AMC Strategic Marketing Plan
An Academic Research Project
Executive Summary
For 100 years, AMC Entertainment Holdings, Inc. has been a trusted leader in the exhibition industry, bringing memorable customer experiences to movie fans worldwide. The purpose of the marketing plan is to reimage AMC’s brand as the ultimate hangout destination for Millennials and Generation Z.
As the company is preparing to open its door again post-pandemic, we will launch AMC Igloo, a private pod concept, allowing customers to experience movies in a bubble tent’s comfort and safety in AMC style. We will roll out celebrity-endorsed advertising campaigns on social media platforms to disrupt our digital streaming competitors. Our goal is to welcome customers back to movies with extensive sales promotion and loyalty program.
We are asking for a $4 million marketing budget. The investment aims to grow 20% QOQ AMC Stubs members, increase 20% YOY loyalty member spent, and sustain a minimum 25% monthly attendance during a non-peak period and 50% monthly attendance during the peak period, respectively, for the next 12 months.
Introduction
AMC Entertainment is an American movie theater chain founded in 1920, headquartered in Leawood, Kansas. AMC is the largest movie exhibition company in the United States, the largest in Europe, and the largest throughout the world with approximately 960 theatres and 10,700 screens across the globe, according to AMC 10K Reports (AMC, 2020). In May of 2012, the Chinese conglomerate Dalian Wanda acquired AMC for $2.6 billion (Harrington R., 2016).
AMC’s primary revenues derive from tickets and concessions sales. Due to the pandemic, AMC has remained closed for the better part of 2020. The suspended operation caused a substantial financial loss for AMC. During the Reddit-induced short squeeze in January 2021, AMC stock was traded as high as $20 from its lowest point of $2 before plummeting again (Farooque, 2021). Interestingly, the millennials are the driving force behind Reddit-induced short squeeze. Many of them are loyal AMC fans.
Situation Analysis
Macro Environment
According to the Motion Picture Association report (2019), the combined global theatrical and home/mobile entertainment market surpassed $101 billion for the first time, reaching $101 billion in 2019, an 8% increase from 2018. The global theatrical market (box office film releases) reached $42.2 billion in 2019, up 1% from 2018. The global home/mobile entertainment market (content released digitally and on disc) reached $58.8 billion in 2019, a 14% increase from 2018. The 2019 home/mobile market surpassed the theatrical market. See table 1 below.
In 2019, the theatrical market accounted for 42% of the combined theatrical and home/mobile entertainment market, with the digital market (48%) and the physical market (10%) making up the rest (MPA 2019). See table 2 below.
With the rising of Video on Demand (VoD) streaming services such as Netflix and Hulu, more people opt for the convenience of home entertainment options. The affordable monthly subscription fee is attractive as it is comparable to a single movie ticket. Deloitte Insights (Arkenberg, C. et al., 2020, p. 2) suggests that the impact of the global pandemic on movie theatres has accelerated two preexisting trends: More people are staying home to enjoy movies and other entertainment, and more studios and media distributors are developing their direct-to-consumer streaming services.
Traditionally in the exhibition industry, ticket sales account for two-thirds of revenue; food and beverage sales for about 30%. Other income sources include on-screen advertisements, facility and concession rental during non-peak hours, and amusement machine use (DNB, 2020). During the pandemic, AMC is operating between 40% and 50% capacity but only 10% to 20% attendance. Profitability requires at least 25% consistent attendance(Whitten, 2020).
Hollywood studios also suffer from the stay-at-home norm with halted production and delayed production (Arkenberg, C. et al., 2020, p. 2). VoD platforms have done incredibly well during the pandemic, substantially increasing their user base.
Collaborators and Complementors
AMC’s top collaborators are “The Big Six” movie studios, comprised of conglomerates 20th Century Fox, Paramount Pictures, Warner Bros., Universal Pictures, Columbia Pictures, and Walt Disney Studios, account for over 83 percent of the North American market share and bring in billions of dollars in revenue each year (Watson, 2020). Studios derive almost half their revenues from theatrical releases (Arkenberg, C. et al., 2020).
