Operations Management of New Offering - Multiplex Cinema

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Operations Management Project.

Made By:- SYBBA- C

Name Roll NoAmman Saraf 123Nischay Gupta 148Palash Agarwal 151Ronak Mehta 157Tirup Patel 171Vivek Jhala 175Yajur Gupta 176

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INDEXSR.NO TITLE1. INTRODUCTION ABOUT THE

SERVICE

2. CUSTOMER SURVEY3. CAPITAL

4. PRODUCT DESIGN5. PROCESS DESIGN6. FORCASTING AND ITS

TECHNIQUES

7. STRATERGIES AND CONCLUSION

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THE CURRENT INDUSTRY SCENARIOIndia's craze for films has not been fully exploited by the "Film Exhibition"industry due to the lack of screen density in the country coupled with thepoor quality of screens. "Multiplex Cinemas" offer an alternative to tap thispotential by providing a quality experience to the viewer as well aseconomies to the multiplex operator."Films" has been one of the integral components of the Indian entertainmentindustry contributing nearly 27% of the total revenues of the entertainmentindustry. Besides, films also contribute to other components of theentertainment industry like music, television and live entertainment. TheIndian film industry is one of the most complex and fragmented national filmindustries in the world comprising of a number of regional film industries likeHindi, Tamil, Telugu, Kannada and others. The Hindi film industry is the mostpopular among them. Though India produces the largest number of films inthe world (Approximately 1000 per year), it accounts for only 1% of theglobal film industry revenues. In spite of being over 90 years old, the Indianfilm industry was accorded the status of industry only in 2000. Over theyears, the Indian film industry has been highly unorganized as film financingwas dependant on private and individual financing at extremely high interestrates. Only recently, the industry has got access to organized finance. Withvertical integration taking place between producers, distributors, exhibitors,broadcasters and music company’s corporatization is now taking shape inthe Indian film industry. We believe, that corporatization, will bring abouttransparency, accountability and consolidation which will help to improve theoverall profitability of the Indian film industry as well as reduce piracy andleakages which presently account for 14% of the Indian film industry'srevenues.

FILM EXHIBITION BUSINESS IN INDIA TREMENDOUSSCOPEFilm exhibition forms the most important component of the Indian filmindustry. According to the - KPMG report domestic theatrical revenuescontributes 57% of the total Rs59bn film industry revenues and are expected

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to grow at 17%. Overall, the Indian film industry is expected to grow at 16%. The main pockets for film exhibition in India are Delhi, Mumbai and South India. Due to various regional language film industries in the South, it has become an important film exhibition pocket. Hyderabad and Bangalore are 2 southern cities whereoccupancies are exceptionally high at around 70%-80%. Price-Waterhouse-Cooper prepared the report, which threw up some exciting figures that includes the truth that profits from Indian cinema has arisen by 17% between 2004 to 2007.For the same period, the foreign box-office share stands at an incremental 9%, and the domestic video market has indicated outstanding growth of 30%.Experts think that the mixing of ancillary income sources and the increasing acceptance of Hindi cinema out of the country is responsible for this combined change.Ace filmmaker Yash Chopra said, “More and more overseas markets like Mauritius, China, Japan, Korea are being explored with each passing year.”Producer Bobby Bedi commented, “I think the market revenue is getting divided in an even manner. Be it home video or be it theatricals, the viewership is expanding.”The report also reflects an interesting estimation of a strong reduction in the domestic box-office share in the coming time by as much as 70%.Thus far, with an entire ancillary world of cable and DTH TV, out of home video and radio plus internet film-based content rapidly developing, Bollywood's global reach is set to expand business and markets substantially.

MULTIPLEXIndia currently has 11500 existing screens, 95% are standalone, singlescreens. These single screen cinemas are poorly maintained as the ownersfind it difficult to upgrade and renovate their facilities, due to unavailabilityof organized finance. The deteriorating quality of these cinemas dissuadedviewers and they started using alternative viewing options.Over the last few years, multiplexes have emerged as a trend in urban India."Multiplexes" are essentially cinemas with 3 or more screens. They provide aquality viewing experience and are generally located around shopping mallsto increase footfalls in these malls. Each screen in a multiplex has smallseating capacities in the range of 150-300 seats as compared to singlescreen cinemas which have capacities in the range of 800-1,200 seats.With around 11500 active screens, India is under screened. China, whichproduces far lesser films than India has 65,000 screens while the US has36,000. India’s screen density stands low at 12 screens per millionpopulations. There is a need of at least 20,000 screens as against the current

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11500. This gives multiplex operators enough room to grow as the traditionalsingle-screen theatres do not have the financial wherewithal nor do they enjoy tax incentives.

