By Peter Lyle DeHaan , PhD
When someone says, “Let’s watch a movie,” what’s the first thing that comes to mind? Do you immediately think of a group outing to go watch the latest flick? Perhaps your preferred viewing venue is the more cozy environment of your living room couch. Could it be that watching a movie is a solitary experience for you, one that is enjoyed parked in front of your laptop computer Whatever it may be, there are a multitude of options for watching a movie – and a diverse list of business enterprises that support those variations. Consider the following options for watching a movie:
- Drive-in Movie Theaters: This is not likely where you would start your list, but, yes, drive-in movie theaters still exist – and there is resurgence of interest. According to drive-ins.com, there are 520 drive-ins operating in the United States today.
- Single-Screen Theaters: The traditional theater with a solitary screen is also waning in popularity and in numbers, but it is not a thing of the past either. Close to where I live is a one-screen theater that has been making a go of it – and attendance is increasing.
- Multiplex Theaters: The multiscreen theater is the premier venue for the off-site (that is, away from home) movie-viewing experience. These theaters offer multiple titles and varied viewing times. For major openings, they can show films simultaneously on multiple screens and with staggered starting times.
- Network TV: This is the least costly option for those willing to wait to watch a particular movie. With an antenna, viewing is essentially free, sans the electricity to operate the TV. If you have cable or satellite, the effective cost goes up, but still there is no incremental per movie charge.
- Movie Channels: Some movie channels are included as part of a cable/satellite subscriber package, whereas others require a monthly subscription. These are great ways to watch current and classic movies – and everything in between – providing you are willing to scrutinize the programming schedule for desired titles.
- Pay-per-View: This is generally available on cable/satellite systems, allowing for the viewing of movies (limited to what is offered and when it is showing); there is a charge for each viewing. Essentially this model combines the scheduling and admission elements of a theater with the comfort of home viewing.
- Video-on-Demand: On-demand is pay-per-view without the schedule. Start a movie at any time, on any day.
- Local Video Rental Store: Video rental stores function like a library for movies – except that there is a cost for each rental. Most stores are fairly limited in their titles and may stock few copies.
- Mail Rental: Netflix (90,000 titles) led the way with this option, with Blockbuster (80,000 titles) and others following. This service allows customers to order a movie online and have it mailed to their home, often by the next day. Watch the movie and mail it back – with free mailing. Although advance planning is required, it is less hassle than driving to a video rental – twice – and there are many more titles and copies available.
- Download Rental and Streaming Video: This is much like the video-on-demand option, but it utilizes the Internet for distribution (think YouTube, with high quality, for movies). Currently Netflix and Movielink (acquired by Blockbuster) each have 6,000 titles available for download.
What does all this mean? Plenty – and it can apply to any industry or business.
The movie distribution business is highly fragmented with many competing variations. Each of the options listed has a threatened existence. Some of them are arguably obsolete, requiring innovation and determination to remain viable. Many are feeling competitive pressures that endanger their existence. For those on the leading edge, technological advances could render them obsolete in an incredibly short time.
Let’s revisit the list again, with these issues in mind:
- Drive-in Movie Theaters: This is an obsolete option. Those that have survived have adjusted their business model and reinvented themselves to make it work. Over 500 have done just that.
- Single-Screen Theater: This option is one step removed from the drive-in. Those that have stayed open have figured out how to market themselves and fit into a desirable, sustainable niche.
- Multiplex Theater: The leader among off-site movie viewing, and the conventional business model, the multiplex is facing increased and intense pressure from the remaining options on the list (except for network TV).
- Network TV: This is the last distribution node to obtain a movie after its release; therefore, it is typically the last option we consider. How would you like to be least preferred option and garnering decreased interest? Enough said.
- Movie Channels: An option for many, but increasingly viewed as limited in comparison to the next five options.
- Pay-per-View: You get to see movies closer to their release date then the preceding options, but the titles are quite limited in selection and somewhat restricted by schedule.
- Video-on-Demand: This solves the scheduling restriction of pay-per-view, but still suffers from limited titles.
- Local Video Rental Store: Who wants the hassle of going to a video store to rent a movie, especially without knowing if your title will be available? Succinctly put, this model is rapidly approaching obsolesce. This is precisely why Blockbuster ventured into rental via mail.
- Mail Rental: Netflix changed how we rent movies, but this model will quickly fade. Downloading movies will soon make this option passé.
- Download Rental and Streaming Video: This remaining option seemingly has no immediate threats, but it is a technology-based solution and technology changes rapidly. As such, a pervasive threat to this business model could erupt at any moment and with little or no warning.
Many industries are likewise fragmented. Some businesses are stuck in the past. These companies, mired in obsolescence, are still in business because they have done what the drive-ins and single screen theaters have done: somehow they reinvented themselves, found a niche, and marketed effectively.
Then there are organizations that are trapped in their business plan, traveling down a narrowing road. Perhaps their distinctive advantage is their staff, but they can’t hire enough qualified employees. Maybe they have staked their future on an uncertain and questionable strategy. Others are loaded with technology, but the next competitive technological innovation could render all that they have as something that no one wants.
This analysis is not unique to movie distribution. It exists in every business, in every industry, and in every economy. Some will survive and some won’t. The key is taking what you have and using it to your advantage, perhaps in a way that no one else has thought of. It could be your location, your staff, your technology, your niche, your management team, your leadership, or something else. If you have none of these options, then perhaps it’s time to morph into another line of business, be it within or apart from the industry in which you are currently a part of. Regardless of your situation, with determination and innovation there’s always the opportunity to reinvent your business. The one solution that won’t work is to do nothing at all.