Slashdot Mirror
Why Do All Movie Tickets Cost the Same?
gambit3 sends this quote from The Atlantic:
"Like tens of millions of Americans, I have paid money to see Mission: Impossible, which made $130 million in the last two weeks, and I have not paid any money to see Young Adult, which has made less than $10 million over the same span. Nobody is surprised or impressed by the discrepancy. The real question is: If demand is supposed to move prices, why isn't seeing Young Adult much cheaper than seeing Mission: Impossible?"
I've gone to see plenty of big films whose ticket prices were higher than the other films playing at the same theater in my town. I get that this is supposed to be a ~Big Evil Movie Industry~ article, but the premise isn't true--especially with Avatar, which the article acknowledges as an "interesting exception."
Because all the parking spaces are showing the same movie?
On the contrary, it should be more expensive to see a bad movie since the production cost (+ profit) has to be payed for by fewer viewers. While massively successful movies should cost a dime due to economies of scale... the problem is that you don't know beforehand how the movie will do, so the price should change from day to day depending on its success... which of course would be complicated and thus it is easier to just pay the same for all movies.
What I've found interesting is that video games actually DO follow the rules of supply and demand, even at Best Buy, and this surprised me! Skyrim was on sale for a whopping $60, some less-popular-but-still-new games were in the $50s, and my brother and I got a good laugh when we saw poor Duke Nukem Forever sitting there for a measly $15.
What a bad place to start your argument. In classical economics, demand shifts affect pricing if supply is a factor. When it comes to movie distribution, supply usually isn't an issue.
Also, profits of Mission Impossible to to cover the losses of the gamble on Young Adult. Essentially, movie ticket prices are aggregated and normalized across movies to mitigate risk. Do you really want to spend $40/ticket on Mission Impossible so that Young Adult would cost only $3?
The actually hard-costs to the theaters (staff, electricity, rent, etc.) is pretty much the same regardless if 5 people are in the theater or 500, and is relatively minor in their overall operations. They pay back to the studios based on how many watchers they have, which where most of their expenses actually lie. They have to pay back the same amount to the studios regardless how how many tickets they sell, so why would they implement variable pricing?
I'm out of my mind right now, but feel free to leave a message.....
Economy of scale.
I don't think so. I think it is because, to the theater owners, supply is more or less infinite and demand is fixed. When they stop filling the theaters with one movie, they rotate to the next. Of course I am simplifying... there is definitely a shortage of blockbusters, not an infinite supply... but they can pretty much account for average attendance and price accordingly.
Variable pricing would piss off people and mark certain movies as failures. I'm pretty sure it would work like wine - people would avoid the cheap ones.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
The fixed price has more to do with the requirements of running a theater than is has to do with the cost to produce or the popularity of a movie.
You have to run your physical plant, your concessions, pay your property taxes, employees, cleaning crew (theoretically), and make payments to your mortgage. The price you pay to the studio distribution chain may or may not vary (I honestly don't know). But in any event it is a fairly small component of the overall ticket price.
The reality is that the less popular shows will hit the video release channels much sooner, as theater owners can't fill their seats. When theater owners can't attract an audience, the stop showing the film and it sooner or later ends up on video/dvds, along with the inevitable price drop to just a few dollars or 99 cents or whatever. The less popular movies often show up on TV well within one year.
With that move to video, the price to view will fall for the average viewer, in spite of the fact that some paid full price to view it in a theater, but more waited to view it at home.
The average viewer may not be interested in some movie at (insert theater price here) PER SEAT, but will spend $3 bucks or less, PER HOUSEHOLD.
The theater manager can't afford to let in an entire household (who bring their own popcorn, sodas, squalling kids and yaking on the phone) for 3 bucks.
The mistake here is assuming the movie is the only thing being purchased in the theater.
Sig Battery depleted. Reverting to safe mode.
