Why are movie ticket prices so consistent?
March 13, 2012 10:34 AM Subscribe
Why are the prices for the discount art flick, the small production movie, the big studio romantic comedy and the big action film that cost $200 million to create all priced roughly the same?
Where I live there is a one dollar spread among three theater chains (We have one major chain, one minor chain and one "artsy" theater chain with a total of 40 screens in my town).
I know the theaters make little if any money on the ticket sales. It just seems odd that the movie that cost $5 mil and the one that cost $200 mil share the same ticket price. It costs more to make a Ferrari or Bentley than it does a Toyota or Chevrolet, and they are priced accordingly. It costs more to grow organic food that 'regular' and it is priced accordingly. A hand made watch costs more than a Casio at the drug store...yet movie ticket prices are the same regardless of costs.
Any ideas?
Where I live there is a one dollar spread among three theater chains (We have one major chain, one minor chain and one "artsy" theater chain with a total of 40 screens in my town).
I know the theaters make little if any money on the ticket sales. It just seems odd that the movie that cost $5 mil and the one that cost $200 mil share the same ticket price. It costs more to make a Ferrari or Bentley than it does a Toyota or Chevrolet, and they are priced accordingly. It costs more to grow organic food that 'regular' and it is priced accordingly. A hand made watch costs more than a Casio at the drug store...yet movie ticket prices are the same regardless of costs.
Any ideas?
The answer is, as always, because you're willing to pay the money. Baggage fees, gas prices, real estate, hotel rooms--they cost what they do because folks are willing to pay that much.
posted by MrMoonPie at 10:44 AM on March 13, 2012 [1 favorite]
posted by MrMoonPie at 10:44 AM on March 13, 2012 [1 favorite]
If you don't want to read the article, here is how he ends it with 5 theories.
So how come we're still stuck with $12 tickets for both blockbusters and indie flicks? A few theories:
1) Theaters do price discriminate already, kind of, but they do it with space. At the multiplex, not all theaters are alike. Bigger movies get more theaters with better technology. Smaller movies get older theaters with smaller screens.
2) You can't consistently cut prices after a successful opening weekend. If people knew that ticket prices would fall after a big opening, many more would wait until the second or third weekend to see it, which would, ironically, destroy the meaning of opening weekends.
3) Price can repel as easily as it attracts, because it's a signal of quality. If you're a theater showing one movie for $6, one movie for $10, and another for $12, perhaps fewer people will see the $6 movie because they assume it's garbage.
4) Cheaper tickets lead to higher policing costs. I'm a cheapskate, so I might buy a ticket to see cheap, cheap Iron Lady and sneak into Sherlock Holmes. This would create a fascinating incentive for art-house studios to release smaller, cheaper films the same weekend as blockbusters, knowing that thousands of canny consumers might buy fake tickets to their show to sneak into the more expensive blockbuster.
5) Price discrimination offers more opportunities for other movie theaters to steal each others' audience. Once again, I'm very cheap, so I don't mind taking the metro way across town to see Sherlock Holmes for significantly less money if one multiplex starts to mark up its blockbusters.
posted by OnTheLastCastle at 10:46 AM on March 13, 2012 [5 favorites]
So how come we're still stuck with $12 tickets for both blockbusters and indie flicks? A few theories:
1) Theaters do price discriminate already, kind of, but they do it with space. At the multiplex, not all theaters are alike. Bigger movies get more theaters with better technology. Smaller movies get older theaters with smaller screens.
2) You can't consistently cut prices after a successful opening weekend. If people knew that ticket prices would fall after a big opening, many more would wait until the second or third weekend to see it, which would, ironically, destroy the meaning of opening weekends.
3) Price can repel as easily as it attracts, because it's a signal of quality. If you're a theater showing one movie for $6, one movie for $10, and another for $12, perhaps fewer people will see the $6 movie because they assume it's garbage.