Where will you watch them?India is an entertainment hungry nation, and the major sources ofentertainment are cricket and Bollywood. More than 3.3bn tickets are sold inIndia annually, this makes us the most cinema going population in the world.Even then, there are only ~11,000 screens operational in the country.Secondly, 95% of these are single screen theatres many of which have poorquality ambience.Most of the single screen theatres are run by single proprietor, often withoutproper operational management skills. Moreover, because of the poor qualityof prints supplied to the single screen theatres in the rural areas, footfallshave been coming down. On top of it, these screens are not eligible forentertainment tax exemptions. These factors have eroded the viability ofthese screens resulting in poor infrastructure spend which further reducesfootfalls.

People willing to pay for qualityWith the entry of multiplexes, which provide better quality movie watchingexperience at a higher price compared to single screen theaters, more andmore middle income group people are coming back to the theatres thusunlocking a latent demand. This is a classic case of leisure consumptionwinning over value proposition in India. As content supply booms, more andmore people will turn to multiplexes because of the rising willingness ofpeople to pay for such services.

Enough space for more multiplexesWe believe that there is enough space for more multiplex projects given thequantum of demand and lack of supply in the sector. Our preliminaryanalysis suggests that at national level and considering only the urbanpopulation demand in the age group of 15-60 years, 662 multiplexes with 3screens per property i.e. ~2000 screens can operate at 35% capacity. All ofthe multiplex players combined are operating only ~500 screens at present,hence, we believe that even though there might be a case for overbuild insome pockets, overall there is enough scope for further screen supply.

BREIF IDEA ABOUT OUR SERVICE.Our service is cinema theatre.This is to entertain people from their daily and tiring routine. Our theatre name is APEX CINEMA. We have targeted to mostly college going students but others can also come.our cinema will be located at

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vile parle as there are more college going crowd. It will be unique experience in our theatre with much of facilities and people can enjoy movie and sit comfortably .

GROWTH DRIVERSAt a time when single-screen theatres are dying due to lack of footfalls,people are queuing up at multiplexes that sell tickets at almost 5 times theprices prevailing in single-screen theatres. This fact provides ampletestimony to the increasing prosperity as well as the Indian consumers’willingness to pay for superior-quality entertainment. Given the prevailingdemand-supply dynamics, we believe that the sector offers high visibility forsteady cash flows. KEY PLAYERS-

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CUSTOMER SURVEYPlease take a moment to help us improve your experience watching movies in a theatre.

NAME: Phone No.:

AGE: Occupation:

Email: Gender:

How often do you go out for a movie?

□ Once a week□ Twice a week□ Once a month□ Twice a month

How much do spend on going out for a movie?

□ 50-100□ 100-150□ 150-250□ 250 and above

What genre of movies do you prefer?

□ Action□ Romantic□ Comedy□ Thriller□ Drama□ Other

Which language do you prefer watching movies in?

□ Hindi□ English□ Regional Languages□ Foreign Language

What show timings do you prefer?

□ Morning show□ Afternoon show□ Evening show□ Night show

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Additional Comments

May we add you to our mailing list, which offs news and exciting promotions?□ Yes □ No

Thank you for your participation!

IINFERENCE FROM THE SURVEY

We carried a survey on 20 college going students about their movie going preferences which would help us get a better idea of their choices. We want our cinema Apex to attract more and more college going students as it is near many colleges and has a very good location.These are a few inferences that we extracted from the survey.

1) About 80% of the total people go for a movie once a week. Students go for a movie every weekend right after their college. They constantly need some source of entertainment and most of them said “what better tan a movie”.

2) A major portion of people spend around Rs. 100-150 on a single movie outing. Students tend to go more for morning shows as they are comparatively cheaper .

3) Action and Comedy are the most preferred genres as they are considered to be most entertaining. People want something that is an extravagant affair and larger than life.

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4) College going students are interested in both English and hindi movies and don’t mind going for any of the two if the movie is good.

5) Morning shows and matinee shows are more acceptable to the students as it is difficult for them to get out in night.

CAPITAL(revenue, expenditure, budget)BUDGET-we have decided to come up with an initial budget of 100cr. Keeping in mind all the capital expenditure(i.e. one time expenditure).

EXPENDITURE-

Coming up with such an service with all the rivals very well settled will require a very calculative expense sheet.

