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Low Cost Cinema Through Dynamic Pricing
cinesprocket writes "EasyJet, the European pioneer of LowCost airline travel has broadened its horizon into the entertainment field. easyCinema is to open tomorrow in Milton Keynes, England, offering cinema-goers cheap rate tickets as low as 20 pence (33 cents) using the same formula that made their airline company revolutionise the industry in Europe. However, according to the the BBC, easyCinema is being given the bird by Hollywood who will not allow it to show it's high cost movies for a low price for fear that it will create a domino effect in the future, like the airline industry has felt (in Europe). Given that easyCinema is willing to pay the movie producers the same price as the other multiplexes, it shouldn't matter what price they sell on the tickets at for we poor folk? Their success depends upon showing the big films and their lawyers are reported to be already mounting a case. Given that the case will be heard in England, where the MPAA have less of a hold on the government, it will be interesting whether they can bring the behemoth to its knees."
distributors make money out of box office, cinemas barely keep themselves staffed and the doors unlocked on the ticket margins they recieve. Thats why coke and popcorn are so expensive and only come in two sizes: Xtra Large and INSANE!
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First, the MPAA has a subdivision or something called the MPA, which handles stuff outside the US. Second, the movie studios can sell to whomever they want. It's their movies (or rather, their members movies). I don't quite understand their logic here, but "they reserve the right to refuse service to anyone".
They make their money by cutting the overhead:
They also try to get a larger quantity of people: It crazy enough it just might work.This is yet another venture by Stelios Haji-Ioannou, the seventh of his easy* ventures. One of these is easyJet, but he's no longer involved with the management of that company.
Whether or not the parent post gave complete credence to their business plan doesn't matter. Your cut and paste from the fine article does not change the fact that movie theatre profit is generated principally from concessions, and should their model prove successful, others will copy it but won't mind paying the "high cost" of popcorn serving.
It is documented concessions are the principle motivator in the venture of showing feature releases. If there is sufficient demand for popcorn when the bodies arrive, it will be understandable when they will sell popcorn.
The boys presenting this scheme have a good, solid idea which has been used to before by some other industries (e.g., the airlines). Fact is, actual attendance is dismally low compared to seating when you adjust for all times, around 1/5 of the theater seats available. Decreasing price results in increasing attendance; Econ 101 tells you that in many cases the improved attendance will actually result in *more* profits, not less. That is:
Fill 20 seats at $7 each = $140
Fill 50 seats at $4 each = $200
Fill 100 seats at $2.50 each = $250
And so on.
But the MPAA isn't interested in the basics of the free market. What they're interested in is control, pure and simple - and price fixing is one very obvious, and very effective, method of maintaining control. If you can no longer enforce price fixing then you lose one of your more important tools for controlling not only the theaters that run your movies, but also of moviegoers.
How's that? It's really very, very simple: the higher the price the less movies the consumer can afford. Because the consumer can only see x number of movies, advertising can be used to 'herd' the consumer into spending his limited movie income on movies the MPAA chooses to push. The higher the price, the more limited the options, the more likely the consumer will spend his money on something being heavily promoted by the MPAA.
Lower the price and the consumer can now make more movie choices. The consumer, blast his heathen soul, might decide to use some of this disposable income to see movies *not* promoted by the MPAA - perhaps smaller, independent films. The consumer, that communist scumbag, might actually begin to believe that he has a more options - he might even take some of that 'movie money' and spend it on something else! After all, if all he wants to see are two films a month, and they're now half the price that they were, he might spend the other half of the money on something radical, like a book.
Bad, bad consumer!
In any event, remember that the MPAA is at the top of the heap. Like any organization that's king of the hill, change is a threat to the status quo and one that must be quashed regardless of the possible upside. To the invested, change is evil and must be prevented at all costs.
This particular change takes some power out of the hands of the MPAA and puts it into the hands of the consumer. Despite the fact that it would most likely increase overall profits, the loss of power is simply unacceptable and cannot be tolerated. Price-fixing *must* be maintained.
For organizations like the RIAA, the MPAA, or monopolies like Microsoft, profit takes a big back seat to power. The free market is of no interest whatsoever to these folks; in fact, the less free, the better.
Max
My god carries a hammer. Your god died nailed to a tree. Any questions?
No they're not. The MPAA is American. Easycinema is in the UK. I didn't realise that we were offically another american state (although these days it does appear that way).
As for lawyers, well Stelios likes them. As he owns EasyJet, EasyRentaCar and others, he has a nasty tendancy to sue for any domain name that starts with Easy* and Easi*. When ICANN started ruling against him in domain disputes he stopped using it, and starting using the UK courts instead. He's got great PR, but underneath it all he wants his own monopoly on domain names. He finally backed down in the case of EasyArt. You may want to read up at easyprotest2.com and consider if this is the sort of person geeks should be backing.
