Is there some weird wrinkle of the movie business that I don’t know about, or do these guys just not believe in supply and demand?
I don’t know the answer, but I do know that certain theaters carry all the big movies, and there is a second tier of theaters with lower prices that carry the not-so-hot movies or the bigger names after the luster has worn off but before they come out on DVD.
My guess is that theaters figure out what is a price point that works and make it easy for their audiences with one-price-fits-all. And remember, most of the money a theater makes is from concessions anyway, so charging less for a less-popular movie won’t bring in enough additional people to make it worthwhile.
Also, I doubt first run movies in multiplexes are very price sensitive. People don’t go to a multiplex and then choose a cheap movie. They decide they want to go to a particular movie and then pay what it takes.
The distributor/cinema business is very complex, but basically it boils down to that the cinema (usually a chain) makes a contract with the distributor (either a flat rate rental fee, a profit splitting arrangement, or more often some hybrid thereof) long before the movie is released. The distributor then pays a proportion of the profits to the studio or film company (which may itself be the distributor), which then doles out profits to investors and royalties and residuals to actors, et cetera as stipulated. This arrangement is rather inflexible to variations in demand, unlike television where advertising rates fluctuate with the popularity of the program (though advertisers there usually “block out” rates months in advance). Why not have a more flexible arrangement? Because verifying contract compliance and accounting would be very difficult, and frankly, it’s just not going to make that big of an impact. There might be a few people who select the film they’re going to watch on the basis of ticket price, but most people are going to see what interests them or is available; varying the cost of the ticket will have little impact on making unpopular films more profitable, and while people might be willing to choke up another $5 or $10 to see Iron Man or The Dark Knight than the latest rom-com snoozer, the ill-will generated is probably not worth the price, especially since theatrical release of big blockbuster films is largely considered to be just part of an extended marketing campaign these days; the real profits come from promotional tie-ins and DVD sales, which can dwarf all but the biggest grossing theatrical releases. (As previously noted, cinemas make their profits from concessions; films are mostly loss-leaders, or at best pay operating expenses, which bring people to the concession stand.)
Plus, if they charge less for a crappy movie, it indicates…well, that it’s a crappy movie, which probably further discourages people from going to see it. Of course, theaters have long discounted tickets for matinée showings, second run, or promotional showings as a way of getting more legs out of film, but that’s more about keeping screens that would otherwise be empty in use than pricing to the market.
This isn’t to say that you couldn’t vary the price of the film based upon the perceived value of it, especially if the feature film market transitions to a predominately on-line distribution model; doing this would make it relatively easy to vary prices in proportion with demand and/or value, the way the DVD market works (i.e. new releases and high hifalutin Collector’s Editions and Criterion Collection releases command premium prices, while older films get discounted). But the current cinema system, just like print publishing, isn’t set up to readily do this, nor is there a great impetus to do so.
Stranger
I went through a phase of watching movies at the cheep cinema ($1.50) and I’d check imdb to determine which of the six I wanted to see. The following month, a lot of the movies were showing up on DVD at Wally. They always charge the most for “new releases,” even if the movie was a total dog. Sometimes I find great, well-known movies in the bargain bin; other, lesser-known movies may command top dollar.
From my ex-roommate, who used to manage a movie theater:
One of the factors is that for lesser movies, or ones that have been running for a while, the theater is receiving more of the ticket revenue. He said that for a huge movie with expected sellouts, like Dark Knight, the movie distributor will drive a very hard bargain, taking almost all of the ticket money for the first few weeks. The theater chain can’t afford to be “the one that doesn’t get the cool movies”, and it’s told to live on the concessions from the large crowds. As time goes on, the theater gets a greater percentage. For movies that the theater has little interest in taking, the distributor pays a greater amount to convince the theater chain.
My point being that I think that at least part of the reason the theaters don’t mess around with the ticket prices because the current system is already compensating them for worse movies, like greater volume would.
Maybe they also think variable pricing is opening some kind of can of worms that will cause arguments from customers, and create the idea of shopping theaters by price, causing a price war. Now that I think about it, there does seem to be some sort of tacit agreement between theaters in an area on what a movie ticket should cost.
There’s also the issue that if they charged different prices for movies in the same multiplex, they’d have to put a lot more effort into making sure you actually enter the theater you bought a ticket for. Nowadays they just station one usher in front of the entrance to all the theaters - once you’ve passed him, no one really gives a crap whether you go into Kung Fu Panda or Meet Dave. If they were different prices, they’d have to station an usher in front of every theater, or at least the expensive ones, which could wipe out whatever extra revenue they make.
Smaller movie houses that play independent films and second run movies usually do charge less.
As for the big chains, the only indication of a movie being “less popular” is attendance. You’d have to constantly evaluate the attendance figures and adjust pricing. After a while some people would only watch the cheaper movies, sucking customers away from the Hollywood blockbusters and pissing off the movie studios. It would be a nightmare to manage, it wouldn’t earn extra profits, and probably wouldn’t attract enough people to be worth it.
I’ve never really figured out why the local independent theater doesn’t charge more. It’s significantly cheaper than the big theaters - I mean, granted, most of the foreign and independent films it shows are just now coming out on DVD when they hit the theater, but as a member I get all tickets for $4.50. It’s more than $8 at the regular theater! And I can get a beer at the independent! I’d pay a lot more.
That’s actually the argument for variable ticket pricing. Whatever gets more people into the theatre makes more money. I question whether it’s true that, as Stranger said, “There might be a few people who select the film they’re going to watch on the basis of ticket price, but most people are going to see what interests them or is available; varying the cost of the ticket will have little impact on making unpopular films more profitable”.
Anyway, thanks to all of you for educating me on the movie business. I see now that the setup is actually rather complicated and it’s not so easy for the cinema chains to change prices. Still, every time I go to a movie and find the theater nearly empty, I can’t help thinking that there’s a lot of concessions revenue being missed.
Why do they show only new or recent films anyway, considering how poorly many of them do? Why don’t they just show the movies everyone already loves?
So what’s to stop people with an eye towards giving the theater a couple more bucks from buying a ticket for the stinker and actually watching this week’s smash hit?
Because the multiplex will typically station a drone at the auditorium entrance to check ticket stubs and verify that the people going into Dark Knight actually have tickets for that and not for House Bunny or whatever. This is done for the first weekend, certainly, and sometimes through the second weekend, depending on the movie’s “legs.” If they didn’t, they would have a theater whose movie is sold out but whose seats are overoccupied by screen hoppers, with the result that many audience members wind up standing or sitting in the aisles.
30 years ago, most cities had “revival” or “art” theaters, which often showed older movies. Sometimes the multiplexes would even use one of their theaters for revivals of very popular movies. Home video killed that business.
Because the drones still need to be paid, and as mentioned upthread, those salaries eat into any profit derived from variable pricing.
This used to happen when I worked at a theater. The chain sold movie passes at a discount, but these passes couldn’t be used for certain movies (The 1988 release of Batman with Michael Keaton was such a movie). So…people would buy tickets for the Care Bear Stare or whatever with their passes, and then just wander on down to the Batman room.