The initial expenditure is going to be capital expenditure that will be of licenses, land, construction of cinema, labour, and purchasing of other rights.

The revenue share between multiplex exhibitors and producers is as follows:Pre-standoff

Producers MultiplexWeek 1 47% 53%Week 2 36% 64%Week 3 25% 75%Post-standoff

Movie earns < Rs. 17.5 Cr Movie earns > Rs. 17.5 CrProducers Multiplex Producers Multiplex

Week 1 50% 50% 52% 48%Week 2 42% 58% 45% 55%Week 3 35% 65% 38% 62%Week 4 30% 70% 30% 70%

We even plan to launh gradually a new concept on miniplexes(a multi-use theatre with two screens, seating capacity of approximately 120 per screen and price point of nearly Rs90 per ticket). These miniplex operators have aggressive roll out plans of having over 500miniplexes across the country in the next few years.

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PRODUCT DESIGN

1. It is the main cinema hall. It has the capacity of accommodating around 350 persons per show. The screen of this theatre is a hi-def 3d-4d optical screen with a dolby surround sound system which makes every seat

Apex cinemas

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enable to hear even the minute audio details due to its unique architectural design. All the seats would be leather seats with the facility of slide backward seats for more comforting seating. There is 4 entry points and the same is used as exit points but with a different path of exit on its left. There is also 2 emergency fire exits in the theatre room which connects to emergency exit staircase and also an non-electric pulley system emergency lift.

2. It is a screen storage room, where all the past screens are stored with proper storage and holding facility.

3. These all are the food joints of the theatre where all snacks would be available just by stepping out of the theatre room.

4. Gents and ladies washrooms.5. Staff discussion and daily work allocation.6. It is the common lobby adjoining the theatres.7. It’s a new concept of flexible theatre. It must be having all the features

of the other screen. But in this screen mainly 4d movies would be played due to its unique design and also the screen would be on the ceiling with a slight dome structure for the convenience and the ultimate experience of film watching.(this concept is used in imax).

8. Backup projectors and music equipment room.9. Play section for kids with various videogames.

10,11. Ladies and gents washroom.

PROCESS DESIGNProcess Design is for services that deal with the processes by which they are produced. It involves compiling and understanding the service’s requirements,

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converting the requirements into engineering specifications and producing plans that marshal the materials, equipment and people needed to make and.

Here's the path a film usually takes to get to your local theater: Someone has an idea for a movie. They create an outline and use it to promote interest in the idea. A studio or independent investor decides to purchase rights to the film. People are brought together to make the film (screenwriter, producer,

director, cast, crew). The film is completed and sent to the studio. The studio makes a licensing agreement with a distribution company.

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The distribution company determines how many copies (prints) of the film to make.

The distribution company shows the movie (screening) to prospective buyers representing the theaters.

The buyers negotiate with the distribution company on which movies they wish to lease and the terms of the lease agreement.

The prints are sent to the theaters a few days before the opening day. The theater shows the movie for a specified number of weeks (engagement). You buy a ticket and watch the movie. At the end of the engagement, the theater sends the print back to the

distribution company and makes payment on the lease agreement.

A particular cinema experience of a customer begins with him getting to the theatre in his vehicle or by any appropriate means of transport. If he comes via his own vehicle , he will have to park his car in the parking lot . He will then move to buy the tickets at the box office or the ticketing counter. Then he moves to his respective screen where the movie is being screened. At the interval he has snacks at the canteen. And then When the movie gets over , he moves via the exit door to the parking lot . Gets into his vehicle and goes home.

PROCESS

1.GATES.Two gates,1 for entry and 1 for exit to avoid congestion during rush hours.

2.PARKING.We have our own parking space on the Ground floor and basement. parking is for 4 and 2 wheelers.

Parking sufficient enough for 60 4 wheelers and 80 2 wheelers.

3.BOX OFFICE.

