Reality Check India

Help the cinema hall

Posted in Uncategorized by realitycheck on June 5, 2007

Here is a short case study for you to solve. 


Assume you are the owner of RC Cinemas. You run a single multiplex with five screens in a small town in India. The town has a population of 1 million (10 lakhs). Times were good earlier , but recently your profits have started to slide. You have now decided to do something about it. First, you want to find out which movies were most popular in the recent past and which were running to empty halls. You are convinced that this would give you a fair idea of the viewing preferences of your townfolk.

So, you summon your two managers. You then ask them to go forth and get this information.  

Manager 1 : Sab, this is easy. Lets just count the number of tickets sold for each movie. This is easy and will give you an accurate idea of the viewing preferences of our town.

Manager 2 : I have a better idea. Let us do a comprehensive survey of our townfolk. Let us ask them what movies they saw recently and what they would like to see. There are a few agencies that do this type of poll, can I call them ?

Manager 1 : Sab, this is crazy. Why did you even make this guy a manager ? If you ask the townfolk they will say I want to see “Mahabharata”, “Ramayana”, or “Jesus Christ” – but they will turn around and queue up only for Mallika Sherawath or even Shakeela. You cant trust these guys – Saar. The best way is to directly measure what they paid money and saw. I can bring you the answers in ten minutes.

Manager 2 : Sir, with your permission, I want to thrash this fellow. Dont trust him. A survey is much better because we can also ask those who did not come to our multiplex at all. We can also cover those who have not seen a cinema in years. Sir, please remove this uneducated manager and let me be the only manager. I cannot work with him.

You : <- What do you do ? ? ? Do you go with Manager 1 or Manager 2 ? ?

37 Responses

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  1. Gaurav said, on June 5, 2007 at 7:55 am

    1 ??

  2. realitycheck said, on June 5, 2007 at 8:08 am


    Why 1 ??

    What about the merits of Manager 2’s case ?

    Can we do both ? What if the results dont match ? What if Manager 1 is indeed right and the townfolk are less than truthful in admitting they like sleazy movies ?

    I am just looking to stimulate a discussion.

  3. Revathi said, on June 5, 2007 at 9:49 am

    It depends on what do you mean by “asking”. If it is face to face, a lot of people will be the “ramayana” types but if it is anonymous on the internet, you may get closer to the truth. On the other hand, you will be limited to the people who surf and this may not represent the truth either. The idea is to get discrete, charming people who can administer a “verita serum” to the population.

  4. Gaurav said, on June 5, 2007 at 10:51 am


    I prefer 1 not because I believe townfolks are less truthful, it is possible to be choose methodology (for example automated anonymous telephone surveys) which will eliminate human angle and remove a major cause for misrepresentation. The reasons I choose 1 are

    1. I believe,assuming the cinema hall does show a variety of movies, ticket sales are more accurate representation of prefrences of cinema hall’s customers, as opposed to city wide survey because all may not prefer going to multiplex for various reasons.

    2. In 1 we already have the date which is accurate enough, why spend money.

  5. Revathi said, on June 5, 2007 at 11:04 am

    Dear Gaurav,

    I dont think I agree with you. Just because I dont go to Shakeela movies, I approve that only these should be shown in cinema houses. Perhaps I am concerned about the effects it has on the youth for example, my own children..

  6. Gaurav said, on June 5, 2007 at 11:20 am


    Didn’t get what you are saying.
    If you dont go to shakeela movies, it means you dont prefer it, if many people dislike shakira movies like you, it will reflect on ticket sales.

    PS. I think Shakeela movies are meant for family audience.

  7. Revathi said, on June 5, 2007 at 11:30 am

    No it wont reflect on ticket sales- since a lot of people may see a movie several times even if it is not liked by every one. For example, pornographic films. On the internet, I see that sex films get maximum hits. So according to you, these are democratically elected winners.

  8. Gaurav said, on June 5, 2007 at 11:58 am

    Yeah they are. I think you are making a mistake.
    The survey is being done by the cinema owner for “his” benefit, if people prefer p0rn, and his “sole” concern is profit he will show p0rn

  9. Barbarindian said, on June 5, 2007 at 12:23 pm

    I will do both. If the results are at odds, I will replace some non-prime slots by top survey preferences that were not shown in the theatre.

  10. Reason said, on June 5, 2007 at 1:32 pm

    A sample survey to measure backwardness has these flaws –
    a) problems with the sample – size of the sample, selection of the sample etc
    b) lying. A ‘backward’ group that can mobilize massive violence in four states can also arrange for its group to lie in the survey to come out as the bottom-most in society.

    Collecting data at the admissions gate need not be a true measure of access – or equality of opportunity. If a group is not turning up at the theaters, it may be because they are being prevented from coming anywhere near the theater or schemed against securing tickets if they come in. It may also be because the group considers movies an evil and corrupting influence and opts to stay out on its own free will.

