The Market for Cinema in the UK
• Multiplexes are so big that if a film is full there is either another session starting
in 40 minutes, or there is something else that they really want to see.
• In its early years, a multiplex was typically the monopoly supplier to its local
catchment area.
• The multiplex environment enabled cinema operators to employ the mandatory
number of employees to manage additional revenue-generating activities such as
concession stands and ticket booths.
The Movie Industry
• Film production, distribution and exhibition were the fundamental elements of the
movie business.
Film Production
• Film production is expensive and risky
• Average cost of making and marketing a Hollywood movie in 2001 was $78.7
million
• UK film companies are not large integrated organizations
• UK film companies must pre-sell film distribution rights to a separate distribution
company
• Distribution company contributes to the production budget in form of an advance
or guarantee
Distribution
• Studio-owned and independent distributors operated in the UK cinema industry
• Distributors advised on which films should be released and sold exhibition rights
to independent operators
• Factors such as film type, potential audience size and composition, and other
films released around the same time were taken into account when determining
marketing plans and release strategies
• Success in the cinema was seen as critical to success in other markets
• Films were released in successive periods, beginning with the cinema release
highly important because the success of a film in the cinema was viewed as being
critical to its success in multiple other markets.
Exhibition
• Odeon was the leading cinema operator in the UK with a strong proposition as the
film-lover's brand
• UCI pioneered the multiplex in the UK with digital projection and IMAX screens •
Warner Village had 36 cinemas with the largest multiplex in the UK
• Cine-UK with its portfolio of 28 Cine-World cinemas had featured in the Deloitte &
Touche Indy 100 list
• Nut was negotiated between exhibitor and distributor with distributors taking
lion’s share of takings
• Theatre staffing levels increased during peak periods
Target Audience
• Two broad categories of distinction in the industry: mainstream (commercial) and
art-house
• Families were a key segment for cinemas, with weekend offers designed to make
the movie-going experience more affordable and enjoyable
• Newly refurbished cinemas emphasized comfort, service and quality films
, Use of New Technology
• Research showed that young, avid cinema-goers tend to be heavy users of mobile
phones and the Internet.
• Most cinema houses had adopted the Internet as a means of reserving seats and
purchasing tickets.
Pricing Strategies
• Little difference in average prices charged by leading exhibitors.
• Prices varied by region.
• Prices varied by time of day, day of week, type of seating, or customer segment.
• Discounted rates offered to students, senior citizens, and children.
Easyjet
• Stelios founded easyJet, Europe's first low-cost, no-frills, point-to-point airline in
1995
• Bypassed travel agents and used a yield management system
• Homogenous fleet comprised only brand new Boeing 737s
• Experienced pilots paid prevailing market rates
• No advertising agencies -used own aircraft as marketing tools
• Stelios maintained 21.9% stake -sold some of shares to finance new ventures
Easy Group
• 1998: EasyJet and easyGroup brand in place
• easyInternetcafé established, same yield management and dynamic pricing
principles as in airline business applied
• Franchises of easyinternetcafe available in 15 US states and 10 other countries
• Profitability & Growth info in Exhibit 12-14
• easyCar car rental service established in April 2000
• 2 central London rental sites established by February 2003
• Profitability expected in 2003 and targeted an IPO in 2005
Other Ventures
• Launched easyValue.com and easy.com in November 2000
• Launched easyMoney in 2001
• Financed personally by Stelios in 2003, with minimal investments from other
easyGroup management team members
New Venture Development
• EasyGroup constantly sought new business opportunities, even inviting visitors to
submit ideas.
• Decisions were made based on data from the public domain.
• The easyCinema project was closest to reaching a decision point.
Criteria for New Business Selection
• Consumer-facing businesses
• Significant price elasticity
• High fixed-cost base
• Low marginal-cost to service additional customers
• Stelios cited funeral business as example of non-suitable businesses due to lack
of discretionary spending; not suitable for yield management
Process of Entering new Business
• Extract complexity from business processes to simplify operations
• Implement user-friendly software to ensure all "check-out" process steps are
executed
• Reverse engineer business operations to arrive at a cost structure that is half of
competitors
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper lstokroos. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €10,49. Je zit daarna nergens aan vast.
