PESTEL Analysis of the American Movie Theater Business Industry

PESTEL Analysis of the American Movie Theater Business Industry

A look at the movie theater industry in America reveals that a lot needs to be done to improve the performance over time. In the internet era, the industry faces significant challenges with the ability of individuals to stream movies from sites such as Netflix. Technology has also threatened traditional movie theaters, which have been replaced by big screens that help individuals to get a better view of the images. The paper involves a PESTEL analysis of the movie theater industry in the United States to understand the factors threatening its survival and grab the opportunities available for improvement.

Political factors

The movie industry is free in terms of political legislation in the United States. Censorship and limitations are not an issue in the industry since the freedom and expression are repeated rights in the industry. However, political influence is considerable in the movie theater industry, given that it plays a significant role in the mass media. For instance, the Federal government imposes a limit on the nature of political content that scriptwriters display. The United States movie theater industry is also threatened by the political tension between the United States and China. The implication is that this tension could negatively inhibit the ability of major American theater industries to acquire foreign-owned firms to increase their profit margins..

Economic factors

The economy affects companies in all sectors in the United States. Such factors threatening the movie theater industry include the level of economic growth. For instance, the American movie theater industry was hardly hit by the 2008 financial crisis that saw a reduction in the country’s economic growth and the level of employment (Lo, 2012). When the level of employment is low, people have little money to spend on entertainment, and this will reduce the profitability of firms in the movie theater industry. Skyrocketing ticket prices also affect productivity. However, there is a good reason for the expensive ticket prices since the movie theater owners receive a small percentage of the profits while the rest go to the studio that created the movie. The high ticket prices, however, discourage people from attending in large numbers and therefore the profitability of the firm. The availability of alternative options for movie streaming also threatens the profitability of movie theaters since individuals can watch a series of movies at home and a cheaper cost. However, movie theaters are trying to deal with this competition by offering different concession options such as restaurants, comfortable chairs, and options like yogurt, popcorns, and desserts that provide a better experience for the customers.

Sociocultural factors

The movie theater industry is hardly hit by the availability of streaming options like Hulu and Netflix that enable individuals to watch movies at a lower price. This has seen a reduction in the theater attendance patterns. The Box office attendance hit a record low in 19 years in 2015, leading to a significant decrease in the profit margins (Brandom, 2015). The demographics and skill level of the population impact positively on the productivity of the movie theater industry. The United States has a significant number of youths who are highly likely to attend movie theaters, leading to an increase in the productivity of movie theaters. The leisure interests of the Americans also impact positively on the movie theater industry because individuals take movie watching as a way of family bonding.

Technological factors

Technology has had a positive impact on the movie theater industry. Most theaters offer 4Dviewings so that where the individual watches the movie as their chair moves too (Omori, Tsutsui, and Ueoka, (2013). Such theaters also provide appropriate changes to the environment, including wind gushes and water sprinkles, depending on what is happening to the film. These positive experiences attract customers to the industry and, therefore, an increase in the profit levels.

Environmental factors

The environment has little or no impact on the movie theater industry in the United States. However, movie theaters can make the environment more eco-friendly using LED lighting technologies, which can save between 50 and 60% of energy (Maruejols, Ryan and Young, 2013). Other movie theaters are installing solar panels on the roofing of their buildings to conserve power, while others use natural fiber for popcorn bags to save the environment. Virtual reality also poses an opportunity for movie theaters to provide quality content to the viewers in the future.

Legal factors

The movie theater industry is greatly affected by lawsuits and discriminatory actions against individuals. Several theaters across the United States have faced discrimination lawsuits that recommend a lack of movie captions and accommodation standards for people with disabilities. One factor influencing the movie theater industry is the US Supreme Court ruling that demanded studios to end block booking. Studios and exhibitors have been forced to negotiate film rental and access.

References

Brandom, R. (2015, January 1). Box office attendance hits lowest level in 19 years. The HollyWood Reporter. https://www.theverge.com/2015/1/1/7478987/box-office-attendance-hits-lowest-level-in-19-years

Lo, A. W. (2012). Reading about the financial crisis: A twenty-one-book review. Journal of economic literature, 50(1), 151-78.

Maruejols, L., Ryan, D. L., & Young, D. (2013). Eco-houses and the environment: A case study of occupant experiences in a cold climate. Energy and buildi ngs, 62, 368-380.

Omori, N., Tsutsui, M., & Ueoka, R. (2013, July). A method of viewing 3D horror contents for amplifying horror experience. In International Conference on Human Interface and the Management of Information (pp. 228-237). Springer, Berlin, Heidelberg.