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Would a different ticket-pricing structure bring more people to movie theaters?

March 21, 2011 |  7:00 am

Theat

The box office again found itself in a lull this weekend, dropping 9% from the comparable weekend last year despite a diverse group of new releases. It provided the latest sign that we may be in for a long-term slump instead of just a cyclical dip. This was, after all, the fourth straight weekend that box-office receipts dropped compared with the previous year. And things weren't much better before that: Through Presidents Weekend, box-office dollars were down 24% compared with 2010.

It would seem like a sharp wake-up call after the outsized success of movies such as "The King's Speech," "Black Swan" and "The Fighter" at the end of last year. But for all the successes, film attendance in 2010 endured its largest drop since 2005. The declines in moviegoing, apparently, won't be reversed by a surge in quality.

On Twitter, the suggestions have been flying for some time on what, in fact, will reverse it: more in-theater amenities, more 3-D releases, fewer 3-D releases, across-the-board price reductions (unlikely to happen), assorted other recommendations.  But the sales slump also calls to mind another idea that has been alternately floated and dismissed over the years: variable pricing.

A jargony term for a straightforward concept, variable pricing basically means that ticket prices  will rise or falling depending on a slew of factors, most notably how much people want those tickets in the first place.

Many theater chains, of course, already practice a form of it with their afternoon matinees. The concept, which economists have been examining for a while now, would extend the variability to other factors: where assigned seats are located, how close to the showtime the tickets are bought and, most critically, how in demand the tickets are. Basically, it's the airline and hotel model for movie tickets.

How would it work? Essentially, prices for all movies would start at the same baseline as they do now ($7 to $12, or even a little lower, to give filmgoers a break). But as supply and demand shift before and during a film's release, the prices would fluctuate accordingly.

For instance, this weekend, as demand for "Limitless" increased, the amount that it cost to see the film would tick up. Prices for "The Lincoln Lawyer" and "Paul," less in demand, would slide down.

As more people took advantage of the lower prices, prices for it would start to climb back up. At the same time, as the higher prices deterred some "Limitless" patrons, the price for that film would start to drop. If the system were set up right, you should, many economists believe, see more revenue on "Limitless" and more tickets sold on "The Lincoln Lawyer." 

It's a system that attempts to solve the dual but disparate problems that currently afflict moviegoing: Film fans say ticket prices are too high, and studios and theaters say they're not making enough money.

Of course, "Limitless" is only a marginal example of an in-demand movie; the price and revenue uptick would apply most heavily to highly anticipated franchises, the "Twilights" and "Harry Potters" of the world. And therein lies perhaps the biggest obstacle to this sort of flexibility. Studios, which wield influence over but cannot  legally dictate ticket prices, have historically opposed variable pricing; they fear it will dissuade filmgoers from coming to see their biggest movies. Do you want to be the company bringing out "The Dark Knight Rises" and explaining to fans that the movie they've been waiting years to see will now cost them $20 or $30?

Yet most studios don't just peddle big releases but also mid-range and smaller movies (relatively speaking, anyway), and this system should help those films. And even if attendance drops for event films, there's no reason the system couldn't be calibrated so those losses were offset by revenues from the higher prices.

More important for all of us in the general public, variable pricing would offer an incentive to buy tickets early and with some resourcefulness, the way frequent travelers seek out the best flight deals. It would reward planning and enthusiasm -- that is, it would reward the hard-core filmgoers, which isn't at all a bad thing. Sure, none of us want to pay more for movie tickets. But if you're a big Christopher Nolan fan and bought tickets right out of the gate, it would cost you a lot less than if you sat and dithered, a proposition that has a kind of pristine fairness to it.

And for those of us who are a little more lazy or indecisive, variable pricing would still carry a benefit: tickets for non-event releases would cost less than they do now. Since that encompasses a fairly large amount of movies on offer, it means that for many trips to the theater we'd experience lower prices.

There's a potential democratizing effect to this, too. People say they'd like to support smaller movies that aren't big blockbusters. Variable pricing  builds that support into the system -- as prices drop, audiences would be lured to a movie they wouldn't have gone to otherwise. (Lionsgate tried to induce this itself with Groupon discounts for "The Lincoln Lawyer" this weekend.)