4) Cheaper tickets lead to higher policing costs. I'm a cheapskate, so I might buy a ticket to see cheap, cheap Iron Lady and sneak into Sherlock Holmes. This would create a fascinating incentive for art-house studios to release smaller, cheaper films the same weekend as blockbusters, knowing that thousands of canny consumers might buy fake tickets to their show to sneak into the more expensive blockbuster.
5) Price discrimination offers more opportunities for other movie theaters to steal each others' audience. Once again, I'm very cheap, so I don't mind taking the metro way across town to see Sherlock Holmes for significantly less money if one multiplex starts to mark up its blockbusters.
posted by OnTheLastCastle at 10:46 AM on March 13, 2012 [5 favorites]
Derek Thompson answers. Put simply: nobody knows whether the audiences will show up.
However, I think your analogies are slightly misleading. There's certainly more price variability in, say, a high school football game and a NFL game, or an amateur recital and a concert at the Met, or a local cover band and a famous touring musician, but even those differences aren't on a Ferrari/Toyota scale. There's even less difference in the pricing of CDs, DVDs, video games or media downloads. What you might call "mass-market experiential commodities" -- where you're paying in advance for X hours of entertainment -- tend towards greater uniformity in pricing than tangible commodities.
posted by holgate at 10:51 AM on March 13, 2012 [1 favorite]
However, I think your analogies are slightly misleading. There's certainly more price variability in, say, a high school football game and a NFL game, or an amateur recital and a concert at the Met, or a local cover band and a famous touring musician, but even those differences aren't on a Ferrari/Toyota scale. There's even less difference in the pricing of CDs, DVDs, video games or media downloads. What you might call "mass-market experiential commodities" -- where you're paying in advance for X hours of entertainment -- tend towards greater uniformity in pricing than tangible commodities.
posted by holgate at 10:51 AM on March 13, 2012 [1 favorite]
The ticket price is for admission to the theater; it has nothing to do with the "cost" of the film.
To use your automobile analogy: all cars pay the same toll to cross a bridge, regardless of the cost or "quality" of the vehicle in question.
posted by gyusan at 10:53 AM on March 13, 2012 [1 favorite]
To use your automobile analogy: all cars pay the same toll to cross a bridge, regardless of the cost or "quality" of the vehicle in question.
posted by gyusan at 10:53 AM on March 13, 2012 [1 favorite]
The $200M one is probably playing in a hell of a lot more theatres.
posted by Sys Rq at 10:57 AM on March 13, 2012 [2 favorites]
posted by Sys Rq at 10:57 AM on March 13, 2012 [2 favorites]
With all other examples you mentioned, every single unit costs a lot to produce. Even if Ferrari sold 10 million cars, the next million is still very expensive to produce. Even more with hand made watches, where a lot of time is bound in the production of a single unit.
With movies, it is the other way around. It costs a lot to produce the first copy of the movie ($200 million), but almost nothing to produce additional copies. Therefore it makes sense to sell it to as many customers as possible, even if charging lower prices.
posted by Triton at 11:06 AM on March 13, 2012
With movies, it is the other way around. It costs a lot to produce the first copy of the movie ($200 million), but almost nothing to produce additional copies. Therefore it makes sense to sell it to as many customers as possible, even if charging lower prices.
posted by Triton at 11:06 AM on March 13, 2012
What type of movie would agree to the switch? Big blockbusters depend on families and teenagers who aren't going to want to pay more. Small art-house films attract affluent moviegoers so it is doubtful that they'd actually make more money if they charged less.
posted by acidic at 11:11 AM on March 13, 2012
posted by acidic at 11:11 AM on March 13, 2012
Another theory: volume. Small films that cost less to make also generally have smaller audiences, and large films that cost lots to make also generally have larger audiences. So the per person cost is the same, but in aggregate the large films have a larger audience to cover the larger cost to produce.
posted by davejay at 11:30 AM on March 13, 2012
posted by davejay at 11:30 AM on March 13, 2012
The $200M one is probably playing in a hell of a lot more theatres.