    If you do a survey in a street of 100 house-holds and find that not one has a government job, that information is not enough to say this street is denied opportunity. What if all 100 house-holds have very successful retail businesses that make several times more money than government income, bribe money included?

    If the real goal is equality of outcomes and not equality of opportunity, any approach is pointless – because even if you find that a group is not turning up at the theaters for religious reasons, you will be mandated to reserve seats for them in your theater (with a rebate in ticket price).

    But all this crap is pointless now. Can a group that neither has the numbers nor the fire power, organize riots of the type Gurjjars did, possibly by outsourcing? Those are the type of things you need to be working on.

  11. Sharan Sharma said, on June 5, 2007 at 1:43 pm

    Manager 2.

    (Obviously, this post has something to do with the current political situation but am just ignoring that for now 🙂 )

    M1’s reco is not incorrect in itself – it’s just a good starting point.

    It however assumes that RC-Cinema is representative of the entire population of movies/movie-displaying locations – which may not be the case.

    The advanatage of M2’s reco is that it can generate a lot of additional ‘elemental’ data.

    These movie elements (eg. preference for lead actors, location shot at…) can then be input into a statistical model to try and look at the ideal combination of elements to maximise viewership.

    Additionally, we may also find out that RC Cinema’s declining viewership is not an anomaly at all! – the market for Cinema viewership may be declining on the whole…competition from other entertainment options.

    Lastly, M1 is right in talking about “Response Bias” – but that’s something that good survey researchers are taught to deal with.

    (RC, just being finicky :
    The town isn’t small as mentioned – would be a metro)

  12. Gaurav said, on June 5, 2007 at 1:56 pm


    “It however assumes that RC-Cinema is representative of the entire population of movies/movie-displaying locations – which may not be the case.”

    What do you mean by “entire” ?

  13. Gaurav said, on June 5, 2007 at 1:57 pm

    And it need not be a metro. Even lucknow has four multiplexes now 🙂

  14. Sharan Sharma said, on June 5, 2007 at 2:20 pm


    1) I said metro because the town was defined in the post to have a million individuals – which makes it a metro by definition.

    2) You could define a “population” the way you want to. So, “the population of all cinemas which show English movies” or “the population of all movies whose music was directed by A.R Rehman”. When i said “entire” i just wanted to give it a definition as inclusive as possible. But yes, if there is already a clear idea of what “population” is, the usage of “entire” is superfluous.

  15. Gaurav said, on June 5, 2007 at 2:41 pm

    I think manager1 is making a reasonable assumption.

  16. Revathi said, on June 5, 2007 at 3:38 pm

    Dear Sharan,

    Yes! I love this additional elemental data. It is very good for business. When the people are completely tired of porn, he can try to use this data.

  17. Polite Indian said, on June 5, 2007 at 8:44 pm

    First, you want to find out which movies were most popular in the recent past and which were running to empty halls.

    Assuming that you want to find out this data only about your multiplex then Manager1’s proposal is good enough. But if you are interested in the theaters/multiplexes across the town then you would go with Manager2. If I can afford it, I will do both.

  18. realitycheck said, on June 6, 2007 at 8:08 am

    Thanks for all the responses, Reason – Yes, I am building up to something, but lets not go there yet. The town size was capped at 1 million just to indicate that a survey would be a practical option.

    Revathi, assuming we are able to get a “verita serum” survey. What relative value should the owner place on the survey results vis-a-vis ticket sales ?

    If the two disagree – what does that mean ? Which piece of data validates which ?

    When people say “Numbers dont lie” – do they mean Manager 1’s or Manager 2’s numbers ?

  19. Revathi said, on June 6, 2007 at 9:54 am

    Dear RC,

    I wrote the “Verita Serum” survey example just to prove that it is impossible to get the “real” data. (This reminds me of a survey that was conducted recently in Europe. They asked the people as to how many partners each of them had before getting fixed with someone. The survey showed that men had nearly two times the number of partners when compared to women. How can this be?)
    Let’s say that we got this serum from Harry Potter and we did the survey. In this case, what you want to do with the data depends on what your goal is. If it is a short term goal of just making some quick bucks and selling your multiplex to the highest bidder, you would go for manager1 type response. If your long term goal is to have the multiplex in the first place to gain a ground and further work yourself into other allied businesses and even contest a local election to make the really big bucks, you should try and get a manager 2 type information.
    In any case, a very interesting discussion. .

  20. Kumar said, on June 6, 2007 at 8:33 pm

    It’s elementary my dear RC, there’s a problem that genuis peeepal online think that our marxists naxals socialities are doing all this for the love of Mao and Marx.