Every ticket-pricing system has its flaws and critics, and the logistics of implementing a system like this wouldn't be simple. But with moviegoing sometimes seeming like it could be heading for rigor mortis, a little flexibility might be a welcome thing.

-- Steven Zeitchik
twitter.com/ZeitchikLAT

RELATED:

Bradley Cooper's "Limitless" breaks out of top 5 horse race at box office

Groupon sells 190,000 tickets to "The Lincoln Lawyer"

Box-office receipts are down in 2011

Photo: The Mann Festival in Westwood after it closed its doors in 2009. Credit: Jay L. Clendenin / Los Angeles Times

 


 
Comments () | Archives (42)

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Varying the price won't make a bad picture good. Hollywood is the only place where they think they can ruin your evening while taking $13 a head out of your wallet for the experience.

How about instant refunds after 20 minutes of lousy cinema?

-- If actors' enormous salaries were slashed, lowered ticket prices would be possible. (Wonder if THAT will get printed...)
-- 3D premiums should be abandoned. Demand is sliding away. (Hopefully 3D itself will soon be abandoned).
-- There is already variable pricing. A few discount theaters are still around. Why not have a few more? Just yesterday a friend invited me to see The King's Speech for $3 at a discount theater. I did not go, however, because even at $3 I have no interest in the film. But the price did interest him enough to go. (Note that the price was $3, not the current $7-$12 as this article proposes).
-- I did pay $22 for two tickets at the Egyptian theater last night. If contemporary films were as good as those made in the late 60s, or the late 70s for that matter, I might attend more films. In other words, dispense with all the comic book stuff. (Ironically, the film I watched last night was a very "comic-book" James Bond film from 1967, but the style and direction still beat the pants off of today's actioners.)
-- If each tween-paid $20-ticket to Twilight and The Dark Knight were to subsidize my ticket to "XYZ", I might visit the theater more often. But there's the rub, I could not think of a title that I am currently interested in visiting the theater for, at any price.

Why is this even a discussion? It's obvious that the price of tickets is what keeps people away. It is about $50 to take my family (4 of us) to the movie theater and that's not counting any concessions or parking fees. I get a much better bang for my buck with Netflix. I used to see quite a few movies in the theater, but it keeps getting more and more expensive (especially here in Los Angeles) that it's usually not even a consideration for me anymore.

I already have paid more for the "big event" movies. Bakersfield has no IMAX so me & some friends will drive down to L.A. occasionally to see a movie like "Inception" or "Watchmen" @ City Walk or the ArcLight. When you break down the shared costs those movies ran well over $20 a ticket.
I won't pay that for "The Social Network" or "The Kids Are All Right" which are excellent movies but play almost as well on my 32" HDTV.
A note to those knuckleheads who think that I'm going to watch "The Dark Knight" for the umpteenth time on my cell phone: It ain't gonna happen --the format is waaay too small.

"The declines in moviegoing, apparently, won't be reversed by a surge in quality."

This is uninformed insanity. If ANYTHING can be learned from this whole mess, it's that good, original films are still making money.

The biggest problem is that execs - and apparently reporters - refuse to give poor production, bad ideas, uninspired re-makes/boots and overly frugal rom-coms the blame they deserve for tanking cinemas. People still go to see good films. The problem is that cinemas have never been so stacked with crap.

The thing that will bring more people to the movies?

BETTER MOVIES.

Less Blockbuster junk. Means the teenagers will stay home and watch their superheroes on their iPhones. Then adults can once more enjoy the movies.

You might be surprised to know, there are more of us than there are of them.

I know! Who wooda thunk?

Sure. Let the ECONOMISTS solve the issue of marketing movies.

They've done so well with everything else.

I have to agree with J MacDonald on this one. I would not pay one dollar to see a bad film, but I would pay 20 dollars to see a good film. If Hollywood makes good films we will come. The problem with this system is that the human and emotional element of film attendance is being replaced by cold, unfeeling math. Yes, your plan is just a bunch of number crunching, and besides, is it really fair to charge someone a great deal of money for a good, popular film and at the same time entice them to see a bad, unpopular film because the price is lower. In addition, the article fails to address the key problem with Hollywood today, GREED. Execs say they don't make enough money. That may be true because they have to pay the likes of some A-listers 10-20 million dollars to be in their stuff. As with all professional sports the high priced talent continues to make out like gang busters while the fans are stuck holding the bag. Maybe, execs and talent alike can implement some pay cuts across the board, bring the price of filmmaking down and at the same time drop ticket prices.