Ticket prices vary from area to area. It has nothing to do with what the theater wants or what the market will support, at least not directly. It's very rare that the individual theaters get to decide what they charge. Rather, the corporate suits are the ones who decide. There is constant arguing/negotiating between the MPAA members and the NATO members (no, not the North Atlantic Treaty Organization, but the National Association of Theater Owners) over how much to charge for each area.
And the matinee prices don't really matter, since relatively few people see a movie during matinee hours.
Don't bitch about $8. In New York the prices are something like $10. Here in Phoenix, AZ they're $8.50.
I have a hard time believing that there exists a decent theater in a decent-sized town that still only charges $4 for a non-senior/child, non-matinee ticket.
If they are going to run theatres as they do the airline company, it doesn't matter if the seats are cheap. Cheap is still better than Zero, which is exactly what the cinema industry seems to get on 80% of their seats. The actual, base line, cost of showing a movie, or flying a plane remains the same no matter the number of occupied seats .. THAT's why this will work.
.. some will, but certainly not all!
/klang
Don't think that EVERY seat is going for 20p
Yes and no, he is trying to get the film manufacturers to sign a fixed price contract so he knows how much to charge but they only want to sign the normal one were they get a share of the takings. Historically this agreement has been good and bad, it HAS ment that poor cinemas and low volume ones could take films they otherwise could never justify. Some cinemas would have never been able to afford the upfront cost (and infact risk). In the days of multiplexs and chains it has also been used laterly to milk big hits. I got to see Matrix reloaded at my local multiplex (I have 2 walking distance from my house) and didn't think that the 3 pounds (4.5 dollars) was alot to pay for my ticket, that would have bought me one pint of Guiness in london and lasted ALOT longer (some might say two long....)
James
Stelios uses some rather cool software to sell seats on airlines, internetcafe seats. If you book well in advance for a movie for a tuesday afternoon - you'll get it for pennies. It's not unheard of for people to do shorthaul air travel in the UK for less than 5 pounds (about 8 US dollars). If you book lastminute for a popular timeslot, i.e. friday night, then there's a good chance that the price will be closer to 'normal' prices. all it is a basic trading exchange - as an event/flight/film gets more popular the price goes up. Stelios has been really successful - he knows that even though 40% of the audience will be paying 20% of 'normal' ticket prices, others will have paid more AND he'll have 80% full cinemas. The average yield for the flight/movie whatever is never published, but I imagine it is higher than selling 20% of your seats at full price. He is the son of a greek shipping magnate - and 'borrowed' a couple of million off his father to start the airline in the nineties and is now a very wealthy man in his own right. I think the trick is to buy film seats WELL in advance spread over a couple of days and then choose which viewing to go to nearer the time and tout the tickets at the door - after all, you can't do that with airline seats because they are named. rd
Would be interested to know where you heard that. The way Stelios tells it, in his piece in the Guardian, it sounds like the distributors don't want to sign the normal contract either. To quote:
The single stumbling block remains the stubbornness of the major distributors. I'm spending a lot of time trying to sort this out. They say they don't believe in my pricing policy - they think it will encourage the same audiences to see films at a cheaper price, as opposed to luring a whole new audience who have been frightened off by the escalating costs of cinemagoing . . . I've promised them that I will remove the risk to their revenue by paying them a lump sum, somewhere between a few hundred and a few thousand pounds, to screen their releases; that way they get paid even if I turn out to be incompetent. But they're not budging; they believe that when their $200m blockbuster can be seen for 20p, it cheapens the product.
Of course, he is a PR man writing for public consumption, so we can't take this as gospel. While he strongly IMPLIES that he offered to sign the standard contract - and that the fixed-price contract is purely a concession to the distributors - he doesn't say so outright. Perhaps a more skilled researcher than I could find out what's really going on.
Stelios is not looking to concessions to make money, he's changing the business model.
easyGroup want to pay the film distributers a fixed sum for each film they show rather than the accepted approach of a percentage of the revenue. This then means that the ability to make a profit then depends on getting enough people in to see the film to cover the fixed cost to show the title.
This is achieved by using the usual easyGroup approach of using dynamic charging (tickets start cheap and then the price increases nearer the show time, or as the cinema fills up) and also by having as few staff as possible. You can see this approach in use if you ever use any of the easyInternetCafe's - they have no staff on site at all and the busier the place is the more surf time costs.
Selling popcorn goes against this approach as you have to have staff not only to sell the items, but to clean up the mess afterwards. Staffing costs is the main overhead easyGroup and Stelios always try to remove.
On a side note, I don't now if they have followed through on this or not but the original plan was to have no toilets on site as well! Keeping the toilets cleaned and maintained put the costs up too much!
