The following appeared as part of a business plan developed by the manager of the Rialto Movie Theater.” Despite its downtown location, the Rialto Movie Theater, a local institution for five decades, must make big changes or close its doors forever. It should follow the example of the new Apex Theater in the mall outside of town. When the Apex opened last year, it featured a video arcade, plush carpeting and seats, and a state-of-the-art sound system. Furthermore, in a recent survey, over 85 percent of respondents reported that the high price of newly released movies prevents them from going to the movies more than five times per year. Thus, if the Rialto intends to hold on to its share of a decreasing pool of moviegoers, it must offer the same features as Apex.”

The following appeared as part of a business plan developed by the manager of the Rialto Movie Theater.

“Despite its downtown location, the Rialto Movie Theater, a local institution for five decades, must make big changes or close its doors forever. It should follow the example of the new Apex Theater in the mall outside of town. When the Apex opened last year, it featured a video arcade, plush carpeting and seats, and a state-of-the-art sound system. Furthermore, in a recent survey, over 85 percent of respondents reported that the high price of newly released movies prevents them from going to the movies more than five times per year. Thus, if the Rialto intends to hold on to its share of a decreasing pool of moviegoers, it must offer the same features as Apex.”

Write a response in which you discuss what questions would need to be answered in order to decide whether the recommendation is likely to have the predicted result. Be sure to explain how the answers to these questions would help to evaluate the recommendation.

The manager of the Rialto Movie Theater is proposing that the theater make major changes or close its doors forever. Since the recent recession, 85% of movie-goers have decreased their frequency in going to the movies. The manager is trying to take advantage of the increasing popularity of video and home entertainment systems to entice people to visit the Rialto more often. This suggestion is unrealistic because, as previously mentioned, the Rialto is not located in a high-traffic area and therefore has no chance of attracting patrons to the theater if it redesigns it to resemble a multiplex. Even if a multiplex is located within the Rialto’s city, it would hardly be competitive with such a facility, since it would likely offer the same types of amenities that the Rialto hopes to offer. Furthermore, the manager’s assumption that people will not go to the movies more than five times per year is dubious at best. People in general have certain preferences when it comes to attending entertainment events such as movies, and when the Rialto attempts to offer the same type of entertainment as Apex, its prices would be prohibitive for many people. If the price of a movie is $10, which is the current average, those who can only afford $4.50 per ticket would not feel obligated to purchase five tickets.

The manager’s recommendation to remodel the theater into the Apex model has the predicted outcome. If the Rialto’s business model is to survive, it has to follow a different strategy. Unless the Rialto can find a way to stand out from all the other movie houses in the area by offering unique or new types of entertainment, it will continue to lose customers. On the other hand, if the Rialto can impress viewers with its presentation of new or old movies, it may be able to retain its customers.