Bingo. Sure would be nice to throw up some graphics here, but if you're familiar with basic microeconomics, the supply and demand curves are assumptions of aggregate quantity bought or sold at a given price; if you keep the consumer price constant, the number of seats available to watch it is what the industry estimates the quantity demanded at that price will be. It's a hell of a lot easier to expand or contract the number of theaters screening a movie week to week than to try to coordinate marking prices up or down.
posted by psoas at 11:31 AM on March 13, 2012
Bingo. Sure would be nice to throw up some graphics here, but if you're familiar with basic microeconomics, the supply and demand curves are assumptions of aggregate quantity bought or sold at a given price; if you keep the consumer price constant, the number of seats available to watch it is what the industry estimates the quantity demanded at that price will be. It's a hell of a lot easier to expand or contract the number of theaters screening a movie week to week than to try to coordinate marking prices up or down.
posted by psoas at 11:31 AM on March 13, 2012
The same could be said about music, books, and other commodities of a similar nature, where one could be replaced by another, and there are ample alternatives for the consumer.
In other words, it's hard to justify a significant price variation, when the consumer can buy a similar product for a relatively standard price elsewhere. There are exceptions to all of these, which only reinforce the same-ness of everything else. There are opening night events, where the writer, producer, or cast might attend and provide a Q&A session afterwords, just as books might be published in limited quantities, or CDs come with special packaging and bonus bits.
Otherwise, your standard-run films are competing against each-other in the broader marketplace of movies, just as bookstores are full of similar books, and music shops are full of CDs.
On the costly end of any of these spectrum, there are accountants and CEOs who are looking at the projected sales, the number of potential viewers, buyers, and readers, before the costly movie/ book/ album are produced. The indie folks make their magic because they care, and they try to reach as many people as they can, hoping to make their money back.
posted by filthy light thief at 11:34 AM on March 13, 2012
In other words, it's hard to justify a significant price variation, when the consumer can buy a similar product for a relatively standard price elsewhere. There are exceptions to all of these, which only reinforce the same-ness of everything else. There are opening night events, where the writer, producer, or cast might attend and provide a Q&A session afterwords, just as books might be published in limited quantities, or CDs come with special packaging and bonus bits.
Otherwise, your standard-run films are competing against each-other in the broader marketplace of movies, just as bookstores are full of similar books, and music shops are full of CDs.
On the costly end of any of these spectrum, there are accountants and CEOs who are looking at the projected sales, the number of potential viewers, buyers, and readers, before the costly movie/ book/ album are produced. The indie folks make their magic because they care, and they try to reach as many people as they can, hoping to make their money back.
posted by filthy light thief at 11:34 AM on March 13, 2012
I think part of the equation has to do with movie distribution companies. Note that the choice of what movies actually make it to theaters actually lies with the distributors, not the theaters. The distributors make an assessment of what can be released, and how widely, and in which markets, based on what theaters already charge, which is a standard ticket price. This means that distributors decide whether a big blockbuster versus an indie flick makes it into a theater, at whatever price the theater is charging.
Distributors, in essence, make the call on how much a movie costs. They will not, for instance, provide a big-budget movie to a discount theater for the opening weekend. They also won't release indie flicks in IMAX theaters, which have traditionally higher ticket prices. Theaters, on the other hand, don't really care what movie ends up in which theater, as long as they get the money-making blockbusters; for instance, they make deals with movie distributors in bulk, not by the movie per se. So a theater may not get access to the new Twilight flick unless it also shows Warrior the year before.
Also, distributors don't count ticket sale numbers. In fact, they don't care about ticket sale numbers. They care how much money their money makes over a weekend in hard numbers, regardless as to how many tickets they sell. The movie industry lives and dies off of money made, not ticket sales per se. Movies, even indie flicks, are judged by how much money it makes, not by the number of tickets they sell. So, if ticket prices are lowered for lower-budgeted movies, then it throws off the model. This is a disincentive to lowering ticket prices for certain movies.
