Building a Successful Movie Theatre in a Competitive Entertainment Landscape
A client planning to establish a new movie theatre in Surat, Gujarat, approached Stratefix Consulting to conduct a comprehensive movie theatre market research and feasibility study. With increasing competition from multiplex chains, evolving consumer behaviour, and the growing OTT impact on theatres, the client wanted clarity before committing to a high-capital investment.
The objective was not merely to open a theatre, but to build a commercially viable and differentiated cinema business aligned with local demand and future industry trends.
Why Market Research Is Critical in the Cinema Industry
The cinema industry has undergone a structural shift over the last decade. While the appetite for entertainment remains strong, footfalls can no longer be taken for granted. Post-pandemic behavioural changes, rapid OTT adoption, and rising expectations around comfort and experience have reshaped how audiences decide whether a theatre visit is worth their time.
In this environment, cinema industry market research becomes essential not to validate assumptions, but to challenge them. For the client, relying on instinct posed far greater risk than investing in data-backed decision-making.
Objectives
The engagement focused on answering a few critical business questions. The client sought clarity on how to differentiate their theatre offering, how to price tickets in line with local demand, and how to position the brand in a crowded entertainment market. In addition, they wanted visibility into gaps in the existing theatre ecosystem, demand variations across locations and audience segments, competitive strategies of existing players, and regulatory considerations that could impact feasibility.
Stratefix’s Market Research Methodology
Stratefix followed a structured approach combining primary research, secondary research, and analytical frameworks to ensure recommendations were grounded in reality rather than perception.
Primary Research
The team conducted detailed discussions with the client’s management to understand vision, investment expectations, and operational constraints. This was complemented by site visits to existing movie theatres across Surat to observe footfall patterns, peak and non-peak utilisation, concession behaviour, and experience gaps.
To go beyond surface-level observation, Stratefix interacted with on-ground staff such as ticketing and concession teams. These conversations provided practical customer insights for theatres, including audience preferences, operational challenges, and buying behaviour that rarely appear in formal reports.
Secondary Research
Secondary research included analysis of cinema industry publications, competitor websites, and market reports. Demographic data for Surat was studied to understand age profiles, income distribution, family composition, and location-wise demand. Consumption behaviour patterns such as genre preference, price sensitivity, and online ticketing adoption were also mapped to refine segmentation.
Market Analysis Framework
Porter’s Five Forces Analysis
The analysis indicated high buyer bargaining power, with audiences having multiple cinema and OTT options. Supplier power remained moderate due to the presence of multiple film distributors. Competitive rivalry was high, driven by established multiplex players and independent theatres, while substitutes such as streaming platforms posed a significant and growing threat.
PESTLE Analysis
Political, economic, social, technological, legal, and environmental factors were assessed to understand licensing norms, entertainment taxation, sustainability expectations, and technology adoption trends that could influence long-term viability.
Competitive Landscape: Multiplex vs Single-Screen
The multiplex feasibility study highlighted clear positioning patterns among existing players. One major competitor focused on premium, luxury-led experiences, while another leaned heavily toward regional and mass-market content. However, the research revealed under-served segments particularly families with children and community-oriented audiences where differentiated offerings were limited.
Key Market Gaps Identified
The study revealed experience-level gaps such as limited alternative viewing formats and a lack of premium-yet-accessible options. Audience segmentation gaps were also evident, especially in offerings tailored for families, children-centric programming, and event-based cinema experiences. Additionally, location-related challenges such as inadequate parking and weak integration with dining or retail zones reduced the attractiveness of several existing theatres.
How OTT Has Changed Theatre Demand
OTT platforms have not reduced interest in cinemas; they have changed expectations. Audiences now visit theatres for immersive experiences rather than content alone. Comfort, ambience, sound quality, and exclusivity play a far greater role in decision-making than before. This insight directly shaped the client’s theatre design and positioning strategy, ensuring the cinema offered a value proposition that OTT platforms could not replicate.
Location Selection Framework (Applied)
As part of the feasibility study for cinemas, Stratefix evaluated potential locations using a structured framework. Catchment area demographics, accessibility and parking, competition density, and alignment with the target audience were assessed in detail. This process helped the client eliminate emotionally preferred locations that lacked commercial strength.
Key Strategic Recommendations
Based on the research findings, Stratefix recommended a family-focused positioning supported by children-centric programming and event-based offerings. Ticket pricing was designed to remain competitive against luxury multiplexes while allowing premium add-ons to protect margins. A phased business roadmap was also developed, covering brand positioning, technology adoption, and sustainability initiatives.
Outcome & Strategic Impact
The research-driven approach gave the client clear confidence on feasibility, target segments, and revenue potential. More importantly, it reduced investment risk by replacing assumptions with structured insights. The client was able to proceed with clarity, knowing exactly where differentiation and demand existed.
Conclusion
This case reinforces why movie theatre market research and structured feasibility analysis are no longer optional. In an industry shaped by changing consumer behaviour, OTT disruption, and rising expectations, successful theatre businesses are those designed with insight rather than instinct.