Theatrical releases drive box office revenues and determine how revenue from subsequent TV and Cable windows are negotiated (Arkenberg, C. et al., 2020). “Changes to the century-old business model such as releasing a movie on premium VoD instead of in a theatre could create a domino effect of change across other windows and potentially undermine large revenues generated from theatres” (Arkenberg, C. et al., 2020, p. 5).
However, the pandemic has changed the industry landscape. Studios find themselves in a tight spot. They either lose revenues by delaying movie releases in theatres or generate some revenues and reach a broader audience simultaneously by going digital. They chose the latter. Warner Bros. announced that Wonder Woman 1984 and the subsequent films set to open in 2021 would be released on HBO Max and in theatres simultaneously (Libbey, 2020). AMC and Universal Pictures also signed an agreement, after months of the feud, that Universal Pictures will release new movies on premium VoD within three weeks of their debut in theatres (Lang, B. et al., 2020). Traditionally new movie releases are shown in movie theatres for 90 days before subsequent distribution to home videos and premier TV networks (Arkenberg, C. et al., 2020).
AMC’s complementors are food services that provide a dine-in menu, snacks, and alcoholic beverages. Serving premium food and beverage is one of AMC’s unique differentiators; for example, AMC MacGuffins Bars are popular among adult guests. AMC serves Coca-Cola Freestyle drinks at the theatres. AMC Stubs loyalty program members enjoy perks such as over 100 different drink choices and free refills or size upgrades.
Competitor Analysis
AMC competes with two categories of competitors: traditional players in the exhibition industry and digital players in on-demand streaming services.
Regal entertainment group, Cineplex, and Cinemark are top competitors in the traditional exhibition industry. AMC operates among the most productive theatres in the United States’ top markets, having the #1 or #2 market share positions in 21 of the 25 largest metropolitan areas of the United States. AMC is also #1 or #2 in market share in 12 of the 15 countries it serves in North America, Europe, and the Middle East (AMC, 2020).
Netflix, Hulu, HBO Max, Disney Plus are top competitors among the digital players in on-demand streaming services. Although streaming may look like the obvious path forward, studios cannot fully monetize all their franchises through streaming services, mainly if they do not control their distribution channels (Arkenberg, C. et al., 2020, p. 2). For those that do, deploying streaming services is very costly. Many have yet to show much profit, despite their expanding market valuations. Early experiments with premium VoD, where first-run movies are offered directly to consumers on streaming services, have had mixed results during the pandemic (Arkenberg, C. et al., 2020, p. 2). According to a survey, 68% of consumers want to watch at least some movies in theatres post-pandemic (Srivastava, 2020).
Porter’s Five Forces Analysis
AMC differentiates itself in the following areas, based on AMC Fact Sheets (AMC, 2018).
- More comfort and convenience: 1) More than 255 locations and online reservation services. 2) AMC signature recliners.
- Enhanced food and beverage: 1) 28 Dine-in Theatres. 2) AMC MacGuffins Bars serve beer, wine, and cocktails to adult guests in 288 locations. 3) Broad food and beverage offerings.
- Greater engagement and loyalty: 1) AMC Stubs membership program.
- Premium sight and sound: 1) IMAX screens, RealD 3D capability, Dolby Cinema at AMC.
SWOT Analysis
Marketing Objective
The marketing objective is to maintain AMC’s leadership position by acquiring new customers and increasing customer loyalty. Even though China market presents an attractive business opportunity, due to the US and China’s ongoing geopolitical tension, AMC will prioritize its marketing efforts in the US. We aim to achieve the following goals measured by specific success metrics in the next 12 months.
§ Grow 20% QOQ new AMC Stubs members.
§ Increase 20% YOY AMC Stubs members spent.
§ Sustain a minimum of 25% monthly attendance during the non-peak period and 50% monthly attendance during the peak period, respectively.
