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Customer Lifetime Value in Movie Business Essay

Unlike other industries, the marketing scenario in media and entertainment industry such as movie or music business are more unpredictable and unstable. In terms of movie industry, which differs from typical product category, nevertheless, provides a variety of interesting multiple-genres products serving different audience herds for entertainment.

The diffusion is quite rapid and the product life shell is extremely short, even though reversioning or rerunning might take place. Correspondingly, the customer lifetime value is relatively low and difficult to estimate. The brand loyalty doesn’t make too much sense in this area whatever giant movie studios or indie films, the audience goes for a movie based on their personal preference or word-of –mouth communications (both online and offline). Thus a lot of customer churn happen in movie industry and “nobody knows anything” theory occupies, which leads to a unstable and insignificant retention rate.

As a result, we cannot utilize the formulation II regarding retention rates in book to estimate CLV here. Instead, if we use the first formulation, a series of hypothetical figures are required. Based on database from NATO(National Association of Theater Owners), the average customer goes for movie 5 times a year. A movie fan maybe watch film every week. The average ticket price per year is around $7.5. However, the variable cost for ticketing and acquisition cost per cost are unknown.

However, the concept of CLV still of great significance to movie industry that

1) It comes up with the concept of customer segmentation. We should treat different customers differently. For instance, to implement rewarding incentives or promotion to retain those diehard moviegoers that value much to the business. It is also an effective method to gathering audiences’ information and data. 2) Multiple marketing strategies are required to promote a single product( one movie) and maximize the profitable value. Besides, the entertainment industry should try to embrace the “free” model in the digital time, for instance, to create spin-off products related to the movies as another revenue stream.

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