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348 HARVARD BUSINESS REPORTS
Commentary: In the face of widespread opposition on the part of customers of the Universal Pictures Corporation in the Oklahoma territory, the company's decision to stop selling pictures to nontheatrical accounts in that territory was wise. Though this action might result in some irritation on the part of such nontheatrical accounts, it may be said that a company is always justified in protecting the customers upon whom it relies for the bulk of its distribution as against other accounts.
The question may be raised, however, as to whether or not this opposition on the part of the theater owners was justified. On the whole, it must be said that such an attitude is open to question. Sales to nontheatrical accounts fall into two classes. First, there are those which are made to prisons and to other institutions in which those in attendance probably could not attend any theatrical performance. There can be no objection to the exhibition of pictures to such groups where the public is not admitted and where no admission price is charged. A different question arises with reference to the sales made to churches, schools, etc. Relative to such pictures it should be noted first that many of those attending such exhibitions never do attend theaters under any circumstances. Secondly, the pictures so shown are very frequently old pictures having little entertainment value for theatrical purposes. Third, many of the pictures are of the type exemplified by scenics and travelogues which most exhibitors feel have no particular place in the theater program. Fourth, the total number of persons attending such exhibitions has always been comparatively small. Fifth, persons seeing such pictures may very readily develop a habit of attending theater exhibitions.
Aside from these factors, the attitude of the exhibitors in this case was wholly defensive rather than aggressive. Instead of seeking to attract patrons by alert showmanship, they were seeking to protect profits by making it impossible for patrons to go elsewhere. Such an attitude is not progressive.
In this particular case it was not the actual facts as to the extent of such competition but rather the belief of the exhibitors as to its existence which had to be recognized by the distributor. Operating in a field in which competition was extremely keen, the company could ill afford to sacrifice the goodwill of any considerable group of exhibitors. November, 1929 H. T. L.