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2 TABLE OF CONTENTS 1. The US Theater Industry Introduction 2. The US Theater Industry Size, By Box Office Revenue, By Number of Theatres and Screens, By Number of Admissions and Ticket Prices, The US Theater Industry Segmentation 3.1. By Analog, Digital and Digital 3D Screens, By Screens Per Venue By Type of Audience By Gender, By Age Group, Box Office Revenue, Movies and Admissions by Genres, Box Office Revenues and Admissions by Ratings, D Movies Market Introduction and Size, D Movies Market Introduction and Size, Trends and Developments in the US Theater Industry 6.1. Theaters Being Positioned as Entertainment Destinations 6.2. D-box Seats: New Seating Style for Real-Life Experience 6.3. XD-Extreme Definition and Dual Projection- alternates to I-max 6.4. Luxury Theaters: Theaters With a Difference 6.5. Rising Number of Mergers and Acquisitions for Competitive Advantage 7. The Theater Industry Value Chain in The US 8. Porter s 5 Forces Model for The US Theater Industry 9. SWOT Analysis 10. The US Theatre Industry Competitive Landscape,

3 10.1. By Major Theater Operators/Owners, Major Theater Operators/ Owners by Concession Revenue By Major Production Houses, The US Theatre Industry Future Outlook Cause and Effect Relationship between the US Theater Industry and the Independent Factors 12. The US Theatre Industry Future Projections, By Box Office Revenue, Future Areas for Growth By Number of theatres and Screens, By Number of Admissions and Ticket Prices, Company Profile of The US Theater Industry By Theater Operators/Owners Regal Entertainment Group Company Overview Business Strategies Financial and Operational Performance AMC Entertainment Inc Company Overview Business Strategies Financial and Operational Performance Cinemark Theatres Company Overview Business Strategies Financial and Operational Performance By Production Houses Warner Bros 3

4 Company Overview Business Strategies Financial and Operational Performance Walt Disney Pictures Company Overview Business Strategies Financial and Operational Performance Sony Pictures Company Overview Business Strategies Financial and Operational Performance Paramount Pictures Company Overview Business Strategies Financial and Operational Performance 14. Macro-Economic and Industry Factors: Historical and Projections The US Households Median Income, Expenditure on Entertainment, Appendix Market Definition Abbreviations Research Methodology Data Collection Methods Approach Variables (Dependent and Independent) Multi Factor Based Sensitivity Model Final Analysis Disclaimer 4

5 LIST OF FIGURES Figure 1: The US Theater Industry Size by Box Office Revenue in USD Billion, Figure 2: The US Theater Industry Size by Number of Theaters and Screens in Units, Figure 3: The US Theater Industry Size by Number of Admissions in Million and Ticket Prices in USD, Figure 4: The US Theater Industry Segmentations by Type of Screens on the Basis of Theater in Percentage, Figure 5: The US Screens by Type of Venue in Units, Figure 6: Gender wise contribution to Population, Moviegoers and Tickets sold in Percentage (%), 2011 Figure 7: Age Group Share of Total Population, Moviegoers and Tickets Sold, in Percentage, 2011 Figure 8: Frequent Moviegoers by Age Groups in Million, Figure 9: Number of 2D Movies Released in Units and Growth Rate in Percentage, Figure 10: Number of 3D Movies Released in Units and Growth Rate in Percentage, Figure 11: Theater Value Chain in the US Figure 12: Porter s 5 Force Analysis of the Theater Industry in the US Figure 13: The US Box Office Estimated Revenue in USD Billion, Figure 14: Estimated Number of Screens and Theaters in The US in Units, Figure 15: Estimated Admissions in Billion and Ticket Prices in USD, Figure 16: Attendance in Theaters, Sports events and Theme Parks in Million, 2011 Figure 17: Number of Theaters and Screens in the US, Figure 18: Total Revenue of the Regal Entertainment Group in USD Million, Figure 19: The Admissions, Theater locations and Screens Operated by Regal Entertainment Group, Figure 20: Total Revenue of the AMC Entertainment in USD Million, Figure 21: The Admissions, Theater Locations and Screens operated by the AMC Entertainment INC

6 Figure 22: Total Revenue of the Cinemark Theatres in USD Million, Figure 23: The Admissions, Theater Locations and Screens operated by the Cinemark Theaters, Figure 24: Total Revenue of the Warner Bros in USD Million, Figure 25: Total Revenue of the Walt Disney Pictures in USD Million, Figure 26: Total Revenue of the Sony Pictures in USD Million, Figure 27: Total Revenue of the Paramount Pictures in USD Million, Figure 28: The US Median Household Income in USD, Figure 29: The Average US Expenditure on Entertainment per Capita in USD,

