Market Feasibility - Movie Theatre Business

MARKET FEASIBILITY STUDY

ON

MOVIE THEATRE BUSINESS

CONCEPT

There is a lot of passion for sports and entertainment in India. The primary source of entertainment are movies. The highest grossing movie in India has estimated gross collection of approximately 100 million Canadian dollars. This collection has come from around 85% of total screens in India. The interesting fact is, despite being the second largest country in the world in terms of population, India has only a little more than 8000 movie screens in total while a country like the United States, with a population 3 times less than that of India, has over 40,000 screens. The statistical numbers are enough to realize that more than 75% of movie business potential in India is yet to be explored.

       In a lot of provinces, the screen counts are very less. Therefore, people must travel long distances to watch a movie. For instance, the nearest theatre from my native place is at 20 kilometers. Hence, watching a movie consumes additional time and money. Hence, I believe that there is a lot scope for a cinema hall in our small town. My dream is to establish a 2-screen cineplex theatre with advanced technology. The total seating capacity would be over 1200 (600 per screen) and the building would consist of two cafeterias and a large parking area for vehicles.

     The demand and location are the prime factors which differentiates my business from other competitors. There has been a constant increase in footfalls for movies and when it comes to location, there are no theatres in a radius of 15 kilometers.

MARKET ASSESMENT

A thorough study on the market size, trends, customer surveys and estimated sales and market share is necessary before starting a business. This analysis would help in implementing what the customer requires.

MARKET SIZE & TREND

An estimated population of 1,50,000 stays in the spherically targeted area covering 15 kilometers. The distance mentioned could go further depending on the quality of service. Since movies release throughout a year, there is hardly any seasonal effect. The current trend in the business is to make the maximum out of a film in two weeks by allotting highest number of shows. This is done in order to access new movies which release in every two weeks. Moreover, show timings could be adjusted depending upon the success of the films.

TARGET AUDIENCE

The primary source of income for movie business is undoubtedly family audience. Even though youth provides the initial rush and helps in generating word of mouth for good movies, sustainability depends on families. They contribute to greater occupancy as they drop in as a group of at least three which could extend to six members or more. Majority of family audience drop in during evening and night shows while the morning and afternoon shows are filled in by teenagers and young adults. Most of the tickets booked by families are done through online booking sites which avoids chaos in theatre premises.

CUSTOMER SURVEYS

Researching is an integral part of business. It is done before initiating a business, while carrying it on and envisioning future developments. The initial process mainly includes surveys and talking to people. The questionnaire would encompass different sections like the facilities people expect while watching a movie, the seating comfort, the technical satisfaction, price of the food items in the cafeteria and so on. This would help to mould the cinema hall in a way people want it to be rather than making it the way owner wants it to be and forcing people to like it. Moreover, having effective talks with people would help build a healthy relation between the owner and customers which could in turn contribute to profit.

ESTIMATED MARKET SHARE

From the business perspective, a film has 3 major sectors – production, distribution & exhibition. A producer makes the film with a certain budget and sell it to the distributors for a high price. The distributor then distributes the film to theatre owners. The amount that is left, after excluding government taxes, is shared between distributor and exhibitor at a ratio of 55:45. In detail, if the collection earned from a single show is $100 (excluding tax), the share of the theatre owner is $45. The ratio may vary for certain films with the consent of both the exhibitors and distributors. When a film runs well, the theatre owner earns almost half of the total collection which is highly profitable once the breakeven point is met.

TECHNICAL FEASIBILITY

Generally, two types of movies are made in India – one for the class and the other for the mass audience. The former is preferred by people who likes to enjoy the movie in a peaceful ambience while the latter is received with cheers, whistles and laughter. Therefore, the structure and technical factors should satisfy both set of audience to have a healthy business.

4K Ultra HD movie screens are very scarce in my province in India. Out of the two screens, one would be designed for 4K HD projection while the other would be made for 2K HD. Along with the visuals, the sound system also will be modified to be of higher quality. The primary aim behind the implementation of the superlative technology is to make the audience ‘feel the experience’. Even though IMAX screens offer supreme quality, the plan to execute in a small town like that of mine would be huge risk as the initial installation price, the maintenance cost as well as the ticket price are going to be much higher which would affect the business in a negative way.