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Comparative market analysis

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University of Ottawa
Carl Denis

Cineplex f Macroenvironment Facteurs economique : • 85% of theatres have digital projectors which cost 70-80 thousand dollars each and more than 80 000 dollars for 3D projectors. • Rely on concession sales too, which are declining due to increasing prices • During economic downtimes people see more movies ( increase of 16% during recent economic downturn and 13% during economic down times of 1982) • 3 of 10 billion dollars in revenue were lost due to piracy Facteurs economique: • Piracy is an issue that decreases movie sales • June 2011-1 billion hours of Netflix watched • People don’t want to leave the comfort of their own home • Digital copyright laws need to be adjusted. • Overall revenues will decrease as people skip the distributor Facteurs Legaux • Currently Netflix and online streaming sites are expempt from certain fees telecom companies face for Canadian content • Netflix not required to follow laws requirinf the funding of Canadian Content by distributors Facteurs Technologiques • Increasing 3D technology- 11 of top 25 movies in 2011 were 3D, and those under 25 saw 2 on average • 4D inventions • IMAX introducing advanced technology and DOLBY speakers change the spearkers used to enhance the sound Facteurs Sociales • Social networks facilitate ticket buying, promote theatres, make interactive, announce promotions, sales and post coupons • Different regions like different movies ( The Help did better in the US and The Smurfs did better in Quebec) Industrie Strengths : Marche • Those 12-24 make up 22% of movie goers and 30% of ticket sales • 13% OF Movie foers are 60+ • Largest decline in movie goers was 12-17 • Steady decline in revenues and popularity since 2002 ( decrease of around 19% from 2002 to 2011) • Many people investing in TV and home theatre system ( under 2000 for projector) Strategie de Marketing • Trying to entice younger viewers with paperless ticketing, better audio systems, 3D systems, better seating, gourmet food • WWE wrestling , sports, Olympics etc being shown in only some 60 theatres • Online rentals and downloads (new) Recommendations • Show a wide variety of media in ALL theatres • Expand online selection Netflix Macroenvironment • Increasing techonological dependence- people like streaming and convenience • U.S streaming increased by 46% in 2012 , with spending reaching around 46 billion • Older demographic using internet for personal use- according to stats Canada, 40% of those 65 or older are using the internet for personal use, perhaps due to physical and mobility restrictions • 54% of internet users download videos, watch movies, or video clips online • It is illegal (obviously) to pirate videos- Netflix is an affordable alternative to buying or going to movies, and it is legal • Strict copyright laws with video streaming and content sharing ( bittorrents and linking take away copyright owners’ control) • Streaming technology isn’t always illegal(P2P) BUT nature of content can be • Streaming illegal content is a grey area and not often punished, where as bittorrent downloads allow officials to track IP address • Uploading and streaming content is illegal-considered a public viewing • Watching a movie was traditionally a social activity- with friends etc. Netflix allows one to do so in the comfort of their home. If one person has Netflix , it can discourage friends from getting Netflix because they have access through a friend • Friends and reference groups influence what movies to watch- Netflix offers a much larger variety than Cineplex/ theatres- less restrictive • Netflix also allows those of different cultures with different beliefs to find and watch movies according to cultural beliefs, traditions, etc. where as movie theatre offers a select few movies. • Social Media LARGELY influences decision with friends reviews on shows and movies, spoilers, fan clubs, etc • Netflix is affordable in an economy where the average household has 3 children and thus saves money on movie tickets ( 8 dollars a month for unlimited movies vs. around 60 dollars per trip to the theatre) Industrie • Started movie streaming in 2008, before was a dvd delivery service • Netflix acquires rights to the political film 'The Square,' a frontrunner in the upcoming Academy Award race for best documentary. • Opportunities: International Growth, Netflix original programs(ex: Orange is the new black), real time streaming of cable shows. • Threats: Internet Service providers blocking / slowing traffic ( it is in the ISP’s financial interest to slow traffic to Netflix-Maria Clement), Increasing competition because of increasing demand ( Dish network, etc.) Intense competition for subscribers, New technologies/decrease popularity of DVD. Changes to law,Delayed availability of content from studios, Reliance on partnership to stream video.,Loss of distribution channels., Increase costs,Server disruptions • Strengths: Brand loyalty( 30 million customers),diverse movies/products, loyal following- competitors are limited geographically, or in selection • Weaknesses: DVD and physical media delivery has been put on the back burner, so to cope Netflix has to/can redistribute resources to perfect online streaming and develop selection online • Netflix, which has more than tripled this year to lead the Standard & Poor’s 500 Index, gained 6.4 percent to $313.06 at the close in New York. • Since 1997 ( start of Netflix), they have been leader in the industry , gaining 25% of market share in first 10 years and currently holding 32% of market share. Netflix’s success has inspired direct competitors,(Hulu, coin star) causing a decline in market share in 2012. • Indirect competitors are increasing as well- ones without registration fees- (Youtube, BitTorrent) • No threat of restrictions or bandwith caps • Amazon and Comcast are bigger threats than piracy • Amazon has been largest competitor since 2011- 70% content increase (streaming) since 2012 • Comcast is much lower in cost and has relations with media companies, offering them leverage • Netflix reached a deal with Warner Bros. allowing them to release titles 28 days after their release in order to address the shift of preference from buying dvds to streaming due to a shaky economy • Historically speaking, this industry began as stand-alone brick and mortar rental stores suc
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