7 LIST OF TABLES Table 1: The US Theater Industry Segmentations by Type of Screens on the Basis of Theater in Units, Table 2: Movies in Production in the US by Genre in Units, Table 3: The US Box Office Revenue Earned by Genre in USD Million, Table 4: The US Theaters Admissions by Genre in USD Million, Table 5: Theater Admissions in the US on the Basis of Movie Rating in Units, Table 6: The US Box Office Revenue Earned on the Basis of Movie Rating in USD Million, Table 7: SWOT Analysis Table 8: Revenue of Major Operators/Owners of the US Theater Industry in USD Million, Table 9: Major US Theater Chain Operators/ Owners Theatrical Admission Revenue in USD Million, Table 10: Market Share of Major Operators/ Owners of the US Theater Industry on the Basis of Percentage, Table 11: Major US Theater Chain Operators/ Owners Concession Sales in USD Million, Table 12: The Revenue Earned by Production Houses in USD million, Table 13: Cause and Effect Relationship between the US Theater Industry and the Industry and Macro Economic Factors Table 14: FDI Guidelines in China Table 15 Correlation Matrix of the Theater Industry of the US Table 16: Regression Coefficients output for The Theater Industry of the US 7

8 THE US THEATER INDUSTRY SIZE, BY BOX OFFICE REVENUE, The US theater industry is the largest in terms of revenue earned. In 2006, the box office revenue was USD ~ billion and in 2011 the box office revenue was USD ~ billion. The box office revenues have grown at a CAGR of ~%. The growth rate over the last 5 years can be attributed to the commercial success of the 3D movies, franchise movies and adaptations of movies from books and novels. Other factors that can be attributed for the rise in box office revenues can be the increase in the number of screens across the country, increase in the average ticket price, use of I-Max technology and XD projection, sequels of popular franchise movies. Figure: The US Theater Industry Size by Box Office Revenue in USD Billion, USD Billion BY NUMBER OF THEATRES AND SCREENS, In 2006, the number of theaters in the US was ~ which had increased to ~ in 2011 at a meager CAGR of 0.2%. The number of theaters in the US registered a negative growth in In 2008, the number of movies released was less. As a result, the entire industry took a hit in terms of revenue and growth. In 2008, the theaters registered a negative growth of ~%. In 2009, with a positive growth in the release of 3D movies, theater chains across the US increased their capacity 8

9 (screens per theater) and expanded geographically. The growth rate of theater industry in 2009 was ~%... The theater industry has shown an increase in the digital projection technology for the screens. The conventional analog screens are being phased out slowly. The theater chains are differentiating themselves on the basis of projection techniques being used. This is one of the main reasons for the phase out of the analog screens Figure: The US Theater Industry Size by Number of Theaters and Screens in Units, In Units 5,650 5,600 5,550 5,500 5,450 5,400 5,350 5, ,800 39,600 39,400 39,200 39,000 38,800 38,600 38,400 38,200 38,000 In Units Number of Theaters Number of Screens THE US THEATER INDUSTRY SEGMENTATION BY ANALOG, DIGITAL AND DIGITAL 3D SCREENS, In 2006, the percentage share according to the type of screens was ~ % for analog screens, ~ % for the digital non 3D screens and it was ~ % for the 3D screens Currently there are as many as ~ screens across the US using I- Max technology The number of Analog screens has decreased to ~ % of the total number of screens in the country in A negative growth rate of - ~% was registered by the Analog 9

10 Screens in the last 5 years. The decline in this screen can be attributed to the increasing use of I- Max in the theaters The Digital 3D screen segment has shown a similar growth from This increase has been due to more 3D films releasing over the last 5 years. In 2006 the number of 3D screens was 206 and in 2011 the number had risen to ~ at a CAGR of %... Table: The US Theater Industry Segmentations by Type of Screens on the Basis of Theater in Units, Particulars Analog screen Digital non 3D screens Digital 3D screens Total BY TYPE OF AUDIENCE BY GENDER, 2011 The total movie audience of the theater industry was ~ million in The audience has shown a fluctuating trend in the last 3 years. The audience of 2009 was ~ million; this had increased to ~ million by In 2011 the number of people visiting theaters was ~% of the total population of the US The average ticket sold per person was ~ in 2009, which was reduced to ~ in 2010 and ~ in 2011 In terms of frequency of visits, male population was more frequent in visiting theaters as compared to the female population The frequent moviegoers account for only ~% of the population but they bought half of all the movie tickets sold in 2011 (~ million ticket sales) 10

