company has insufficient technologies like virtual reality and other artificial intelligence. A lack of innovation and creativity in AMC can potentially lead to losing its clients to other companies (Geng, 2022).

Second, the organization lacks accurate product and service demand forecasts (Foss & Klein, 2022). The weakness is precipitated by AMC’s failure to use modern technology in making its core business decisions. Additionally, the company maintains more inventory internally and externally than its rivals.

Third, AMC has insufficiently funded the emerging technologies in movie theatres. The company has focused more on film than non-film products. For instance, virtual reality is one of the industry’s rapidly growing and emerging technologies. However, AMC’s investment of $20 million in virtual-reality arcades and productions is less than that of its competitors (AMC Theatres, 2021). Increasing the investment in virtual reality would attract more clients driven by technological changes.

Last, AMC lacks product and service diversification to attract more clients. The company has put more effort into film products, ignoring the more profitable non-film ones. The lack of diversity in its product and service categories puts AMC’s business at risk of recording losses.

Opportunities

Various opportunities are available for AMC to take advantage of and maintain rapid growth. Advanced information technology presents developments in virtual reality and motion pictures with the highest quality (Yin et al., 2022). AMC can take advantage of this opportunity by investing more in technologies providing more attractive services.

Additionally, the increasing global population and lack of movie theatres in some parts present a good market opportunity for AMC. For instance, the company can focus on entering African countries with growth potential (Yin et al., 2022). This opportunity will allow AMC to expand its products and services to the global market.

Furthermore, AMC can enjoy friendly U.S. economic policies with its global partners. The U.S. government has entered into free trade agreements with countries such as Australia, Colombia, Chile, and Canada. Such agreements are advantageous to AMC since it was founded in the U.S. The company will have an easy time navigating the emerging markets in the countries that have entered into a free trade agreement with the U.S. Expanding its global market allows AMC to broaden its consumer base while remaining sustainable in the global market. The opportunities available to AMC can help it overcome some of its weaknesses and maximize its strengths.

Threats

Economic and social challenges can be detrimental to the growth and expansion of AMC Theatres. The firm faces various threats exacerbated by the changing economic and social conditions. Firstly, AMC faces the threat of being outdone by alternative entertainment technologies. The development of virtual reality and more advanced television screen resolutions is making it unnecessary to visit movie theatres. Consequently, the company is at risk of losing its broad consumer base.

Secondly, the motion picture industry is facing stiff competition due to new entrants. Companies such as National CineMedia, Cinemark Holdings, Carmike Cinemas, and Discovery Communications have started to dominate the industry.

Thirdly, natural pandemics such as COVID-19 and Ebola in AMC countries of operations are posing a threat to closing the business. During COVID-19, the U.S. was one of the countries most affected by the pandemic, and strict measures were required to curb it. Consequently, the social distancing policies and regulations led to the closure of AMC theatres (Ankenbauer & Lu, 2022). The company recorded losses during the pandemic, making it difficult to sustain its human resources, including increased labor.

Lastly, political ideological differences between the U.S. and its rivals, such as China, harm the company’s expansion plans in the enemy countries. The firm faces heavy taxation due to its American origins. AMC should take advantage of available opportunities and strengths to reduce threats faced in the industry.

Competition

The motion picture industry is highly competitive due to emerging technologies and new entrants in the market. The greatest AMC competitor at the global level is Regal Cinemas and Cinemark. The companies have 6851 and 4426 screens globally, meeting the increased demand for theatre services. Consequently, the majority of AMC clients shift their loyalty to the two companies. Moreover, the company faces stiff competition from other firms, such as Discovery Communications and Cineplex Entertainment LP. Although AMC provides products and services that make their client more comfortable, the competitors exhibit strengths that give them a competitive edge over AMC.

Companies such as Regal Cinemas and Cinemark have prioritized technology integration in their products and services. Consequently, they offer better entertainment services than AMC. Moreover, the companies have adopted fair prices for movie tickets, making more customers prefer them to AMC. Local entertainment companies in various countries where AMC operates have broader consumer bases. Unlike AMC, local theatres integrate a country’s culture and traditions, which makes them more attractive. While AMC has an excellent brand reputation, it should adopt effective business operations strategies to remain competitive.

Management and Leadership

Effective leadership is primal for effective decision-making and desirable business growth. AMC has adopted corporate management, which divides various roles at different leadership levels. The company has a Board of Directors, primarily involved in key decision-making. The Board is composed of majority shareholders such as Wanda Group.

AMC has executive teams led by a president to manage the company’s routine activities. The president is deputized by vice presidents who head different AMC departments such as operations, procurement and logistics, and corporate systems. The vice presidents are involved in making key departmental decisions and heading supervisors.

The Board of Directors and executive team collaborate to realize AMC’s full potential. The company’s leadership and management are guided by the corporate values and culture of inclusivity, diversity, and workplace happiness. Therefore, the leaders of AMC ensure that employees and customers have the best experiences when working at the company.

Moreover, the leadership and management are guided by AMC policies and regulations that are consistent with international labor laws and those of its countries of operations. Having a clear mission and vision statement, AMC has encouraged its leaders to focus more on customer experiences. Therefore, the leadership and management at AMC are vital for its growth and success.

Financial Outlook and Predictors

Although AMC is not as profitable as other global movie theater chains, its future financial performance looks positive. The company has a positive long-term investment return, and its share price is estimated to increase by about 160% in a five-year term (Seeking Alpha, 2023). The improved financial performance is due to various predictors in the industry. AMC has increased its investments in technology in the 2023 budget. The increased technological integration is likely to boost its financial performance.

Additionally, the company has adopted various customer loyalty programs intended to increase the consumer base. An increase in clients will lead to high revenues and consequent profits. Furthermore, AMC is acquiring various local companies to expand, leading to a wider market. Technology integration, a broad consumer base, and exploitation of new markets present a positive AMC financial outlook.

Strategies

Effective business strategies are crucial for sustainability and positive growth. AMC uses acquisition as its expansion strategy at local and international levels. The company acquired a movie theatre business with an established market through its strategy. The strategy is beneficial since the company reduces market research costs. For instance, in 2002, it acquired General Cinema Corporation, expanding 66 theaters with 621 screens (Liu, 2022).

For marketing strategies, AMC has adopted customer loyalty programs to promote its products and services. The marketing strategy includes issuing vouchers and discounts, among other guest loyalty programs. Additionally, AMC has adopted a digital marketing strategy that communicates the latest released movies to its clients. The expansion and products and services promotional strategies have given AMC a competitive edge in the industry.

Conclusion

AMC is one of the biggest and most profitable movie theatre chains in the U.S. and the world at large. The company was founded in the U.S. but has expanded its operations to countries like the UK and Canada. Stiff competition and insufficient technological integration are some of AMC’s weaknesses. However, AMC’s excellent brand reputation and available broad-consumer base offer opportunities for it. The company has adopted effective expansion and product promotion strategies, making it sustainable despite existing threats. Technological integration and maximization of the emerging market are important for AMC’s positive growth.

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