I go to movies at the nearby movie theater less and less, partly because every time I go it’s sticker shock. Also it seems like every time there’s fewer people in the theater with me. Last time was last week at a 2pm showing with my children. For a daytime showing the children’s price was $7.25…we went and enjoyed the movie, but it was too much, won’t be going again, not when equivalent entertainment at home is essentially free.
Movie theaters will surely go out of business if their response to lower prices in their competition (movies at home) is to raise prices. But people have been complaining about ever rising movie prices as long as I can remember and there are still 3 movie theaters in my mid-size town.
people that understand economics or the movie business better than me, is there something I’m not seeing? or is big change soon to come?
Because they are making tons of money at the ticket prices they are currently charging. You can’t watch theatrical movies at home while they are still in theaters, so there isn’t any competition that you’re talking about. If I want to see the new Transformer’s movie ASAP, I have to go to the theater, or I have to wait for months.
It sounds like you personally don’t care about what movie you watch on any particular night, so the theater is a poor value for you. Also, you probably don’t care about the size of the screen, the audience interraction (laughs, gasps, heckles,etc), the high quality and loud surround sound, etc.
There are many things about the theater that people enjoy that you can’t easily or just can’t replicate at home without breaking the law.
A theater at 2PM I would expect to be empty no matter what the price was.
The simple answer is theaters are charging the amount that will maximize their profits. They don’t actually care how many people are in the theater, they care how much money they make. If tickets were $1 million and only one person showed up to a theater’s run, that theater would be pretty darn happy.
Movies at home are not competing with movies in the theater. Totally different timeframe and experience.
One of the basics of economics is the demand curve. If 1,000 people want something when it’s free, 500 of them might want it at $1, 300 at $5, 100 at $10 and 10 at $50. When a business looks at this from a profit/loss standpoint, one of the things they’ll notice is that they have the same gross revenue (i.e. ticket sales) at $1 as at $50 per ticker ($500 total revenue), but they actually have the highest revenue at $5 per ticket ($1500 total). When the business then looks at their costs, they might actually find that selling 10 tickets at $50/ticket is the most profitable model for their business.
Yes, it means that 990 people will find some other means to watch movies, but the business might not have a profitable way to make those 990 people happy. In essence, then, the business is successful because it only caters to those willing to pay the most.
Oh, I should also add that you might shop around and see what prices are available. There’s a theater near me that does $1 tickets at noon just one day a week for certain kids movies. My favorite theater does $5 tickets all day on Tuesday.
This is part of economics, too. If you can find a way to sell at a lower price point without cannibalizing your higher-end clients, then you can marginally increase your sales/profits.
Here is the US domestic yearly box office totals including number of tickets sold.
Fairly steady overall growth in box office. Some oscillation, especially when the economy tanks. But note that 2005 was an out-of-place down year. Things like that usually have to do with a lack of big, successful movies.
Note that number of tickets sold has been trending down a bit for over 10 years.
So taking into account a small amount of inflation and the growth of the US population, the trend is slightly downward but not too bad given the large number of alternatives. I think most people would have guessed a much bigger drop off.
Studios really limit how low ticket prices can go. Several years ago, the studios were demanding so much that several chains went bankrupt. It’s a little better now, but not much.
Note that theater chains try to hold costs by increased automation, bigger multiplexes, etc. But distributor demands to switch to digital, etc., are hurting them.
The real driving force in ticket prices is movies with absurd budgets. E.g., the standard “That Adam Sandler movies cost how much to make???” argument.
If studios took a more rational approach to holding production costs, and got rid of most of the idjits with poor greenlighting abilities, costs would come down, the demands from studios on theater fees would come down, and ticket prices would stabilize at more sane levels.
In the 40s and 50s, movie tickets in my town were 14c for kids, 20c for teenagers, and 35c for adults. The depreciation of the dollar is about 1/15 since then, so that would translate to $2.00 for kids, $3.00 for teens, and $5.00 for adults.
For comparison, a gallon of gas, a pack of smokes, or a monthly magazine or a paperback novel were all 25c, or $3.75 in today’s prices. Gas is commensurate, but smokes and books are double the inflation rate. My parents paid $60 a month rent for a 3-BR house on a residential lot, about $900 today.
So, yes, movies are in the category of things whose prices are on the high end, considering inflation.
You can buy movie tickets at Costco for $7 each, for an adult ticket you can use anytime. For 3D or IMAX films you pay the difference in ticket prices (so if a 3D movie would cost 2 bucks more you’d give them the Costco voucher plus two bucks).
My wife and I enjoy going to the movies, and so when we shop at Costco we’ll often buy batches of six or more. Compared to paying $11 on a Saturday night 7 bucks isn’t too bad.
My impression was that matinee prices used to be less than that. I tried to do some research, and according to sources like this and this, the average price of a movie ticket has steadily increased in absolute terms, but hasn’t changed all that much (and is not at its all-time high) when adjusted for inflation.
However, if that’s the average price of all tickets sold today, it may well include surcharges for 3D and IMAX movies. What I’d really like to know, but couldn’t find, is how the average price of an everyday matinee movie has changed over time. For the price-conscious, how much are today’s cheapest theater tickets, and how does that compare to the bargain prices of yesteryear?
In particular, the theaters where you could see a not-quite-new movie for a buck or two, that were around during the 1990’s and 2000’s, seem to have mostly disappeared. So, seeing a movie in a theater is something that you could do for cheap, but no longer can.
People talking and waving cell phones in front of you?
I’m not really familiar with the economics of movie theaters, but I’ve heard it said that the theaters make no money on the movies and everything on the concessions, particularly for first run movies. So they may not have a choice in how much they charge for tickets – there may be contractual issues, or they might have to make up the difference if they discounted the tickets.
If anyone takes the opportunity to listen to the Planet Money piece I’ve linked to above, you’ll see that movie ticket pricing is actually a complex issue.
One important factor is that studios play an important role in theater pricing. And studios would be very annoyed if theaters discounted unpopular movies, because it would be tantamount to declaring them stinkers.
And theaters don’t want to annoy studios because they can then make sure that any offending theater group doesn’t get to show any blockbusters.
We have one theater locally that has really, really cheap tickets. They carry films that are recent, but not current. Prices there are like $2 or $3. So I guess the answer is, as previously stated, you’re paying for the opportunity to watch them ASAP.
Re the “demand curve”: No consideration for popcorn, etc.? It was my understanding that snacks and drinks are the biggest money-makers for cinemas. Wouldn’t this mean more people buying tickets at lower prices might be preferable even if the ticket revenue is the same?
Although, if the ticket revenue goes down while total profits go up thanks to snacks, presumably that’s where studios might start getting unhappy.
Movie theaters don’t set ticket prices. Movie distributors do (albeit indirectly).
For hot movies, the rental cost is nearly that of the ticket price. Theaters only make money on a tiny margin of those tickets, a larger margin for longer runs and less-demanded movies, and from concessions. Upscale theater amenities like rocker seats and designated seating allow a little more margin.
It’s always been something of a shitty business, and these days, you can’t even play unless you have a chain of 15-plexes. Small theaters can only survive in the smallest and most isolated markets, and have almost no chance to show premiere films.
Just yesterday, I saw a current film, in a comfortable theater, with state of the art 4K projection for $4.50. And no, nobody was talking, waving cell phones or anything like that. This was at Cinemark’s Palace at the Plaza in Kansas City in a high end shopping mall.
Equipose manages to see films every day of the week in Chicago, a very expensive city, for no more than $7 per film.