Target Market(s)
According to Motion Picture Association (2019) report, more than 76% of the US/Canada population aged two or older, equivalent to 268 million people, went to a movie at the cinema at least once in 2019. The typical moviegoer bought 4.6 tickets per year in 2019, down from 5 tickets in 2018. 11% of the US/Canada population are frequent moviegoers who attend the cinema once a month or more. These individuals represent 47% of all tickets sold. More than 50% of the population are occasional moviegoers (54%), representing 51% of all tickets sold. See Table 4 below.
Table 4: 2019 Moviegoer Share of Population and Tickets Sold
The Motion Picture Association (2019) report also indicates that the 25–39 year age group (10.7 million) are the most frequent moviegoers. See table 5 below. The gender composition of moviegoers is split between men and women in 2019 (MPA, 2019).
Table 5: Frequent Moviegoers (Millions) by Age
Based on the data, we will target the frequent and occasional moviegoers’ segments in Generation Z (ages 14–24) and Millennial (ages 25–40) age groups. We will indirectly target Generation X (ages 40–49) as they typically fund Generation Z’s movie expenses.
Experience and flagship consumption are essential to Millennials, while uniqueness and unlimited consumption are critical to Generation Z, according to Francis et al. (2018).
Positioning Statement
To millennials and generation Z, who enjoy the live multi-sensory movie and dine-in entertainment, AMC is the most comfortable flagship movie theatre to watch both new and classic films, where fond memories are created through the shared experience.
Marketing Mix
Product
AMC experience, the physical environment, is the product. A safe and fun AMC experience is the point of difference. AMC will reconfigure the multiplex by setting up private bubble tents called AMC Igloo. Each AMC Igloo has its signature power-recliner seats, temperature control, and unique surround sound system while sharing the same screen for movie watching. Customers can order a dine-in menu online and have food delivered to them. Each AMC Igloo hosts up to 6 guests. Private theatre rental is available for a larger party.
Price
AMC will lower and standardize admissions to welcome customers back to the movies. Table 6 presents old and new AMC ticket prices for new releases.
Table 6 AMC Ticket Price
The average cinema ticket price is $9.19 (MPA, 2019). By lowing and standardizing the price, customers can afford more movies in a recession. The new price’s primary beneficiary will be AMC’s target markets, millennials and generation Z, between ages 14–40, who will perceive the new price as a good bargain.
Promotion
The promotional strategy is to recreate AMC’s brand image as the ultimate destination for a live multi-sensory entertainment experience. The promotional campaign featuring celebrities and influencers will roll out on social media platforms with hashtag #amcexpeirence, targeting millennials and generation Z. Customers are rewarded with points when tagging pictures on social media about their AMC experience. AMC Stubs members can earn free swag, free popcorns size upgrade, soda refill, or 2X reward points when spending more.
Place, People, Process, and Physical and Online Environment
The AMC experience is about the shared memories created in the theatre. AMC will need to revamp the customer service training and rebrand its staff as the cinema experience ambassadors. According to The Motion Picture Association (2019) report, frequent moviegoers own more key technology products (computers, smartphones, tablets) than the general population. AMC currently has an online ticketing system and mobile app, but the social media presence needs rework. The recommendation is to revamp AMC’s digital technology platform to provide a consistent and integrated customer experience across all customer touchpoints.
Implementation Issues
As a theatre operator, AMC’s profitability is mostly relying on new movie releases. On average, studios share 45% of box office revenue with the theatre operator (Arkenberg, 2020). With the halted movie production in 2020, fewer new movie releases are available in the upcoming year (Andreeva, 2021), which can be problematic to drive theatre attendance. The other concern is the possibility of another shutdown if there is a surge in new virus infections. Finally, modernizing an integrated digital technology platform requires extensive IT expertise and resources.
Conclusion
The show must go on. One hundred years ago, AMC was the pioneer that changed the way people watch motion pictures. Throughout the company’s history, AMC has led various industry innovations. AMC has proven successful in its vision and execution by introducing the theatre, dine-in theatre, IMAX screen, and Dolby sound to signature power-recliner seats. In the digital transformation era, AMC is presented with a new opportunity to reimage its brand as the ultimate hangout destination for the Millennials and Generation Z. This marketing plan will help AMC capture the heart and wallets of movie fans around the world.
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