    We all know that if we were in bijiinesss of making tea-paatii and wanted to figure out as to how many drank it hot and how many drank it cold, every survey would give us results that favored people drinking lukewarm tea. No statistics degree to figure it out, right? Can give you a dozen quotes about how stats is like bikini which reveals all but hides vital areas or how you can beat numbers to sing any tune you want it to. No need for sample size, distributions, variances, meand, T-distribution etc.

    So, tell Manager 2 to go ahead with survey but we don’t have any budget to pay for it but his job depended on the success of survey. So if Manager 2’s sala and bhanja was angling for cash on side, though luck. And Manager 2 has to literally put money where his mouth his – assuming he’ll get his foot out first.

    Manager 1 can do his ticket counting too. So both are happy.

    Personally, envy this theatre owner who can hire multiple managers.

    Trying to figure out if other multiplex are having same problem or issue with quality of service etc can be dealt with when a bit more sober. My guess is that RC didn’t need lessons in management 101 and scope of problem definition exists between two managers.

  21. Kumar said, on June 6, 2007 at 8:48 pm

    Forgot to add in earlier post about the ‘truth serum’/Verita Serum…

    It doesn’t mean anything to problem at hand and can complicate matters if tools not used correctly. Let me explain why:

    Go back to the temperature of tea problem I listed. You want to set up a upscale tea shop and cater to particular clientele who like tea at particular temperature. You survey.
    50% of the people respond that they like it hot – all 100% truthful.
    50% of the people like their tea cold – all 100% truthful in their response.

    Result: most people drink tea lukewarm!!!

    Now as a business owner do you set up your chai latte bistro catering to lukewarm tea drinkers?

  22. Barbarindian said, on June 6, 2007 at 9:38 pm

    I will sell hot tea and give a saucer to the cold tea lovers. They can pour a little at a time and then blow it till the temperature suits them. Alternately they can wait till the tea gets cold by itself.

  23. realitycheck said, on June 7, 2007 at 3:33 am

    >> 50% of the people respond that they like it hot – all 100% truthful.
    50% of the people like their tea cold – all 100% truthful in their response.

    Result: most people drink tea lukewarm!!!


    Your survey did not allow a person to return “lukewarm tea” as a valid response.

    In my view, Manager 1’s data captures the “reality as it exists on the ground” (or in the cash registers).

    Manager 2’s data is nice to have – but must ultimately be validated against Manager 1’s data. So, a measurement at the gate subordinates all other kinds of data (survey,census,opinion poll – whatever).

  24. Gaurav said, on June 7, 2007 at 6:19 am

    Yipeeeee 🙂

  25. Revathi said, on June 7, 2007 at 7:27 am

    Sorry to go offtrack (is it offtrack?). Somethiing reminded me of when one enlightened chemistry lecturer said “if you know the properties of H2 and the properties of O2, then you know the properties of water!” I was one of the unfortunate few to hear it (most were reading the last pages of a Mills and Boon romance). I forgot everything I learned in that school except this sentence.

  26. How Do We Know said, on June 7, 2007 at 10:40 am

    Interesting piece, this!

  27. Sharan Sharma said, on June 7, 2007 at 12:59 pm

    RC, are you confident that M1’s reco (all by itself) can be used for future policy/marketing plans ?

    Apart from what i alluded to earlier, one big weakness is it doesn’t tell you where to improve. Example: Good film, Bad promo, Bad sales. But M1’s reco doesn’t tell you that. The judgement will be: Bad film.

    Some of the data like here and here coming out of a survey is critical in planning.

  28. Sharan Sharma said, on June 7, 2007 at 1:05 pm

    RC, just to let you know – i just posted a comment with two links in it…given past history of using links in posts, might end up in your spam box…

  29. Kumar said, on June 7, 2007 at 3:45 pm


    >>Your survey did not allow a person to return “lukewarm tea” as a valid response.

    You are absolutely right. The point I failed listing is to how we can still arrive at crapy results of our choice to serve our interest.
    Ask people the temperature of tea that they like and raw results will be say:
    50 people like hot tea in temperature range of 90 to 100 degree F.
    50 people like ice tea in temperature range of 0 to 10 degree F.

    It’s easy to take the raw data and get an average temperature in middle around 50 degree F – i.e, your lukewarm tea.
    Perfectly legitmate use of math.
    Ethical – I’m not sure.
    Worth putting your money on – absolutely not.

    Point I’m trying to make is that a tool can be used to get any desired result; in other words for someone who’s good at using hammer, every problem is a nail or can make it to a nail.

    Smart business man will look beyond tools and the bigger picture since it directly affects his bottom line.

    Clearly the tone and tenor of your M2 tells me that he has a vested interest in launching this survey, results are immaterial and he’ll do whatever it takes to get results of his choice.

    Your M1 is not 100% correct either if the general trend in market is that there’s a series of shitty flop movies out here in market and all multiplex are suffering from same problem. Also if your multiplex is serving substandard samosas, stale chai and seats are lice and rat infested, M1’s ticket counting won’t help.

