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Harvard Case - Cinépolis S.A. de C.V. and KLIC: Rising to the Streaming Challenge

"Cinépolis S.A. de C.V. and KLIC: Rising to the Streaming Challenge" Harvard business case study is written by Francisco Gil-White. It deals with the challenges in the field of Marketing. The case study is 12 page(s) long and it was first published on : Mar 22, 2019

At Fern Fort University, we recommend Cin'polis S.A. de C.V. (Cin'polis) adopt a multi-pronged strategy to combat the streaming challenge. This strategy involves leveraging their existing strengths in the theatrical experience, embracing digital innovation, and expanding their global footprint.

2. Background

This case study focuses on Cin'polis, a leading cinema chain in Mexico and Latin America, facing the growing threat of streaming services like Netflix. Cin'polis, known for its premium movie-going experience, is exploring new avenues to maintain its market share and attract audiences. The company has partnered with KLIC, a Mexican streaming service, to offer a combined subscription package.

The main protagonists are:

  • Cin'polis: A cinema chain with a strong brand and loyal customer base, seeking to adapt to the changing entertainment landscape.
  • KLIC: A streaming service aiming to gain market share and expand its reach through strategic partnerships.

3. Analysis of the Case Study

Strategic Analysis:

  • SWOT Analysis: Cin'polis possesses strengths like a strong brand, loyal customer base, and innovative cinema experiences. However, the rise of streaming services poses a significant threat. Opportunities lie in expanding into new markets and developing innovative digital offerings. Weaknesses include limited digital presence and a potential lack of agility in adapting to rapid technological changes.
  • Porter's Five Forces: The cinema industry is characterized by high bargaining power of buyers (consumers), high threat of new entrants (streaming services), and high threat of substitutes (home entertainment options). Cin'polis needs to differentiate itself and build barriers to entry.
  • Competitive Analysis: Cin'polis faces competition from established players like AMC and Regal, as well as the growing threat from streaming giants like Netflix, Amazon Prime Video, and Disney+.

Marketing Analysis:

  • Consumer Behavior: Consumers are increasingly seeking convenience and affordability, leading to a shift towards streaming services. However, there remains a strong demand for the social and immersive experience of a theatrical release.
  • Market Segmentation: Cin'polis can segment its target market based on demographics, movie preferences, and willingness to pay for premium experiences.
  • Brand Positioning: Cin'polis needs to re-position itself as a provider of a curated, premium entertainment experience that complements, rather than competes with, streaming services.

4. Recommendations

1. Enhance the Theatrical Experience:

  • Premiumization: Continue investing in premium cinema experiences, including enhanced sound systems, comfortable seating, and innovative food and beverage offerings.
  • Exclusive Content: Secure exclusive content and partnerships with studios to offer unique theatrical experiences not available on streaming platforms.
  • Event-Driven Programming: Host live events, special screenings, and immersive experiences to create a sense of community and engagement.

2. Embrace Digital Innovation:

  • Develop a Robust Digital Platform: Create a comprehensive digital platform that offers online ticketing, loyalty programs, and personalized recommendations.
  • Leverage Data and Analytics: Utilize data analytics to understand consumer preferences and tailor marketing campaigns effectively.
  • Explore New Revenue Streams: Offer digital subscriptions, on-demand content, and personalized advertising to generate revenue beyond traditional cinema operations.

3. Expand Global Footprint:

  • Target Emerging Markets: Explore opportunities in emerging markets with high growth potential and a burgeoning middle class.
  • Strategic Partnerships: Partner with local players to leverage their expertise and market access.
  • Localized Content: Offer culturally relevant content and experiences to resonate with diverse audiences.

4. Strengthen the KLIC Partnership:

  • Joint Marketing Campaigns: Develop integrated marketing campaigns that highlight the benefits of both the theatrical and streaming experience.
  • Cross-Promotion: Offer bundled subscriptions and exclusive content to incentivize customers to engage with both platforms.
  • Data Sharing: Collaborate on data analysis to understand customer behavior and optimize marketing efforts.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core Competencies: Cin'polis's core competency lies in creating a premium movie-going experience. This strategy leverages this strength while embracing digital innovation.
  • External Customers: The recommendations address the evolving needs of consumers seeking both convenience and immersive experiences.
  • Competitors: The strategy aims to differentiate Cin'polis from streaming services by offering a unique, curated experience.
  • Attractiveness: The recommendations are expected to increase customer engagement, drive revenue growth, and enhance brand equity.

6. Conclusion

Cin'polis faces a significant challenge from the rise of streaming services. However, by leveraging its existing strengths, embracing digital innovation, and expanding its global footprint, Cin'polis can maintain its position as a leading entertainment provider. The company's partnership with KLIC provides a valuable opportunity to tap into the growing streaming market and create a unique value proposition for consumers.

7. Discussion

Alternatives:

  • Focusing solely on the theatrical experience: This approach risks losing market share to streaming services.
  • Acquiring a streaming service: This would be a costly and risky venture, potentially diverting resources from core operations.

Risks:

  • Technological disruption: Rapid advancements in technology could render current strategies obsolete.
  • Competition: The streaming market is highly competitive, and new entrants may emerge.
  • Economic downturn: A global economic downturn could negatively impact consumer spending.

Key Assumptions:

  • Consumers will continue to value the theatrical experience.
  • Cin'polis can successfully adapt to the changing technological landscape.
  • The KLIC partnership will be successful in driving customer engagement and revenue growth.

8. Next Steps

  • Develop a detailed implementation plan with clear timelines and milestones.
  • Allocate resources and budget for key initiatives.
  • Monitor progress and make adjustments as needed.
  • Continuously evaluate market trends and adapt strategies accordingly.

By implementing these recommendations, Cin'polis can navigate the streaming challenge and emerge as a leading entertainment provider in the digital age.

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Case Description

Cinépolis S.A. de C.V. (Cinépolis), an innovative private Mexican firm-and one of the largest movie theatre companies in the world-had developed an over-the-top (OTT) streaming product, KLIC, and launched it in Mexico. But by late 2017, the Mexican OTT market had become competitive and crowded, with Netflix, Claro Video, Blim, Amazon Prime Video, iTunes, and others in the space. KLIC initially faced challenges with finding a proper niche and had not yet achieved profitability. Cinépolis wanted to make the product successful and hoped that interesting synergies between its movie theatre business and the new streaming unit could be found.

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