I am an usher at a major suburban multiplex just outside Boston. The studios might be unpleasantly surprised to know that a variable pricing system (of a sort) is already in place: unenforced ticket fraud. I have been told more than once by management, in no uncertain terms, not to inconvenience customers who have purchased 'senior' or 'child' tickets at a discount who are clearly neither. Even in an optimal scenario, the young, low-skilled labor in theaters aren't trained to enforce ticket accurancy, or simply might lack the courage to confront the customer on the issue (especially when management is going to wave them on anyway). On a good Friday night, this is probably 15-20 out of every 100 tickets, resulting in a loss for the studios -- who get the biggest chunk of first weekend gate -- and a gain for the theater, who get a customer with more disposable concession money in their pocket. Extrapolate that out to every multiplex in America, and we're talking in the millions of dollars. This is a bigger problem than the studios realize.

I'm in Australia. Ticket prices here are $17-19 i think. It's been a while. Tight-ass tuesday is $11, but if you go on a TUesday there is a squillion other people with the same tightass intentions. I used to go to the movies once or twice a week but now it's once or twice a year. I can wait a couple months and download it, or rent it for less than the price of a Happy Meal ($4), potentially saving me around $30 a week ($50 if you include the popcorn pricing).

Check out
cineplex.com.au
It is a chain if cinemas here in Brisbane, Australia that offer reasonably priced cinema tickets ( $AUD 4.50 kids, $AUD 8:50 , Digital 3D Movie $AUD 13.00 Adults, ) The Screens are excellent ( 1 is 25 Meters) The food at the candy bar is priced the same as any candy store. Guess what? It's packed every weekend and most week nights. Meanwhile the huge multiplexes are half empty because the prices are obscene. It comes down to greed. Take the Apple App Store model. Price things correctly and offer value for money and they will sell.

Variable pricing won't do it. Lower pricing might. But considering that I have a field-of-view filling television in my living room, a multi-channel surround sound system with room-shaking bass and potentially deafening immersive volume, and a comfy couch to watch it on, it would take bargain basement prices to lure me back to the theater for anything. Oh, and 3D isn't going to save theaters because 3D isn't 3D. It's a gimmick with annoying, headache-inducing glasses. If they come up with free-standing true holographic video, that might lure me back, but only at the $13 a pop price for the fake 3D of today.
It's entertainment folks. Adjust your spending accordingly.

I've wondered for the longest time why theaters hadn't moved to the variable-pricing system sooner. Why do movies which cost a lot less to make than the big production films cost the same amount to watch? And offering discounts on early purchase is a no-brainer, which also helps measure projected attendance and allows for the addition of more screenings of popular films.

While I think the variable pricing structure would definitely create a moderate increase in revenue, I don't think it addresses the root cause of lower ticket unit sales. I'm guessing it has a lot to do with a trend that Hollywood refuses to acknowledge: even teens hate dropping coin for poorly made movies. And with substitutes like gaming consoles, iPads, etc., they don't necessarily have to sit through crappy movies on the weekends anymore.

Just make everything cheaper.

some movies are just not for theaters. e.g. Buried, rom-coms, period dramas, horror,beer flicks?

only blockbuster actions are worth it. anything else, pump up the spread of HD streaming w/ bonus features across the counrty, and success awaits.

stop relying on the fall back of disc sales.


It is an interesting concept, I've talked about the struggles of movie theaters at my blog and how I think they could solve the problem with something I dubbed "movies on tour" you can certainly read more about it on my blog look for the post about AMC and Regal's joint venture.

I've also talked about how mulitplex cinemas is a dying model. From the cost of opperation to the cost of gas to get to these multplex theaters which often times are further away than the older duplexes. Could we see a revert back to more mom and pop theaters with one or two screens in local areas rather than big multplex cinemas in the nearest shopping center?