I am a foreign student currently studying abroad in Europe, meaning that probably I represent one of easy*'s biggest demographics. I (and all my friends) almost always fly easyJet to travel, we rent easyCar to drive to France or Andorra, and we check our e-mail abroad at easyInternetCafe. easy is the real thing--it's cheap as hell, especially if you book really early. On the other hand the "customer experience" leaves a lot to be desired. For example, in an effort to cut costs even further, easyInternetCafe literally fired all their employees except for about 15 at the home office. No actual easyInternetCafe employees, work in the easyInternetCafes. Which is at once dumbfounding and frustrating. If your computer crashes or the machine eats your money when you try to buy time, well, you're fucked. No recourse. Lots of the computers are broken, people leave their trash laying around, there are always wierdos looking at really sick, graphic porn, and worse, the cafes are unsafe. Twice now I have seen people brazenly mugged, in broad daylight, in nearly packed easyInternetCafes. Similar experiences on easyJet; they farmed out the personnel contract (at least here in Spain) to some company named EuroHandling, whose ticket agents are assholes and unwilling to help you out in any way, especially if you arrive after 40 minutes before departure time. So I'm a little skeptical of easyCinema, even though I'd probably give it a whirl if it came to a town near me. But sentences like "All we ask is that you don't leave any litter behind" sounds like a sweet way of saying, "we're not paying for janitors, please don't trash our theaters." Personally, I'll gladly pay the extra 2 to avoid sitting on someone else's half-eaten nachos, but hey, that's me.
I think there is a world market for maybe five personal web logs.
concessions £3.50, members £3.50, adults £4.50
Weekday after 6pm:
concessions £5.00, members £4.50, adults £5.50
Weekends, Friday after 6pm:
members £4.50, adults £5.50
This is for York City Screen, a Picturehouse Cinema, that shows lots of non-mainstream European and American movies, but also show blockbusters like the Matrix and Lord of the Rings.
Not too much of a rip-off; London prices are exorbitant though, granted. Mostly to do with property pricing I expect.
Though funnily, for ethnic food, London tends to be *cheaper* than north England.
Michel
Fedora Project Contribut
Cinema Safety and Technical Officer (salary £14k)
based in Milton Keynes.
Main Accountabilities
Emergency evacuation warden, able to demonstrate knowledge of and carry out the Company's emergency evacuation procedures.
Maintain and operate projection and sound equipment.
Make up/break down films. Display "show" reels in accordance with procedure scheduling plans.
Install, upgrade, repair, swap-out and troubleshoot PC's.
Maintain and troubleshoot vending machines, including testing, resetting and swapping-out of internal components, changing print heads and rolls.
Configure, manage and troubleshoot Access Control System software.
Manage, maintain and troubleshoot turnstile barriers, door keypad and local area network.
Monitor and troubleshoot ISP connection and UPS devices.
Manage all warranty, returns and local third party support issues and source and maintain stock of IT consumables and spares.
To act as Safety Supervisor in charge of carrying out a possible evacuation as required when not rostered on other duties.
To ensure compliance with the Conditions of the cinema licence (attached).
Monitor day-to-day operation of cinema (staff, cleaning, turnaround time, premises and call centre) and reports to head office as appropriate.
Knowledge/Skills/Experience
Essential:
Existing projection and management experience required.
Perfectionist with eye and ear for excellence.
Team oriented.
Competencies
Confident and positive Team orientated.
Achievement orientated ('Can do' attitude).
Reliable.
Flexible.
Enjoys persuading/motivating.
Success driven.
Sounds like they want you to run the entire cinema single handed, for 14k a year. Who fancies doing that job? Can they find people with experiance in Management, Computing, Telephone systems, Turnstiles, Vending Machines, Internet Services, Customer Relations, Customer Safety, Film projection systems, and splicing together the advertising?
They want to run these places with only about 3 staff on the premises.
Call Centre Operator/ Usher (salary £10k)
based in Milton Keynes.
Main Accountabilities
Emergency evacuation warden, able to demonstrate knowledge of and carry out the Company's emergency evacuation procedures.
Sell cinema admissions through the onsite call centre and reply to customer enquiries over the web.
Maintain the cleanliness of the cinema, including the auditoriums between showings.
The people who arn't doing the technical things have to be both call centre operators and cleaners?
Sounds like exploitation to me
http://www.easygroup.co.uk/easyCinema/jobs.html
"Taligent is still pure vapor. Maybe they'll be the last who jumps up on Openstep... "
The original BBC article has been edited since its first post and no longer talks about the problems faced by easyCinema. However, there is more writeup on easyCinema's problems in a separate report. The report states that in the UK, the studios take up around 90% of the box office proceeds. This practise was ruled upon in 1994 in Britain as "reasonable". It looks like for Stelios's venture to succeed bigtime, he needs to have the studios change their way they recuperate their costs ie with fixed prices for the cinema's. Fixed pricing though puts more of the movie flop expense on to the cinemas, who would have to become more careful as to which movies they pick. I doubt he will have success with fixed cost movie reels from the studios.
Still, he has managed to swing a deal with Sony (Columbia Tristar) to pay 1.30GBP (~$2.00) per person for two of their films.
I think the guy is going to have a very tough uphill struggle to make this succeed. The French film financing board, the CNC are looking closely at their success.