    Different storkes for different folks here.

  30. realitycheck said, on June 7, 2007 at 4:19 pm

    >> if you know the properties of H2 and the properties of O2, then you know the properties of water!” I was one of the unfortunate few to hear it (most were reading the last pages of a Mills and Boon romance). >>

    LOL ! and I dont think it is off topic.

    Any other form of measurement must square with M1’s findings. We are not talking about theater facilities or food here. If we were, we would count food tokens (or) the lines (or the lack of it ) at food stalls – etc. We can assume these external factors are controlled.

    We assume both M1 and M2 are honest and have no vested interets. Both think that the other’s data is of lesser importance to their own. Your point about vested interests are well taken.

  31. Barbarindian said, on June 8, 2007 at 2:49 am

    50 people like ice tea in temperature range of 0 to 10 degree F.

    That’s a little extreme. Water freezes below 32F.


    What’s the competition like? That will change everything.

  32. Barbarindian said, on June 8, 2007 at 3:27 am

    Some thoughts:

    First of all, hit movies may not necessarily create the most profits. They cost more to rent. When you say profit, things change. You need to separate out fixed and variable costs. It is important to find out how the movies are rotated/renewed, at what point it does not make sense to continue running a movie as the fixed costs are not recovered by low ticket sales etc.

    How does the theatre make money from sale of concessions such as popcorn and soda. It will be different if vendors rent space as opposed to if they pay a commission.

    You have five screens. Do you really think at any point of time there are five superhit movies running? I am guessing it is mostly Indian films that are shown. The point is, at any point in time, you have an opportunity to show a number of good bets.

    The town has a pop of 1 million. Assuming a life expectancy of 70 and a linear age distribution, there are approximately 14,000 people in each age from 1 – 70. Now, depending on your sense of demographics, you may want to check what sort of folks are likely to come to the multiplex in the first place. Add in the income range factor. I am guessing about 30% people in town may at all go to the multiplex. The less affluent will go to single screen cheaper places. Single folks vs. family folks etc. are other important factors.

    The more I think about it, it appears that current stats will be much more valuable in getting most of the insights. Yeah, some survey respondents will perhaps say if you show La Dolce Vita or Citizen Kane they will abandon everything else and come to the movie. But in reality past ticket sales over a long period will tell you fairly accurately what is the expected behavior in reaction to different types of movies.

    There are some folks who go to the movies in small town India with a low frequency. Others will not leave their living room no matter what. The limiting factor thus may not be whether enough hot movies are shown but how much of a market is there for a multiplex in a small town.

  33. Gaurav said, on June 8, 2007 at 6:30 am

    Where is my gift 🙂

  34. Jai_Choorakkot said, on June 8, 2007 at 7:51 pm

    If this is going where by past experience it should, the multiplex owner

    – should be pretty much the only act in town
    – OR should have over-riding powers to dictate entry terms to competing ‘private’ muxes
    – be elected to his/her multiplex ownership position
    – in return for this, could attempt to secure this position by offering rebates on the mux tkts to those who elect him/her
    – introduce a variable by which mux-visiting is enabled or enhanced by previous experience, your own or inherited; if your parents visited the multiplex, you are more likely to.

    – and then introduce M1 & M2 into the picture

    but I’m probably reading too much btwn the lines…

    Reason gets closest to pulling this story into context. I would be concerned with other ‘entertainment options’, entry barriers if any to mux created by those who are used to going there to keep the ‘crowd’ out to preserve a ‘mux ambience’, their reaction to the owners rebates etc.


  35. realitycheck said, on June 9, 2007 at 8:16 am


    Yes, you are reading too much into the case 🙂

    In our policy making there is a strong tendency to expand the perimeters of a problem to a point where the central focus is lost, the perimeters themselves become the points of contention.

    From the theaters owners perspective – the reality is the cash register. All problem solving exercises must be focused on (a) recognizing / measuring this reality (b) defining targets to move the reality to a new level (hopefully a more profitable level) (c) continuously monitor the ‘reality’ to judge effects of whatever actions have been recommeneded.

    The centrality of Manager 1’s numbers can be listed as :

    1. The current reality is reflected by Manager 1’s numbers
    2. The course of action needed to nudge the current reality – can be guided by Manager 2’s numbers
    3. Any course of action must be judged purely against Manager 1’s numbers.

    Thanks for this lively discussion – people.

    When we ask – “What kind of data ?” You know where my position will be rooted – whether for SEZ/Quota or any other issue.

  36. Bruno said, on June 10, 2007 at 5:20 pm

    Any ways, the decision should be taken based on SOME CRITERIA and not based on whims and fancies….

  37. Sumeet said, on June 15, 2007 at 3:12 am

    The word here is ” REVEALED PREFERENCES”

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