Should Movie Ticket Prices Be Based on the Perceived Quality of the Film? One Research Analyst Says "Yes"

Should Movie Ticket Prices Be Based on the Perceived Quality of the Film? One Research Analyst Says "Yes"

Apr 16, 2012

Movie ticketsIt’s an idea that’s been casually discussed for as long as we can remember – why don’t Hollywood and movie theater chains offer variable ticket prices for new theatrical releases based on the quality of the film? As theater attendance continues to sink thanks to the proliferation of affordable large-screen HD televisions that allow people to re-create the theater experience in their own living room (for a fraction of the cost and without the annoyance of other theater patrons), it seems like a relatively innovative way to get more customers into seats. So far, the idea hasn’t gained much traction – but a recent research note from an industry analyst is once again bringing the discussion back to the table.

In an LA Times story, Todd Juenger -- a research analyst at Bernstein Research -- reports that nearly 93% of theater seats go unfilled, with that number ballooning to a massive 99% between Monday and Thursday.

“Movie exhibitors are operating with the largest amount of excess capacity of any industry we could find in the free world,” Juenger says, and his idea to help resolve the issue is to implement a variable pricing plan with ticket charges based on the perceived quality of the film and the day of the week. Will it really work, though? We’re not entirely convinced.

On the one hand, there’s a lot to be said for a variable pricing structure that takes average attendance on a given day of the week into consideration. The industry already implements something similar to this with matinee pricing, where a ticket to an afternoon screening is cheaper than one to an evening showing. Under an updated variable pricing scheme, the discounts would apply to a whole day.

Things get trickier when prices are based on perceived quality. Summer films and prestige pictures would obviously command higher ticket prices, while movies released in months like March would be cheaper. However, while this could cause some films to draw bigger attendance numbers as audiences find they’re willing to risk spending their cash to see a film they would have otherwise passed on because it has a lower ticket price, determining the quality of films isn’t an exact science.

Take, for instance, something like John Carter. Disney expected that to be a big film – and would have charged premium prices under a variable price scheme. That could have potentially caused an even bigger loss for the film as early negative word of mouth convinced people it wasn’t worth seeing at the inflated ticket price. Conversely, Disney could – in theory – have lowered ticket prices in response to initial reaction. That being said, it seems unlikely that even a lowered ticket price would counter negative word of mouth reviews.

With box office numbers being such a huge deal in Hollywood, anything that could potentially alter those figures in a negative way is a big issue. What if a movie like Paranormal Activity opened at a discounted price and then blew up? The studio, even if they adjusted the price upwards in the face of the film’s initial success, probably wouldn’t have made as much as they did with a standard fixed rate. And what of audiences? Would people have resented that early viewers of the film got to see it at a cheaper rate than those who got on the bandwagon later (or worse yet, after the film’s gradual release schedule finally hit their small town? Small towns would seem very likely to get the shaft for films that became big through limited release since they’re amongst the last to get them…)

The other potential snag is that variable pricing seems great when you think of it as getting a discount on movies you might have paid more to see – but that’s only half of the equation.

While some films would certainly be cheaper, others (the ones the average filmgoer really wants to see…) would cost more. Ticket prices are already outrageous for families – but how would a $20 ticket price (just an example, no one has mentioned any kind of specific pricing) affect something like box office figures for a family movie like Pixar’s latest blockbuster? Would a family of four spend $80 just on tickets? That’s approaching the cost of attending a live sporting event, and families have long said they can’t afford those.

Ultimately, there’s no easy answer here – variable ticket pricing is certainly an option worthy of analysis and discussion. That being said, there are some serious hurdles to be cleared if such a plan were to be implemented and work effectively. With the motion picture industry regularly demonstrating that they’d prefer to cling to outdated business models, it seems unlikely that we’ll see any sort of change in ticket prices – aside from the standard across the board increases – any time soon.

What do you think? Would you see more movies in the theater each year if prices were variable based on the day and quality of the film, or would you prefer to maintain the status quo? Is the theater experience even relevant to you anymore or are home theaters simply a better investment? Share your thoughts with us below. 

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