It's not like buying a car or computer. Nobody says "Hey, I REALLY want to see this movie, but for $3 less I'd settle for this other one, even though I won't enjoy it quite as much". Not only are you spending your money on a movie, you're also spending time. Given the choice between a horrible, free movie, or a $15 supremely kick ass one, I'd rather invest a little in my life and actually enjoy it. In other words, people don't watch shitty movies because they're shitty, not because the price was too high.
Ticket prices are the same because the studios mandate the minimum price for ticket prices. The standard agreement between the theatres and the studios specifies what percentage of the gate receipts the studio gets (can be as high as 90% of the ticket price) and that the theatre will charge a certain minimum price. There are exceptions to this, but that is a default situation. Ticket prices therefore don't float in response to market demand because the enitity charging the prices, the theatre, is contracted to keep them fixed above a certain minimum.
Theatres would give movie tickets away in some circumstances if they could, in order to get you to come in and buy the concessions, which is where they make the bulk of their money. Studios counteract this behavior by mandating the high prices in the film rental contracts.
I know this because I used to support a software system that managed theatre accounting for a chain of movie theatres.
I was taught to respect my elders. The trouble is, it's getting harder and harder to find some.
This is Slashdot, the only acceptable price for a movie is 0 because it doesn't cost anything to copy it.
Why does it cost the same to park a big vehicle as to park a small vehicle?
It is more expensive to park an SUV or minivan in many manned garages. It's the unattended ones with the gates where they use uniform prices for what should be an obvious reason.
Why isn't it cheaper to park at 6 AM and more expensive to park at 9 AM or noon?
Most city parking garages seem to have different pricing at different times of day.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Cost is irrelevant to the price. Rational suppliers will set the price that ensures the biggest revenue, regardless of cost.
Dilbert RSS feed
At Longhorn I avoid the cheap wines. At real restaurants I avoid the expensive ones. How does that figure into movie pricing?
I think a good answer is "because people would be pissed off if they had to think too much about the price". Or perhaps another way of putting it is that "the market is more efficient when the price of the movie is fixed and other factors are allowed to fluctuate".
The producers know that their product will sell for a fixed price, and they aim to sell as many as possible. It's easier that way. Consumers know that there is one price at any given time, and they adjust it by waiting longer if they want to lower it.
Perhaps the best answer is, "this is the social contract, and everybody is happy enough with it".
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
so patent it!
But seriously, there is no reason this won't happen. In fact as margins get tighter and tighter it is more likely to happen, just like airlines crunch numbers to extract the maximum amount of money they can out of a jet cinemas could do it with tickets.
The problem is that a jet from dallas to chicago going for fire-sale prices is not going to take business from a dubai to london flight, but a $3 ticket to some shitty Adam Sandler comedy might make some people decide not to see the blockbuster at $50 per seat. So to make it work you would definitely have to do some modelling and behaviour analysis.
Yes, but why not? For any given movie, at a given cinema, at a given time, there's an optimal price that maximizes profit: charge a little more, and you discourage enough people that you end up with less profit; charge a little less, and while you may get more customers, you still end up with less profit.
If it were practical to determine this optimal price, any rational cinema would charge it.
You've hit the nail on the head. A rational cinema might charge that price, true. But the cinema business is not strictly rational, any more than any other media business is (think: "agency model" pricing for ebooks).
Some in the UK may remember when the founder of EasyJet proposed to do just what is suggested. He wanted to create a chain of theaters that priced seats based on demand, in much the same way that EasyJet prices airline seats. Theoretically, you'd be able to see a first-run movie for as little as £0.20, depending on time, date, and how well the screening was showing. He couldn't do it, however, because he couldn't reach agreement with the film studios over a flat-rate pricing scheme that would allow him to set his own prices for seats.
Breakfast served all day!
Movies are popular attractions for dates*. You can take a date to a bad movie, and won't necessarily reflect poorly upon you. But if you take a date to a bad movie because happened to be cheaper than a putative good movie, you're just not getting laid**.
* A social activity with a potential or established romantic goals.
** Sexual intercourse.
--I'm so big, my sig has its own sig.
