One More Thing

This is true in the movie theater business, and it's true in other industries as well. One company decides to either dramatically lower prices, or to build something much flashier and better than their competitors. Say, build a flashy Hollywood 27 to compete against a modest Williamson Square 8. Of course, all of the consumers decide to go there, and, in theory, the former prospers while the latter dies.

The problem then is this. What happens when the new and improved version is poorly thought out and doesn't make money? You are now faced with an industry where to exist you have to use a business model that doesn't make any money. And you can't go back to the old WS8 model. Any new competitor must match the bells and whistles of the top dog, but why would anyone want to do that? So that they can break even or lose money as well? I certainly don't want in.

And the real problem then is this - the customer suffers. The existing company cannot innovate because it really can't take any risks, and nobody new wants to enter the market, limiting consumer choice. Capitalism at its worst.

The only way to beat this cycle is to create some great innovation that consumers want, and that also makes money. Perhaps a no frills, quality service theater? Could that even exist? I'd be more interested in running a company in a different area.