Understanding on the competitive forces can facilitate an industry to restructure its approaches and plan a position, which is highly profitable and less risk to attacks. In real circumstances, the work of the planners is to know and preserve competition. Usually, nevertheless, producers define competition scarcely, as though it just happened among current, direct competitors. However, competition for benefits goes over identified industry rivals to comprise customers, suppliers, prospective entrants, and substitute goods. The distributed rivalry, which comes from the fives forces, defines a business structure, and mould the condition of competitive association in the business (Gave & Matherne, 2008).
The five competitive forces in this industry include the threat of new entrants, threat of substitute products or services, bargaining power of the suppliers, bargaining power of buyers, and the rivalry among existing competitors. When the forces are too strong, such as the situation encountered by this entertainment industry, it implies that no player earns pleasing returns on investment. This entertainment industry is largely affected by substitute types of entertainment and the pressure of the movie manufacturers and suppliers who distribute movies, which are the vital input. With the developments and advances in technology, entertainers face a lot of threats since most of the time new inventions targets to use entertainment as part of their promotion strategies. Internet, for instance, nowadays shows all movies. This, therefore, implies that people no longer need to go to the cinema halls to be entertained. They can get this forms right at their screens (Gave & Matherne, 2008).
New entrants are also flooding the market forcing the existing providers to plan other means of attracting customers to their locations. The new entrants also come with modern technology and offers quality services. This causes more threats to existing providers and returns keeps on declining each day. The power of suppliers also matters a lot in this industry for they are the ones to ensure constant flow of movies, and offer the best and latest to the market. Strong suppliers, including provision of labor can compress revenue out of a business that is not able to transfer the cost rise in their prices. On the other hand, the power of buyers and the audience is a force that has a lot of influence for product market. Strong buyers can influence the market casing even prices to drop, demanding quality for their money and other services hence driving cost. Buyers are influential when they have bargaining power to business participants, especially when they are price sensitive, applying their thump mainly to force price deductions (Gave & Matherne, 2008).
Modern world has so many forms of entertainment, and this is a threat to the established businesses. The advancement in technology brings various programs that are more entertaining than just going to the cinema halls. This substitute product is slowly killing the entertainment industry with its ever-ready products and services. Current mobile phones as well have been installed with advanced systems that can access the Internet, and one can just get all they want without necessarily going to the actual location. All these forces of competition result to rivalry among existing participants. The rivalry has different forms including introduction of new products, price discounting, advertising campaigns, and quality improvement (Gave & Matherne, 2008).
Among industry rival, there can be a high level of competition since each business will try as much to outdo the other. They would employ such approaches as price reduction, service delivery at customer convenient place, discounts, and use of technologically advanced products to attract customers.
There is minimal variance in the provision of the key theater exhibitors’ prices in the market, the same movies are displayed regularly, and the goods and services are usually identical. Competition among theaters regularly draws closer to distance from household, suitable parking and close to restaurant so that they get more profits as they are accessible by public members. Creativity by one theater outlet is easily taken in by other suppliers. The chains offer services to various demographic locations and provide the services differently. Regal concentrate on mid-size markets applying multiplexes and mega lexes, this is advantageous to the competitor because the mid-size market is the largest in the whole market since most people fall within this bracket. This has enabled the Regal’s tickets get the highest market price of $7.43 per ticket. The disadvantage is that the exhibitor cannot provide services to the entire market hence cutting out some customers who would have used their services and goods (Gave & Matherne, 2008).
AMC targets the urban regions with megaplexes and on wide population hubs like those in California, Texas, and Florida. This strategy is vital for this exhibitor, since it is the urban centers where there are more populations; hence, high chances that most people will choose their services. Urban centers also have more resources implying that most people will use the extra cost on entertainment. The disadvantage of this form of concentration is that the exhibitor is restricted to a limited area. Hence, limit possible sources of profits from operating across the country. Cinemark, on the other hand, focuses on smaller markets, functioning as the only theater outlet in above 80% of its markets. Because of their focus on smaller markets, their tickets rates are the least at $5.11. The advantage of this form is that it has a wide field for distributing its services. This can increase sales considerably. It also has no competitors hence enjoy monopoly of scale and can determine the prices of their goods and services with no objections. The disadvantage is that since there is stiff competition, there is a possibility of not providing quality services and movies are likely to be old-fashioned (Gave & Matherne, 2008).
Carmike on the other side focuses on both small and mid-sized markets, with a goal of serving not more than 100,000, which may have other entertainment alternatives. This have the most advanced strategy since they serve a wide area as compared to the other exhibitors. This has an advantage of being able to deliver more services per day hence better sales from their strategy. Serving more people also is beneficial because one can get a wide variety of the option and engage views for long hours. This increases their revenue significantly and can remain in the market for long. Disadvantage of this form is that new entrants can easily penetrate the market without their knowledge and can cause unnecessary competition (Gave & Matherne, 2008).
Financial position of all businesses needs to be regularly checked for it is the driving force. Movie Theater faces many problems because of their inefficiencies in handling financial issues. Too much of their profits are used in the advertisement of which leads to lose since not all the people reached come back to watch or purchase the movies. Instead, most people opt to seek alternative of even download the movies on the Internet. In addition, the business is affected by too much production costs but fewer sales. The produced movies take long before being purchased by people, this affects the profitability of the business since they have invested a lot in production but the sales are moving gradually. The business also keeps on changing in terms of equipments and accessories. These equipments are too expensive hence slowing down the rate of expansion of the industry (Gave & Matherne, 2008).
The strategies possible for this industry is to increase the number of screens that are strategically placed, and ensure they increase the level of experience that the clients get when they visit some of these places. Theaters no longer have the experience that used to be there. Participants, on the other hand, need to be well trained on how to handle customers and avoid harassing them, for they are the ones who will campaign for the industry. The use of mega lexes is also an option, since the technology provides viewers better images creating an environment appealing for movies and full entertainment.
Future success of the industry depends on so many factors including individual creativity, innovation, and flexibility. The exhibitors need to be creative so that they produce high-quality movies that are attractive and can be purchased faster. This needs innovation and proper planning of presentation. People are now advanced, and they need something that keep them entertained for long. Something that does not lose its attractiveness and one that viewers will want to watch it again and again. The current technology also allows people to carry gadgets with them wherever they are and not necessarily have to be in the cinema or theater halls. The producers, therefore, should ensure they focus on this market for it can increase their sales and raise profit significantly (Gave & Matherne, 2008).
Gave, S., and Matherne, B. (2008). A Horror Show at the Cinemaplex? US: Movie theaters.