Analysis of Cineplex

Describe the advantages and disadvantages of each of the top four (4) competitor’s situations and strategic approaches.

There are now four dominant exhibitors: Regal, AMC, Cinemark, and Carmike. There is little differentiation in the offerings of the major theater exhibitors – price within markets differ little, the same movies are shown at the same times, and the food and services are nearly identical. Competition between theaters often comes down to distance from home, convenience of parking, and proximity to restaurants. Others quickly adopt innovations by one theater chain. The chains do serve different geographic markets and do so in different ways. Regal focuses on mid-size markets using multiplexes and megaplexes. Regal’s average ticket price of $7.43 is the highest among leaders. AMC concentrates on urban areas with megaplexes and on large population centers, such as those in California, Florida, and Texas. Cinemark serves smaller markets, operating as the sole theater chain in over 80 percent of its markets. Cinemark’s average ticket price last year of $5.11 was the lowest of the majors. Carmike concentrates on small to mid-sized markets, targeting populations of less than 100,000 that have fewer other entertainment options. Carmike’s average ticket price in 2007 was $5.89, but as $3.05, their average concession revenue per patron is the highest among the majors.

The different approaches of the aforementioned companies are reflected in the cost of fixed assets per screens. These cost result from decisions made on how to serve customers, such as the level of technology and finish of the theater – digital projection and marble floors cost more than traditional projectors and a carpeted lobby. Despite mutli- and megaplex facilities, Regal’s cost per screen is highest at $430,000. Carmike, the rural operator, is the lowest at just $206,000. Cinemark is in the middle at $367,000. Data is not available for AMC, but costs are thought to be...