Identification of the Company’s Strategy
The movie exhibition industry is an American-based international television channel and one of the movie exhibition industry’s properties. The organization programs theatrically released movies and films alongside limited original programming. The company made its initial debut in the early twentieth century by airing the first classic movie in a generally unedited, commercial-free, uncolored, and uncut format (Gove, 2018). The movie exhibition industry business strategy is centered on creating and distributing more personalized product promotion and advertising campaigns via digital, mobile, and social media to reach the potential audience with the desired content. Additionally, the company focuses on producing extensive buzz specifically for independent films and movies to prevent them from being lost due to content overload. Its popular brand name, massive scale, strategic locations, and top box office hits consistent offering help the company achieve a competitive advantage.
Furthermore, the company’s theaters use differentiation as the most significant strategy to provide the best consumer experience. The specialized content and data-driven adverts are highly generated to aid the marketing and awareness of new films on social media customers. Highly personalized content is employed to direct focus on the individuals’ and consumers’ preferences and habits. Furthermore, the theater partners with Movio to create awareness campaigns by paying much attention to a data loyalty program to ensure customers receive movie content of their interest and film habits. American Multi-Cinema is ranked second in the movie exhibition industry among competitors such as Cinemark Holdings, Discovery Communications, National CineMedia, and Carmike Cinemas.
The Strategic Issues Facing the Company
In the twenty-first century, the company has been boosted by great advancements in technology. The introduction of smart technology has highly led to increased film production, where high-quality movies are being produced and released to the public within a short period. However, a couple of issues have given the company’s management and film marketing team sleepless nights while trying to reach more audience markets to boost their revenues. Every business depends on the number of customers to the company since its income depends on the number of individuals who purchase tickets at the films. The motion pictures industry, as well as the box office, have been in a precarious position in the past few years since the number or size of the audience has been rapidly declining.
The company’s management lacks a specific cause of the decline in audience turn-up in the theaters, as it has recorded a 21% drop since 2002. However, the primary reason for the decline is the technological advancements involving the movie live stream features on social media and other related platforms. Individuals have chosen to watch films from their homes or offices on platforms like Netflix and Amazon Prime Video rather than visiting the theaters. The issue is causing more damage to the company as the management and specialists have lacked the special techniques to combat it and increase the audience base. The emergence of the Covid 19 pandemic in 2020 has caused uncountable issues in the motion pictures industry. It has not only affected the customer base but also tampered with the shooting, editing, and modification processes.
Covid 19 shocked the world so quickly since it emerged and spread rapidly worldwide, causing massive deaths in most countries. Everyone, including the government and the world’s top organizations, such as the World Health Organization (WHO), has been highly scared of the pandemic. In collaboration with the governments, WHO set various protocols that restrict people from visiting crowded areas such as theaters (Kim, 2021). In addition, WHO demanded the lockdown, closure, and shutdown of all theaters worldwide to avoid the crowding of individuals, which would increase the risk of spreading the infection. Therefore, the pandemic greatly led to a decline in the number of customers who visit theaters. Consequently, the issue led to a decline in ticket sales, hence lower income and profitability.
Furthermore, the company has suffered high advertising and promotional costs over the past several years. The box office, among other platforms, has been charging huge sums of money to promote the company’s films and create awareness amongst various individuals worldwide. The challenge led to a significant decline in profitability; hence the company would have fewer funds to support its operations and production of new movies (Goff Inglis & Zolfaghari, 2017). However, the company has experienced great challenges in reaching the rural regions, especially in third-world and developing companies. In those regions, there are no theaters nor adequate use of technology; hence it would be difficult for the company to reach the residents. The cost of building theaters in the regions would be high, and the audience turn-up would be low to low due to the lack of awareness among the residents.
Recommendation Plan for Dealing with the Issues
Despite the challenges and issues faced by the company, the management has done its best to improve its operations, increase the customer base, and enhance earnings and profitability. It has mobilized various strategies and mechanisms to combat the challenges and prosper in tough and harsh markets and marketing conditions. First, the company has acquired new technologies to integrate with the existing ones in order to offer the best services to its customers (Weinberg et al., 2021).
It has utilized technology to install new fittings and screens to make the theaters attractive and comfortable to the audience. It has also developed more customer-based means of advertising to attract more customers without considering the cost incurred or the potential profits. The company should use social media, which is more crowded with potential customers than any other platform, to create awareness of new films and release dates, rather than using the box office. The company would incur lower costs for advertising on Facebook, Twitter, and YouTube hence saving some costs and retaining a portion of the profit.
Furthermore, the company should invade the local areas and emerging markets in third-world and developing countries to set up new theaters and contact more customers to increase income. In addition, the company should conduct thorough project innovations to implement the live stream platform for home-viewing substitution. Although Covid 19 pandemic has caused an 82% decline in revenues and poor performance, it does not mean the end of cinemas’ movie exhibitions. Live streaming of films and movie content would help the company reach more customers and increase revenues without necessarily operating the cinemas and theaters. It would be the best approach since most individuals are digitally fluent and have wide access to smartphones, computers, and the internet. Even after the compulsory lockdowns and shutdowns during the Covid 19 pandemic, the company would still gain more customers, market its films, and make more revenue without operating its cinemas.
Goff Inglis, K., & Zolfaghari, S. (2017). A review of scheduling problems and research opportunities in motion picture exhibition. Informs journal on applied analytics, 47(2), 175-187. Web.
Gove, S. (2018). Case 10: The Movie Exhibition Industry: 2018 And Beyond. International Review, 25(6), 384-396.
Kim, I. K. (2021). The impact of social distancing on box-office revenue: Evidence from the COVID-19 pandemic. Quantitative Marketing and Economics, 19(1), 93-125. Web.
Weinberg, C. B., Otten, C., Orbach, B., McKenzie, J., Gil, R., Chisholm, D. C., & Basuroy, S. (2021). Technological change and managerial challenges in the movie theater industry. Journal of Cultural Economics, 45(2), 239-262. Web.