However to related directly to variable pricing, I think that a more expensive "in demand" movie would just hurt attendence further and a less expensive movie that no one cares about - still means no one cares and they'd be more likely to continue to ignore the theaters all together.

I don't really think pricing is the only problem, I know I for one would gladly pay the current prices they are charging if it was for a better experience. But I don't mean the quality in the movies. I think anyone that thinks there aren't any good films made anymore isn't looking hard enough. What I am referring too is fellow movie watchers. I can't stand going to the theater anymore because of all of the rude behavior, it has gotten out of control. People's phones ringing, people answering phones, people texting right in front of everyone, people talking during the movie and making comments the entire time. Why would I tolerate someone ruining my movie experience when I can just wait a little while and watch the film in my own home with no distractions and actually get into it. So if you ask me they can keep charging whatever they like, just use some of that money to post someone inside screenings whose sole job it is to enforce civility and throw people out when they are disturbing others.

Variable pricing? So I get to pay $20 to see the next Batman to help pay for the next Kings Speech, which I would never go to the movies to see anyway (i would rent it and maybe enjoy). No way! That's the quickest way to get me to the theaters less. i could see ticket prices go down for a movie that isn't packing theaters. Raising prices because of demand is greed.
Of course a big budget blockbuster is going to have demand its opening weekend but how does raising the ticket cost bring more people to the movies. Is it about filling seats or making money? If you want to bring more people to the movies you lower concession stand prices.

I could agree with paying a bit more on weekends. Here is a good idea.
When movie open charge a dollar or 2 extra on weekends (not $20 tickets).
During the week all tickets for all shows are much cheaper to fill seats.
Concession items should be lowered across the board dramatically. It's a slap in the face that someone should have to pay $12 for popcorn and soda, 2 of the cheapest food items out there. By applying this Walmart approach where volume sells everyone makes their money. Another idea, the more tickets you purchase the cheaper they get. To be honest though I think the larger issue is that there are too many movies out at any one given time. Definitely too many bad movies. Back in the day the towns 1 theater had 2 movies playing for half the year now movies are expected to put up or get out.

Variable pricing as described in the article won't work....only make things far more confusing...Across-the-board reduced pricing might...I have noticed that more and more theaters have been reducing matinee showtimes...Bring back matinee showtimes for all showings before 6 as they used to be...reduce prime-time ticket prices by 10-15%...find other ways to raise revenue, i.e. expand menu, add beer and wine...just a thought

If they implemented this system the films could be at the mercy of critics and their film reviews. If you have to plan ahead to save money I would think people would be quickly stopping by metacritic and rottentomatoes to finalize their prepaid decisions.

The problem is people watch movies for two reasons. For the art, and for the entertainment.

For a lot of people going to see a movie is weighed between going to a basketball game or playing miniature golf. It's something to do outside the house whether that be for a date, or a family outing.

Complain about the price of movies...but bowling, going to a concert, or eating out is just as expensive.

Right, let's make buying movie tickets as complicated as buying an airline ticket. That will REALLY make people want to go to the cinema.

Everyone says that reduced pricing will not work. I firmly believe that if on any given weekend one of the big chains, AMC or Regal, slashed there prices to $6, ticket sales could double. Not only that but theaters could make more revenue on concession items. The studios should not complain about this because this would give more buzz to your movie either for people to go see multiple times or increase DVD sales. Plus, you could give movies more of a chance. "The Lincoln Lawyer" got pretty good reviews, but I am not going to go see a movie like that because it is just not worth $12. Drop it to $6 and I would go this weekend.

This decrease in movie sales needs to happen though. We need more actors and directors that are willing to take pay cuts. We need studios to stop making crap films. The market will dictate what happens.

Are you kidding? This will just give theater owners license to ask for even more money for poor presentation and crappy popcorn. No thanks. How about lowering ticket prices? That would almost certainly bring people back to the cinema.

Then every theater would have to pin someone at every auditorium door to rigorously enforce the policy, to ensure people don't buy the low-price tickets and theater-hop to the hot-ticket movies. For a 20-screen megaplex, that would increase overhead by as much as $160/hr in high states with high minimum wages.

 
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