What is the value of going to a theatre? How does this vary by the type of movie?
The theatres meet a lot of competition in the modern entertainment industry. The most significant impact on the costs and value of going to the theatre was caused by the development and advancement of the home entertainment. Today a person can enjoy watching movies in his or her personal space, in a comfortable entertainment without any hindrances and restrictions. At the same time, movie-goers can face some disturbing factors that may affect the whole impression from the visiting the theatre: loud talking, phones ringing, commercial advertising, etc.
In combination with the poor movie selection these factors reduce the theatres value dramatically. In opposition to the home entertainment, cinemas represent the value of the social activities for the audience. The quality of movies and their correspondence with the needs of the targeted audience that primarily consists of the young adults and teenagers matters. Thus, the types of the movies are interdependent with the theatres’ value.
What factors determined the rise and fall of theatres? The authors suggest demand is falling down. Why do you think this is the case? How would this vary by demographics?
In the first half of the 20th century, the cinema business thrived in the USA. For years the theatres provided the unique and innovative kind of entertainment. Nevertheless, the emergence of television and radio induced the decrease in the cinema’s popularity. Since 50s, the entertainment market became more competitive, and the competition is gaining momentum. Nowadays, the movies are widely available outside the theatres, and the theatrical releases constitute only a small part of the movie production revenue. The high level of the diversity in the entertainment industry and the emergence of the product substitutes put a lot of pressure on the theatres.
A lesser demand for the cinema can be explained by the availability and proliferation of the new technologies that are considered to be more convenient for the people in the provision of services, and particularly entertainment. While the new technologies offer the home leisure, the theatres became more demanded by those who need socialization. Thus, the cinemas’ targeted audience consists primarily of teenagers.
What determines the movie release strategy? Do you expect the release window to change? Do you expect more movies to have narrow/wide releases?
The movie release strategy is dependent on the movie type to a great extent. Release involves advertisement and several stages of runs that are called windows. Usually, the first-run is a show in a grand theatre with the participation of the movie stars. It is meant to promote the mass production picture. The spread of the movie continues with the next runs in other theatres and the release in the home video and television markets.
The strategy is mainly influenced by the movie’s budgets. So, the high-budget movies will more likely include all the release windows while the low-budget movies will probably skip few of them. The release window could change with the shift in the theatres’ programming. In case, the mass production movies will be replaced to IMAX, the low-budget movies will be settled in the theatres with the smaller screens. Since the movies showed on the IMAX screens are more popular, their release strategy can be exclusive of the printed advertisement and be more focused on the roadshows. The change in strategy will also cause the increase in production of the narrow-released movies.
Given the data in the case, if you were a cinema, would you built an IMAX?
The sustainability of business in the cinema environment depends on the level of the competitiveness and the advantages. IMAX is the technology that gives a lot of benefits and opportunities for the theaters. An IMAX theatre provides the high-quality entertainment that cannot be substituted or imitated. Therefore, IMAX implementation is a competitive advantage and increases the theatres’ value. The technology is affordable and has a good financial return. The tickets for IMAX movies usually cost about 50 percent over the regular ticket price. So IMAX brings more profit to cinemas, and its price can be recouped in a short time.
How could a movie theatre change its pricing strategy?
The two major strategies exist nowadays: differentiation and the resource-based strategy. Differentiation implies the variation in pricing that is hinged to the release’s newness and exclusiveness. According to this strategy, the highly demanded roadshow and first-run releases will have the higher prices than those for the older movies. Differentiation also includes movie’s quality and takes into consideration its budget. It is a common strategy adopted by the majority of the modern cinemas yet it is not very effective and doesn’t provide advantages. The resource-based strategy can be more efficient.
This strategy is based on the consideration of the technologic advantages. So, the tickets in the regular theatres will cost a little higher their nominal value while IMAX tickets’ price exceeds it greatly. Consequently, the technological advancement plays the crucial role in the pricing strategies.
Could cinemas access other revenue streams?
The theatres could offer some other entertainment services and arrange events for the customers to increase the competitiveness. The cinema halls can be used for the concerts, conventions, business meetings, etc. The specialized and VIP movies can be shown. The events can be both private and free-for-all. In any case, it would allow the expansion of the service range and would draw more consumers. The new untraditional social activities assist the attraction of audience in the low-peak seasons. The wide service range creates more profitable opportunities for the business.
Works Cited
Silver, Jon and John McDonnell. “Are Movie Theaters Doomed? Do Exhibitors See the Big Picture as Theaters Lose Their Competitive Advantage?” Business Horizons 50 (2007): 491-501. Print.