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Box office is the ticketing counter. During Peak hours that is during Fridays and weekends there are 4 desks working whereas during weekdays except Wednesday there are 2 desks operating. On Wednesday there are 4 desks working as we expect high demand on Wednesdays as we have partnered with Airtel for launching a scheme on Wednesday movie tickets. At any given point of time , there will be atleast 2 desks operating. Above the desks there are TV monitors which display the menu of the films, classification and the remaining availability of seats for each. It takes three monitors to provide the whole menu. Each desk has a networked computer terminal and a ticket printer. For each customer, a screen code is first entered to identify and confirm seat availability of the requested film. Then the number of seats required is entered, and the tickets are printed, but these do not allocate specific seat positions. The operator then takes payment by cash or credit card and issues the tickets. These operations take an average of 25 seconds, and a further 5 seconds is needed for the next customer to move forward and start the cycle again. In this way, the peak capacity is approximately 120 transactions per desk per hour. – 240 transactions per desk per hour using two desks on weekdays and 480 transactions per desk per hour using 4 desks at peak hours. the maximum seat sales per hour can be 360 easily within maximum expected demand levels The average number of ticket sales per transaction is 1.5. All tickets indicate specific seat positions, and these are allocated on a first-come-first-served basis. We also have tie ups with online booking sites such as bookmyshow.com wherein a customer can book their tickets online and pay via credit card and can collect the tickets at the desk.

4.CANTEEN.We have canteens on all the floors. Canteens are a major source of income for the multiplex.

We provide snacks such as sandwiches, samosas, burgers, hotdogs, cold drinks, pop corns, nachos, tacos ,fries. Staff will take the orders from the customer who need to be seated at their respective seats and the staff will get their order executed. Once the customer receives his snacks he can make the payment. The whole idea is that the customers do not have to take the pain of standing in queues at the canteen and can order their food seating in their positions and enjoy the whole experience.

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FORECASTING METHODS

Model Differences

Qualitative – incorporates judgmental & subjective factors into forecast.

Time-Series – attempts to predict the future by using historical data.

Causal – incorporates factors that may influence the quantity being forecasted into the model

Forecasting Techniques

Qualitative Models

Time Series Methods

Causal Methods

Delphi Method

Jury of Executive Opinion

Sales Force Composite

Consumer MarketSurvey

NaiveMovingAverage

Weighted Moving Average

ExponentialSmoothing

Trend Analysis

Seasonality AnalysisSimple

RegressionAnalysisMultiple

Regression Analysis

MultiplicativeDecomposition

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THEATER DISTRIBUTION

MARKET SIZE AND GROWTH

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GROWTH OF MULTIPLEXES

DRIVERS

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KEY TRENDS

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Strategy and ImplementationThe strategy is simple: provide fair-priced, quality entertainment close to home and customer satisfaction.

Marketing StrategyWe anticipate that a buzz will be created once the renovations begin. Excitement will build as the grand opening approaches. To encourage that excitement, we will have a countdown to opening or theatre. Concurrently, advertisements in both the local newspaper and the college's daily will promote the opening with coupons for free items from the snack bar. Since a large share of profits will come from concessions, we want to let people know about our tasty snacks. Finally, we will use our website to keep our customers, especially the more web salvy college students, updated on the movie selection, which will change every two weeks.

Sales StrategyThe APEX Theatre will appeal to two segments of the market:

Adults and parents with children who seek local, fair-priced and entertainment aimed at the whole family.

Young adults who are interested in seeing recent releases especially college going students.

Pricing StratergyThe pricing of ticketing will be Rs.90 for adults and Rs.50 for children aged between 3-7 years.Whereas on Saturdays and Sundays (weekends) as the number of public increases compared to weekdays the price of tickets will be Rs.130 for adults and Rs.90 for children aged between 3-7 years. The pricing strategy will be based on LPP(linear programming method) where it will be based on the cost of expenditure ,the employees wages and the staff and security.these will be our 4 main constraints.

Other Unique StartergyThere will be collaboration with airtel, service provider users on every Wednesday where the customer gets 1 movie ticket free on purchase of 1 ticket.this will be beneficial to all airtel users.When the customer comes to buy tickets from ticket counter the customer will get the food menu card so the cutomer can select its choice of food at ease and also gets variety of choice. Another unique stratergy to attract the customers is that we are going to showcase OLD HIT MOVIES on every THRUSDAY with 4 shows. This we will be basically targeting senior citizens and people of old aged.There will be NO QUEING on the canteen area as the qeuing system is not applicable in our

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theatre, APEX.As the customer is given the menu card along with buying of tickets ,the customer just needs to order their choice of food items to the staff which will be there in at yur doorsteps.You just order him/her and when he/she gets your things at that time you have to pay him/her the respective amount.

CONCLUSIONTO CONCLUDE , OUR SERVICE OF OPENING APEX MOVIE THEATRE WILL BE GREAT SUCCESS AND WE SOON WANT OUR DREAM COME TRUE IN NEAR FUTURE.AND WE HOPE THAT OUR SERVICE WOULD BE APPRICIATED BY THE CUOSTMERS.

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