11 BY AGE GROUP, 2011 The age group that has contributed the maximum admission to the theater industry is ~ years. This age group comprises of the families as well as the working class of the US population. The theater industry has got ~% of the total admissions from this age group itself Over the last 5 years this is the age group that has given maximum number of admissions to the theater industry. In 2010 this age group had contributed ~ million admissions which were ~% of the total admissions There were ~ million frequent moviegoers in the age group of ~ years in The frequent moviegoers in this age group have been increasing in the last 3 years. The increase in the average expenditure on entertainment of the US is one of the main factors which have resulted in this increase. This age group is one of the main growth drivers for the theater industry. 3D MOVIES MARKET INTRODUCTION AND SIZE, The cinema market of 3D movies has grown at a rapid rate as compared to the conventional 2D movies. This is the order of the day as the experience of these movies is commendable... In the following year 2010, seven 3D titles accounted for ~% of the domestic box office. The movies that have made a huge impact are Avatar, Toy Story 3, and Alice in Wonderland, The Twilight Saga: Eclipse, Despicable Me, Shrek Forever After and How to Train Your Dragon Complimenting this, the theatres have also started adding up 3D screens to their existing screens, this can be inferred as the 3D screens accounted for a total of ~% of the total number of screens in the US. Theatrical revenues would increase if 3D movies are commercially successful because of high ticket price... The number of 3D movies made in 2011 has increased at a CAGR of 41% from In 2011, ~ 3D movies were made whereas only ~ 3D movies were made in

12 Figure: Number of 3D Movies Released in Units and Growth Rate in Percentage, % % % % In Units % 60% 40% 20% in Percentage(%) 10 0% 5-20% % 3D movies released Growth Rate THE US THEATRE INDUSTRY COMPETITIVE LANDSCAPE, BY MAJOR THEATER OPERATORS/OWNERS, The theater industry is a highly competitive market in the US. The major players in this industry are the Regal Entertainment Group, AMC theaters, Cinemark, Cineplex theaters, Marcus theaters, Carmike, Rave cinemas and many small theater groups..the theater chains are competing with each other on the basis of location, stadium seating arrangement, quality of projection (analog and digital projection), and appeal of concession products. The theater chains are also competing with each other over the leisure time of the public... Cinemark cinemas registered the best growth over the last 5 years with a CAGR of ~%. The revenue increased from USD ~ million in 2006 to USD ~ million in

13 Table: Market share of Major Operators/ Owners of the US Theater Industry on the basis of Theatrical Admission Revenue in USD Million, Years Regal Entertainment group AMC Entertainment inc Cinemark Carmike Cineplex 2006 ~ ~ ~ ~ ~ 2007 ~ ~ ~ ~ ~ 2008 ~ ~ ~ ~ ~ 2009 ~ ~ ~ ~ ~ 2010 ~ ~ ~ ~ ~ 2011 ~ ~ ~ ~ ~ BY MAJOR PRODUCTION HOUSES, The movies made by the leading production houses are the key source of revenue for the theater chains. The leading production houses of the US film industry are Warner Brothers, Walt Disney, Sony Pictures, Paramount, Universal and Fox Searchlights. The competition within the industry is intense. The production houses are facing major threats from piracy and maturation in the DVD/ Blue ray market The distribution window for the production houses in theaters and other formats such as video on demand (VOD), television broadcasts has been reducing to curb the impact of piracy and may continue to reduce further in future Over the last 5 years the Paramount pictures has shown the highest CAGR of ~%. The revenue of Paramount pictures was USD ~ million in 2006 which had increased to USD ~ million in 2011, thereby becoming the largest production house in the same year. 13

14 Table: The Revenue Earned by Production Houses in USD million, Years Warner Bros Walt Disney Sony Pictures Paramount Fox Searchlights Universal 2006 ~ ~ ~ ~ ~ ~ 2007 ~ ~ ~ ~ ~ ~ 2008 ~ ~ ~ ~ ~ ~ 2009 ~ ~ ~ ~ ~ ~ 2010 ~ ~ ~ ~ ~ ~ 2011 ~ ~ ~ ~ ~ ~ THE US THEATRE INDUSTRY FUTURE OUTLOOK CAUSE AND EFFECT RELATIONSHIP BETWEEN THE US THEATER INDUSTRY AND THE INDEPENDENT FACTORS Table: Cause and Effect Relationship between the US Theater Industry and the Industry and Macro Economic Factors Industry Factors Market Impact Comments New Mergers/ Alliances Mobile applications 3D Movies Pay per click sites Video on Demand Cause: Effect: Cause: Effect: Cause: Effect: Cause: Effect: Cause: 14

15 Effect: SOPA/PIPA act Cause: Effect: THE US THEATRE INDUSTRY FUTURE PROJECTIONS, BY BOX OFFICE REVENUE, The box office revenues have shown a CAGR of ~% over the last 5 years. The future box office revenues depend upon the commercial success of the franchise films, 3D movies and on screen adaptation of bestselling books across the world The theater industry of the US is estimated to grow at a CAGR of ~% for The industry is estimated to reach USD ~ billion by 2016 Figure: The US Box Office Estimated Revenue in USD Billion, USD Billion E 2013E 2014E 2015E 2016E 15

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