The move could lead to higher prices for blockbusters and lower prices for unsuccessful films. Three-year-old Atom, backed by Disney, Fox, and Lionsgate, has been pushing chains to take such a step. Amy Miles, chief executive officer of Regal Entertainment, made the announcement during an earnings call Tuesday with analysts.
4 comments:
One of the first things you learn in economics is supply and demand. This demand-based pricing is doing exactly that. We’ve seen this in a lot of new technologies and businesses, primarily crowdsourced-based apps. I often use Postmates and Uber. And like most people, I like to eat dinner at a normal time and need to use Ubers on the weekends and at night. During those times, these applications use a “surge-pricing” model to help encourage their drivers to get out on the road (increase supply) and to decrease the demand. What’s interesting about implemented a demand-based pricing model at a movie theatre is that you have fixed resources. You have so many seats and so many theatres. What they are trying to change is the final resource, the audience. By lowering the prices at unpopular times, they are hoping to lure more audience members in. While I don’t always enjoy surge-like pricing strategies, I understand them and how they are useful. What I’ll be more curious to see is how much the change in pricing is.
I agree with Ben that demand-based pricing can be useful by selling more tickets to the less popular movies and by maximizing profit from popular movies. Like mentioned in the article, the demand based ticket pricing system has already proved useful in the airline, hotel, and live entertainment businesses. But I also worry that the demand-based pricing will lead to more commercialized blockbuster type movies to the already saturated market. The movie theaters are already full with certain type of movies such as Marvel superhero movies, Disney blockbuster movies, series brands like Pirates of the Caribbean and Harry Potter. When the ticket pricing changes, more movie theaters will only want to screen popular movies over others. Then there will be less theaters running already less popular movies, and then there will be even less funds for non-blockbuster/no-star kind of movies. It may seriously discourage diversity of the movie stories and deter growth of movie industry in general. Also, I am curious as to how the demand pricing will work when there are so many other sources and contents to choose from. Instead of going to see Star Wars for $50, younger people may choose to torrent it at home, wait till there is cheaper promotion screening or just choose to watch some other Netflix originals at home. All in all, I am also curious how it will work out, but as a broke grad student, I hope that the price will stay reasonable so I can still treat myself to superhero movies once in a while.
This article took a different spin on movie ticket pricing than I thought it was going to. Most movie theaters already have some kind of different pricing for the time of day, a cheaper price for an afternoon movie and a more expensive price for a night time movie. I was thinking that the ticket price for a movie was going to change based on the movie. All movie tickets cost the same, but I think this is where they could really increase revenue because if you increase the price on certain movies, such as superhero movies which a lot of people go to see, you can make a bigger margin profit. I was not surprised to read that movie theaters and the Regal company are losing revenue over time. With how easy it is to access movies from home their is less of a motivation to go to a movie theater. I think finding a balance for theaters will be hard, because if prices increase for a popular movie at a normally high demanding time then people may turn away and instead choice to find things online.
This makes me sad, but it absolutely makes sense. As several other of my classmates have mentioned, movie theaters already do price somewhat based on demand, as seniors get cheaper movie tickets, and there are cheaper tickets available earlier in the day, since siginificantly fewer peope attend those showings of the movie. However, it is very sad to think that more popular movies will be more and more expensive, depending on how many people are attending the film. While this is certainly simple economics of supply and demand, it is still very upsetting.
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