-- See?
throw on an adjective like "organic" and you do.
Do you even lift?
These aren't the 'roids you're looking for.
A couple of places I've lived in the past had $2 theaters where you could go watch a few-months-old movie for $2. You just had to wait until it hit the $2 theater. I miss having a nearby art theater too, closest one to where I live takes about an hour to get to. Most of my favorite movies, I saw in art theaters. The one near where I used to live had Akira one time! How cool is that?
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
I'm pretty sure it would work like wine - people would avoid the cheap ones.
I see a serious flaw in your reasoning. Bronco Wines (makers of Two Buck Chuck) sell more wine than any other California winery, especially ones like Opus One and Silver Oak; Yellow Tail Wines sell more wine than all other Australian wineries combined.
God invented whiskey so the Irish would not rule the world.
That pisses me off at one of the parking buildings in my city. Its $12.50 early bird parking, entry 6am-9am, exit 2pm-7pm. If I need to leave before 2pm I have to pay $4/hour. It is 100m closer to my office, its elevators don't seem like they're about to fall and its only 50c more than the other building with no exit time limits though.
You are assuming the supply of each movie is fixed. They can change the supply by modifying the number of theaters each is shown in. Movies that are unpopular play for shorter periods.
I think it would be smart if theaters did variable pricing, but it wouldn't necessarily mean Mission Impossible would be more expensive (since it would probably play longer). But in the most efficient world, there would be lower prices in play to lessen the number of empty seats, which could be considered waste.
Then there's the problem of the blockbuster that would theoretically see much, much higher prices on opening night or day depending on the draw. When the Star Wars movies came out there were lines and lines, for days, just to buy tickets. If the prices were supply and demand, those initial showings would have had 10x the cost, with $100 a ticket, not $10, and there wouldn't have been lines.
You say that like it's a problem; If it's $100 a ticket, the, uh, "enthusiasts" can work a job for days instead of standing in line for days, and blow that money on a ticket. The cinema makes more money, whatever work they're employed for gets done, and nobody is freezing his arse off in the rain. It looks to me like everyone's better off....
(If you're talking about the case where they raise prices too high, such that there are not only no lines, but half-empty theatres. then it's just the first problem you mention -- which is a big one, but no double-counting.)
I also don't want to see a commodities-trading type of purchase experience. I don't want the theatres to all link up for a market, where a movie is announced at a certain price, and then demand in ticket sales versus the supply of seats in the theatre causes a minute by minute fluctuations in price. It would leave some theatregoers paying little if a movie isn't quite sold out but they want to fill an auditorium, but might also leave some customers slammed in that magic 20 minutes before show timetable, when the bulk of the audience buys their tickets.
Why don't you want that? Is it worse, if the seats are 90% sold, to turn some people away because they don't want to pay the premium for the last few seats. than to turn a similar number away because they got there last? And can you propose a better way to communicate varying degrees of "almost sold out, hustle!" than rising prices?
To me, the problems with a true commodities-trading-like ticket market are the buy-and-resell action of brokers, and the inevitable derivative transactions constructed from it, but there's no reason ticket reselling has to be permitted at all.
Movie prices are all the same because the studios/distributors set them to be the same; it's not up to the cinema owner to decide, because the box office goes almost entirely to the distributor.
So why do the studios set them the same? A big part of it is "perceived value". If they priced Young Adult at half the price of Mission Impossible, a substantial segment of the market would conclude that MI was a "better" movie than YA. It would be perceived as a demonstration that the studio doesn't have faith in YA and figures that they only way they can get people to see it is by "bribing" them with a lower price. In a market where opening-weekend sales are critical to a movie being financially successful or not, studios need to hype each product as "the best". (It's the same reason why the top-grossing half dozen movies each weekend are further hyped as "#1 gross-out comedy in America" or "#1 action dramedy" for the entire following week.) With variable pricing, you'd also have studios trying to use higher prices as a selling point. Suppose you have two CGI action films to choose from, one priced at $14, the other at $11. The first one must really be good if they're charging that much for it! And even if the cheaper film has 10% higher attendance, the more expensive film still outgrosses it and gets the bragging rights for the weekend.
http://alternatives.rzero.com/
>demand is supposed to move prices ...
