Is this an industry that can embrace the "easy" concept of no-frills, low-cost? Yves Doz, the Timken Chaired Professor of Global Technology and Innovation and Anita Balchandani, Senior Consultant at Roland Berger Strategy Consultants, look into it in this Case Study.
According to the Case, three factors made easyCinema an attractive expansion area. First, the yield management capabilities that served the group so well running an airline could be applied to easyCinema. For example, easyJet prices are linked to demand and advance purchase. Likewise, they would charge more for peak-time movie tickets - like Friday and Saturday nights - and less at off-hours. While existing cinemas in the UK operated at 20% capacity, they never pursued a strategy of offering cheap seats for advanced booking or at off-peak times. "Why are cinemas charging so much money when they are so empty," wondered Haji-Ioannou. "It's like what airlines once were."
By maximizing both capacity and the extent to which it was utilized, easyGroup hoped to grow cinema admissions well above current rates.
Second, easyGroup saw a way to use technology to automate the process of serving customers, thereby reducing labor costs. All bookings would be made through the Internet or kiosks in the foyer of the cinema.
Third, the no-frills concept could also be applied. The cinema would now show any advertising or support promotional campaigns associated with films (activities that require significant time and organization). They would allow film-goers to bring in their own food and drink, eliminating the traditional concession stand. "What we're doing is taking away a consumer rip-off," asserted Haji-Ioannou.
easyCinema is just one of many new ideas in the easyGroup pipeline. The New Ventures Team is also looking at the possibility of budget hotels and cruises, gyms, bus transportation and home catering. The criteria for...