Multiplexes are changing rapidly in the film industry, and they are trying to experiment with pricing in ways that might shock theatergoers.
AMC Entertainment is trying a program that bases prices for seats at evening shows on their location in relation to the screen.Credit...Philip Cheung for The New York Times
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By Brooks Barnes
Brooks Barnes has been covering movies since 2007, when tickets were an average of $6.88.
March 5, 2023
Everybody who has ever bought tickets for a concert or baseball game, Broadway play, or flight knows it. Prices are complex and can change minute-by-minute depending on demand.
Movie theaters? They have been caught in pricing amber in many ways. No matter where it's bought or when it was purchased, a seat will always cost the same.
You can do it all.
As they struggle in a fast-changing business, multiplex operators — some carrying astounding debt because of pandemic shutdowns — have started to experiment with pricing in ways that have startled moviegoers. AMC Entertainment, the world's largest cinema chain, is testing 'sightline' pricing, giving seats at evening screenings different costs depending on their location. (Discounts of $1 to $2 for the neck-craning front row, increases of $1 to $2 for the center middle, status quo for the rest.) Chains have also started to charge more on opening weekends for expected blockbusters like 'The Batman' and 'Spider-Man: No Way Home,' with plans to ramp up the practice.
Stacy Spikes, co-founder of the subscription ticketing service MoviePass said, "It's just a taste" of what's to come. He plans to bring it back across the country this summer. Variable pricing is becoming more common in big theater chains. While this may provide short-term financial benefits it could also impact the attendance of younger customers, who are more price sensitive. This is a key factor in future growth.
Increasingly, theaters have been pushing customers toward premium-priced specialty tickets. On Saturday evening at AMC Lincoln Square in New York, for instance, patrons interested in the boxing drama 'Creed III' could choose from three IMAX screenings (a $7 to $11 surcharge, depending on seat location), three screenings with Dolby audio and visual technology and reclining chairs ($8 to $12 more), and two standard screenings ($18 for a regular adult ticket).
Chris Ordal, a Los Angeles tech executive, stated that he would go regardless of what because he loves it. However, the task of sorting through all the options makes him feel frustrated. I understand why chains do this but they aren't doing a great job communicating how it benefits the consumer.
The move toward pricing complexity adds risk as theater owners look for ways to get people back into the ticket-buying habit after three pandemic-battered years. IMAX has been experimenting with live events, including concert simulcasts. Fathom Events has premiered episodes of a religious TV show, ' The Chosen,' in theaters; episodes have generated $20 million at the box office since November, despite being available free online.
Prices may actually be going down for certain types of movies — ones that have struggled to attract ticket buyers in the streaming age, including comedies, conventional dramas and art films. Last month, theaters lowered opening-weekend prices for the octogenarian comedy ' 80 for Brady ' to attract value-sensitive older customers. Tickets for evening screenings cost the same as a matinee, a discount of up to 30 percent, depending on the location. Some theaters offered the same deal for ' A Man Called Otto,' starring Tom Hanks.
Chris Aronson, Paramount Pictures' president of domestic distribution, stated that 'In an industry where the only innovation has been in pricing, this is a good start'. He also urged theaters not to raise prices.
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'We're hopeful that others will follow,' Mr. Aronson added, 'and that this is hopefully the beginning of alternative ways of looking at pricing.' (Antitrust rules prevent studios from setting ticket prices themselves.)
Paramount spent about $28 million to make '80 for Brady,' which has so far collected about $40 million. Roughly 15 percent of the film's target audience, women over 50, had not been to a theater in more than a year, according to exit surveys.
Charging less for certain kinds of movies and more for others has long been a Hollywood third rail, with filmmakers panicking that it will send a message about quality. Just try telling Martin Scorsese that tickets for his next prestige drama will cost less than ones for ' Ant-Man and the Wasp: Quantumania.'
Now, the difference is that it's becoming increasingly difficult for certain genres to get into the theaters. Many filmmakers might not have any other options. Are you happy for your film to be shown in theaters? Are you okay with your film streaming directly to YouTube, where it might get lost in the digital maws? If you answered yes, then you might have to agree to a reduced price.
According to EntTelligence (a research company), the average movie ticket will cost $11.75 by 2022. Prices in New York can reach as high as $28, depending upon the format. A small popcorn at AMC Lincoln Square is $10 plus tax. Fun fact: In 1969, the average price for a movie ticket was $1.42 according to National Association of Theatre Owners. This ticket would be $11.93 today if inflation is taken into account.
Multiplex chains make the majority of their income from soda and popcorn, so it is in their economic interests to keep ticket prices low. Concession counters depend on foot traffic. There is no room for popcorn to go up in price, so operators are looking at creative ticket pricing options to grow their business.
Cinema attendance had been declining for decades, with people citing a variety of reasons for going less often: 50-inch TVs at home, streaming services, rude patrons who text on their phones when the lights go down. But the pandemic caused ticket sales to collapse in 2020 and 2021. More than 500 movie screens have closed since the start of the pandemic. Cineworld, the world's No. 2 chain, filed for bankruptcy in September, and dozens of its Regal multiplexes in the United States have closed.
The recovery has been slower that expected. EntTelligence reports that North American cinemas sold $7.5 billion worth of tickets in 2022. This is a 34% decrease over 2019. According to Comscore, domestic ticket sales are 24 percent lower than in 2019.
The gap is expected to narrow this summer, largely because the flow of new movies is normalizing. Movies delayed by pandemic bottlenecks are finally ready. Studios are also rerouting fewer movies to streaming services. Twelve movies costing at least $100 million to make will arrive in theaters from May to July, up from six during that period last year.
'If you squint hard enough, it is possible now to see a return to the better days,' Robert Fishman, an analyst at SVB MoffettNathanson who follows the Cinemark multiplex chain.
Cinemark is relatively debt-free, but other theater companies are in deep trouble. According to security filings, AMC has over $5 billion of debt. It reported last week that it earned $990 million in its fourth quarter last year. This is a 15% decline from 2021 and a loss of $288 million.
AMC's pricing experiment with seat location was announced last month by the company, which it calls Sightline.
Adam Aron, AMC’s chief executive, described that charging more for the best seats was less of a moneymaking strategy than a way to prevent larger price increases.
In an interview, Mr. Aron stated that he was under pressure to increase prices in these inflationary times. We could have increased prices for every seat in this house. We are sticking to 75 percent of the seats. (Subscribers to AMC's premium loyalty program Stubs A-List can also book a preferred seat for no additional charge.
Wall Street responded favorably. But cinephiles had a conniption. In a column, The Chicago Tribune's film critic, Michael Phillips, called Sightline 'a bush-league pickpocket move' and 'the latest tiny nail getting tap-tap-tapped into the coffin currently under construction for an entire era of filmgoing.'
AMC has responded by noting that premium seats in European cinemas are being charged more for over a decade. He acknowledged that prices in New York City and Los Angeles are very high. He said that 30 percent of AMC customers paid less then $8 per ticket.
'When you change the way an industry has priced itself for 100 years, it is not surprising that there is going to be lots of reaction,' Mr. Aron said. 'It is our expectation that consumers will adjust to this very quickly.'