Variable Movie Pricing

The New York Times reports on movie theaters considering variable pricing. That means that you’d pay more to see a desirable film at a hot time than you would to see a movie that’d been out for several weeks on a weeknight.

At first it sounds like a good idea… I rarely go the movies any more, and when I do go, it’s usually the first show on Sunday or a Tuesday night, because I don’t like the behavior of most other moviegoers. If they’d otherwise be playing to a near-empty theater, then we should be able to get a discount on our ticket. However, here’s a warning bell:

It is not entirely rational, but shoppers usually need to be tempted with a discount first. Companies can sneak in a surcharge later, as part of a broader price increase. Or they can offer obvious benefits to people willing to pay more. That is how the theaters are proceeding: slowly and quietly, so that people won’t notice the change until it’s too late.

Of course shoppers want a discount! If we’re not going to the movies because the value for money isn’t any good — if we can have a better experience cheaper at home with a DVD — then why would we want to consider paying more?

I suspect that what’s going to happen is that theater owners only see the part where they raise prices for Saturday night new movies and reserved seats. I doubt they’re thinking about what happens if this attempt to get more money for the same thing drives even more viewers away.


9 Responses to “Variable Movie Pricing”

  1. Sebastian Says:

    Heh. It’s little things like this which I find interesting. Variable prices in cinemas are an established standard over here in Germany (and have been for at least a decade, IIRC). Never suspected cinemas (all? or just many?) in the U.S. took flat rates every day of the week, and high ones (like the prices for weekend nights over here), at that. That “bargain tuesday” cited in the article reminds me a lot of the low-priced “cinema day” all of the large multiplex chains agreed upon here (which most of the other cinemas adopted as well) a couple of years ago – also on Tuesdays.

  2. Sebastian Says:

    Oh, but different prices for different movies have been used only very rarely so far… some attempts by studios and distributors to cash in even more on certain blockbusters have even led to some cinemas boycotting those releases.

  3. Johanna Says:

    It’s not all US theaters — various movie theaters do discount shows before 6 PM, or the discount days as mentioned in the article. I think it’s a topic of discussion again because movie prices overall continue to rise as attendance falls. Interesting to be able to compare how different countries do it — thanks!

  4. Mitch H. Says:

    Er, how is matinee pricing innovative? Or is this something more involved than two bucks off the shows before 6 PM?

  5. Michael Denton Says:

    Movie theaters are missing the boat here. It’s all about what they can offer that DVD’s can’t. With Blu-Ray and HDVD coming on board, pictures are getting even stronger – some DVDs are already movie quality. Theaters might can get away with charging higher prices for hot movies on prime nights, but they’ll need to offer guaranteed quiet (child-free?) environments, cell-phone silence enforcement, and far superior audio and visual experiences – perhaps more space so people can strech out (couches?) – and more seating so people don’t have to sit on top of each other.

  6. Ralf Haring Says:

    Matinee pricing is not innovative, but charging more or less for regular times is. Where I am (Long Island) theaters are already charging more to see a movie on Fri-Sa-Su nights than on other nights. I also know of at least one theater (not a major one, but not an arthouse on either) that has a matinee-all-day-Tuesday policy.

  7. Kurt Says:

    Michael’s right about the direction theaters need to go but the fact that more haven’t done so is likely related to the capital costs of those changes rather than lack of clue. Theaters haven’t made a money off of ticket sales in years — all the profit comes at the concession stand — so it’s somewhat surprising to me they haven’t moved to more of an airline model even quicker than this in an effort to put more popcorn eating butt’s in the seats in slow times.

    Nice choice for the pull quote, Johanna. The author somehow managed to state the utterly obvious and make it sound ominous all at once.

    DVD’s have been the oncoming train for cineplexes for some time and theaters will get little help from the movie studios (who take a percentage of ticket sales) since DVD’s are the largest source of income the studios currently enjoy. I’ve read several predictions that in the next few years we’ll start to see more and more direct to DVD releases with only very high profile movies spending any significant time in the theaters and possibly only those best served by that environment.

  8. Ed Sizemore Says:

    Johanna, I have been watching Charlie Rose on PBS and in the last couple of months he has interviewed several movie studio execs. They all say the same thing, the lag time between the theatrical release and the DVD release of a movie will be getting shorter. Roth, who heads Revolution Studios, see the lag time getting down to 30 days. So this pricing systems seems obsolete already. Why should I go see a movie in the theater 3 weeks after opening weekend when the price drops, I can wait four weeks and rent it even cheaper? What is more amazing is the fact there seems be a small number of directors and execs who are pushing for the DVD release date to be the same as the theatrical release. I think theaters may need to really rethink their business model from the ground up to survive in the next few years.

  9. Crocodile Caucus » Blog Archive » In which Lyle talks like he understands customers better than marketing execs with six figure salaries Says:

    [...] The New York times asks if variable pricing is the future of movie theatres (found via Johanna). While I can see the potential in the concept, most of the article left me shaking my head. VARIABLE pricing has been around as long as outdoor markets, but the modern version of it really began at American Airlines more than 20 years ago. Robert Crandall, the chief executive, was trying to beat back a discount airline named People Express, and he devised a computerized system he called "yield management" to adjust prices constantly. [...]

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