In a free market demand may be related to price. In a monopoly market the monopoly cartels choose whatever prices they want. Simple economics.
Have you seen the number of people arguing that something with high demand should cost less than something with low demand if supply is essentially unlimited? I don't think this crowd passed business 101...
Second run theaters have largely died out due to the advent of home cinema and the film studios pushing up DVD releases. Fifteen years ago, a movie wouldn't be released to the home audience until ten or twelve months after theatrical release. Now, you have things like Deathly Hallows Part 2, the highest-grossing film of the year, being released on DVD four months after it opened nation-wide, only three weeks after it went second-run. And unlike first-run theaters, second-runs will keep kids' films and blockbusters around for months - the theater I used to work at had "Toy Story 2" for ELEVEN months, and it was our best grosser for eight of those months. If the DVD had been released a month into that run, we would have lost a LOT of revenue.
That said, we still have second-run theaters in Cincinnati, though only about half as many as we did fifteen years ago.
My sister opened a computer store in Hawaii. She sells C shells by the seashore.
This is true. Most people only avoid cheap wines (relative to their budget) in situations where there is social pressure to do so (like being at a restaurant or party with people they don't know), when buying wine to drink privately or in the company of friends of a similar social class people tend to buy cheap wine and its not unusual for them to buy it by the box.
Would've helped if you'd named a few you think are better.
In my local cinema we have sofas you can book in the cinema itself. And during the show I can text the bar to place my drinks and snacks order and they bring them to my seat and I settle up at the end.
I simply don't bother seeing films in the cinema any more unless they are showing there.
Bad analogies are like waxing a monkey with a rainbow.
And the auto-focus systems of most cameras use IR LEDs.
How did this get modded up to +5??? Only active auto focus systems use IR to determine focus. The vast majority of camera auto focus systems use passive techniques such as phase detection and contrast detection and have nothing to do with IR.
from tfa...
not true.
it is, perhaps, in the nfl (what tfa references.. washington redskins football) because of the limited number of regular season home games per year (eight)..
but in other pro sports in north america with a lot more home games per season (41 in nba/nhl, 81 in mlb, in a full regular season)... higher prices for ''premium'' or ''marquee'' games is very common:
example:
the nba's lakers base ticket price ranges from $25 (nosebleed seats on an end) to $280 (lower bowl, courtside).
when the lakers host houston, charlotte, portland, minnesota, or new jersey this season, tickets start at only $10 ($10-265).
but when chicago, new york, dallas, okc, or san antonio come to town the prices go up to $80-450.... and when it's miami or boston, better put a second on the house (or stay at home and watch on tv), tickets jump to $150-900.
this isn't exclusive to the nba either.. major league baseball and national hockey league teams do this too.
I can't help but think of the TouchPad.
People knew it was being dumped, and they still flocked to the stores to get one.
Y'know, this has never occurred to me, but it's a really great point. There are a lot of movies that want to see but simply won't due to the cost, mostly "smaller" films that don't benefit from the big screen. But if I could see them for, say, $3-5 instead of $8-10+, well then I think there's a much greater chance of me going to the theater. Toss in reasonably-priced popcorn and soda and it would be a no-brainer. Alas you're dealing with a dinosaur industry that doesn't seem to understand it needs to adapt if it wants to survive. So sadly I don't really have any hope of the system changing any time soon.
I went to see MI4 Saturday. My first trip to the theater in more than a year. After paying $20 for 2 tickets and $15 for concessions, 15 minutes into the movie a family sat down behind us and proceeded to talk to each other and to crunch the loud snacks they smuggled into the theater. We moved, but we could still hear them. Totally ruined the whole experience for me and I won't be going back any time soon.