Movie theaters will invest in digital and 3-D technologies, yielding higher profitability
Los Angeles, CA (PRWEB) June 21, 2012
A gradual recovery in business and consumer spending and the lagging recovery in unemployment continue to hinder demand for the Movie Theaters industry. Enhanced cinema experiences like 3-D technology and luxury theaters attract a steady audience, partly counterbalancing low consumer spending. As a result, industry revenue is expected to decline at an annualized rate of 0.9% over the five years to 2012; this growth includes an expected increase of 0.2% in 2012. IBISWorld industry analyst Agata Kaczanowska says that increasing disposable income growth will drive consumer spending and contribute to revenue of $13.2 billion in 2012.
The Movie Theaters industry competes with many video product viewing and access alternatives, including cable and satellite TV, iPods, cell phones and internet movie downloads to computers and game consoles. This competition is a major driver for investment in theaters, but it has also spurred some companies to consolidate or declare bankruptcy. Several major players have closed underperforming locations and made significant acquisitions elsewhere, such as Regal Entertainment Group's purchase of some AMC Entertainment theaters and AMC's acquisition of Kerasotes ShowPlace Theaters, says Kaczanowska. Another significant acquisition in the industry is expected in 2012 because a Chinese corporation, Wanda, has announced plans to purchase major company AMC Entertainment. This new parent company is anticipated to finance additional investment in theaters. Major operators are investing in digital screens, improved Dolby sound equipment and stadium seating. The popularity of 3-D movies has supported these theater investments. Operators charge premium prices for 3-D movies and offer an experience that few people can replicate at home. Industry profitability continues to improve as admission prices escalate and attendance rises. However, promotional discounting still prevails, catering to low disposable incomes and consumer sentiment.
In 2012, the industry's top players are the Regal Entertainment Group, AMC Entertainment Inc. and Cinemark Holdings Inc. Concentration has increased since 2007 because of rampant industry consolidation due to large theater chains significantly investing in new locations and technologies. Industry concentration is expected to increase in the near future due to further consolidation pressure caused by low audience and revenue growth and lower-than-expected profit margins. In the five years to 2017, the industry will benefit from increasing personal disposable income, which is expected to stimulate consumer spending. During this time, revenue is projected to increase. IBISWorld forecasts that companies will continue to invest in acquisitions and digital and 3-D technologies, keeping profit fairly steady during the next five years. For more information, visit IBISWorld’s Movie Theaters in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry is made up of businesses that primarily exhibit movies. It includes cinemas, drive-in and outdoor movie theaters, and film festival exhibitors.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.