Ufo Moviez Strategy Analysis

...

releases in non-release cities. Second, UFO had to make trade-offs, namely, utilizing the MGPEG-4

compression standard versus the Hollywood standard DCI. Finally, UFO created “fit” among not only its

own activities, but across entire value-chain by creating a digital platform that operated as a facilitator

for the producer, distributor and exhibitor. In creating a network of digitally enabled theatres,

cooperating with distributors and cinemas, UFO had become a single point of contact.

As alluded to in the above paragraph, UFO had to make two key trade-offs, namely using the

MGPEG-4 compression standard, and consequently serving tier II and tier III exhibitors. The MGPEG-4

standard meant that Hollywood movies could not be shown in cinemas using UFO’s projection system,

and thus demand from megaplexes (tier I exhibitors) would be limited. In making these trade-offs,

choosing to utilize lower quality film standards and pursuing non-tier 1 consumers, UFO executed a clear

strategy by making choices of what not to do. As illustrated in What is Strategy, these positioning trade

offs are pervasive in competition and are in fact essential to strategy. UFO purposefully limited its

offering, and avoided a potentially bad strategy of “straddling”, trying to offer both Hollywood approved

film formats and MGPEG-4. The theory holds that firms that engage in those approaches undermine

their strategies and degrade the value of their existing activities. As a small company without deep

pockets or resources, UFO effectively utilized trade-offs to make savvy business decisions.

Finally, UFO’s entry strategy could be characterized as a combination of low-end disruption and a

value-chain strategy. As described by Christensen in The Innovator’s Solution, UFO pursued low-end

disruption, capturing the fringe customers, the tier II and tier III exhibitors, of established firms and

scaling to provide more value than the existing system, ascending the “S-Curve” of innovation. However,

to do so, UFO had to also integrate and cooperate with producers, distributors and exhibitors,

characteristics of a value-chain strategy, and work within the existing value-chain. UFO provided value to

all stakeholders by reducing distribution costs to producers and distributors and by providing access to

first-day release of movies to exhibitors. Uber versus Halio provides an analogous illustration of UFO’s

strategy. Uber entered the taxi market with a disruptive strategy, seeking to supplant existing taxi

companies. Hailo, by contrast, worked with existing taxi companies to provide a means of hailing a cab

from a mobile phone.

In conclusion, UFO’s success lies largely in its introduction of unique business offerings to the Indian

film industry. However, UFO had to overcome adoption reluctance by making key trade-offs and

strategic pricing decisions, engaging in low-end disruption, and cooperating across the value-chain with

producers, distributors and exhibitors. In doing so, UFO established itself as a market leader with

sustainable competitive advantage.

...