films

Why Do All Movie Tickets Cost the Same?

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Derek Thompson over at The Atlantic has some great answers this basic question: why do movie tickets cost the same, regardless of the budget of the film? After all, shouldn’t supply and demand dictate prices? Why should you pay the same $12 to see a low budget Indie film vs. a Hollywood blockbuster? He offers the following reasons (emphasis mine):

1) Theaters do price discriminate already, kind of, but they do it with space. At the multiplex, not all theaters are alike. Bigger movies get more theaters with better technology. Smaller movies get older theaters with smaller screens.

2) You can’t consistently cut prices after a successful opening weekend. If people knew that ticket prices would fall after a big opening, many more would wait until the second or third weekend to see it, which would, ironically, destroy the meaning of opening weekends.

3) Price can repel as easily as it attracts, because it’s a signal of quality. If your a theater showing one movie for $6, one movie for $10, and another for $12, perhaps fewer people will see the $6 movie because they assume it’s garbage.

4) Cheaper tickets lead to higher policing costs. I’m a cheapskate, so I might buy a ticket to see cheap, cheap Iron Lady and sneak into Sherlock Holmes. This would create a fascinating incentive for art-house studios to release smaller, cheaper films the same weekend as blockbusters, knowing that thousands of canny consumers might buy fake tickets to their show to sneak into the more expensive blockbuster.

5) Price discrimination offers more opportunities for other movie theaters to steal each others’ audience. Once again, I’m very cheap, so I don’t mind taking the metro way across town to see Sherlock Holmes for significantly less money if one multiplex starts to mark up its blockbusters.

Full post here.

Why is Movie Revenue Dropping?

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I read an article that sites how movie revenue is dropping in the United States:

US box office takings fell to a 16-year low in 2011 despite the success of blockbusters such as the latest in the Transformers, Twilight and Harry Potter series. Ticket revenue in the world’s largest movie market fell 3.5% to $10.2bn, while the estimated number of tickets sold dropped 4.4% to $1.28 billion, the lowest figure since 1995’s $1.26 billion.

Roger Ebert posits some theories on why he thinks movie revenue is dropping:

Ticket prices are too high. People have always made that complaint, but historically the movies have been cheap compared to concerts, major league sports and restaurants. Not so much any longer. No matter what your opinion is about 3D, the charm of paying a hefty surcharge has worn off for the hypothetical family of four.

The theater experience. Moviegoers above 30 are weary of noisy fanboys and girls. The annoyance of talkers has been joined by the plague of cell-phone users, whose bright screens are a distraction. Worse, some texting addicts get mad when told they can’t use their cell phones. A theater is reportedly opening which will allow and even bless cell phone usage, although that may be an apocryphal story.

Refreshment prices. It’s an open secret that the actual cost of soft drinks and popcorn is very low. To justify their inflated prices, theaters serve portions that are grotesquely oversized, and no longer offer what used to be a “small popcorn.” Today’s bucket of popcorn would feed a thoroughbred.

Competition from other forms of delivery. Movies streaming over the internet are no longer a sci-fi fantasy. TV screens are growing larger and cheaper. Consumers are finding devices that easily play internet movies through TV sets. Netflix alone accounts for 30% of all internet traffic in the evening. That represents millions of moviegoers. They’re simply not in a theater. This could be seen as an argument about why newspapers and their readers need movie critics more than ever; the number of choices can be baffling.

My reason for going to the theater less than I’ve ever gone before? Relatively expensive movie tickets and the ability to watch many of the movies I want via Netflix, albeit if I don’t mind their release to DVD/Blu-ray a few months after their opening in theaters.

Finally, I really like Ebert’s final reason:

Lack of choice. Box-office tracking shows that the bright spot in 2011 was the performance of indie, foreign or documentary films. On many weekends, one or more of those titles captures first-place in per-screen average receipts. Yet most moviegoers outside large urban centers can’t find those titles in their local gigantiplex. Instead, all the shopping center compounds seem to be showing the same few overhyped disappointments. Those films open with big ad campaigns, play a couple of weeks, and disappear.

Have you been going to the movies less this year than in years prior? What’s your primary reason?