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."

Comments

Re:Understandable.

[bmcphall]

If you go to their site, it proclaims that there is "NO rip-off popcorn". They encourage to bring your own, just do not make a mess.

They make their money by cutting the overhead:

"The efficiency of easyCinema starts at the box office which we have quite simply removed. Seats are booked online or by phone (soon to be available on a premium rate line), and the earlier you book the less you pay."

They also try to get a larger quantity of people:

"On average across the whole cinema industry and across all showings the average occupancy of cinemas is currently only 20%. Four fifths of cinema seats are going empty and yet cinemas continue to charge high prices. What we are doing at easyCinema is lowering the price in order to get more customers. We will make money as a business and more members of the public will get to see more films more often."

It crazy enough it just might work.

Re:Understandable.

[m_chan]

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.

it's not about price....

[maxpublic]

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