I think if movie distribution companies told theaters to charge less for a lower budgeted flick, the theaters would do it. But the model as it currently stands, we're stuck with what we have. Don't worry, theaters and distribution companies are testing out new ways to make money off of movies and theaters all the time, so maybe lower-priced tickets for lower-budgeted flicks may make it to a test market near you.
posted by jabberjaw at 11:37 AM on March 13, 2012
Distributors, in essence, make the call on how much a movie costs. They will not, for instance, provide a big-budget movie to a discount theater for the opening weekend. They also won't release indie flicks in IMAX theaters, which have traditionally higher ticket prices. Theaters, on the other hand, don't really care what movie ends up in which theater, as long as they get the money-making blockbusters; for instance, they make deals with movie distributors in bulk, not by the movie per se. So a theater may not get access to the new Twilight flick unless it also shows Warrior the year before.
Also, distributors don't count ticket sale numbers. In fact, they don't care about ticket sale numbers. They care how much money their money makes over a weekend in hard numbers, regardless as to how many tickets they sell. The movie industry lives and dies off of money made, not ticket sales per se. Movies, even indie flicks, are judged by how much money it makes, not by the number of tickets they sell. So, if ticket prices are lowered for lower-budgeted movies, then it throws off the model. This is a disincentive to lowering ticket prices for certain movies.
I think if movie distribution companies told theaters to charge less for a lower budgeted flick, the theaters would do it. But the model as it currently stands, we're stuck with what we have. Don't worry, theaters and distribution companies are testing out new ways to make money off of movies and theaters all the time, so maybe lower-priced tickets for lower-budgeted flicks may make it to a test market near you.
posted by jabberjaw at 11:37 AM on March 13, 2012
Movie theaters sell the experience of seeing a movie - not the movie itself. As mentioned in the comments at The Atlantic, many people decide to go to the movies before deciding what to see. If movies were priced differently, it's possible that many of those people would choose the cheapest movie. That sort of ties in with 3D movies. It's a different experience, thus priced higher.
posted by COD at 12:43 PM on March 13, 2012
posted by COD at 12:43 PM on March 13, 2012
It just seems odd that the movie that cost $5 mil and the one that cost $200 mil share the same ticket price.
Why? When you make your Farrari/Honda analogy, you're comparing the wrong thing. If you're wondering why it costs what it costs to buy movie tickets, you should be looking at the theaters themselves.
For example a few years ago I lived near a shitty old one-screen theater which only showed things that had already been released for a while (I don't know that it was a "second run" theater, but definitely staler fare than the multiplexes). No cupholders, all the seats at the same level, smallish screen. Absolute bare bones moviegoing experience. I think it cost like $5 to get in. I'm not sure what it cost now, or even if that place is still open.
Then you can compare that sort of theater with a multiplex. Stadium seating, great audiovisiual quality, 3D and IMAX capabilities, 25 screens so you have a wealth of choice about what to see and when to see it. Those theaters charge $10-12 per ticket.
And then you have the prestige places. Here in New York it's theaters like the Paris or the Ziegfeld which are almost historical buildings, lavished with TLC, red velvet curtains, gilt trim, the works. They show only the biggest blockbusters and/or the most important arthouse cinema. Seeing a movie there feels like an Event. In Los Angeles the equivalent would probably be something like the Arclight. In other cities I think there are theaters with waiter service where you can order drinks from a full bar, and instead of candy and nachos there's actually a kitchen serving hot food and upscale snacks. These places can charge anywhere from $13-20 per ticket, depending on what's provided.
The movies you watch in these places? Aside from relative demand (the pulp flick that's two weeks from a DVD release vs. the latest thing that won a zillion awards at Cannes), the cost of producing the movies and even the level of production value on the screen don't come into it at all.
posted by Sara C. at 3:35 PM on March 13, 2012 [1 favorite]
Why? When you make your Farrari/Honda analogy, you're comparing the wrong thing. If you're wondering why it costs what it costs to buy movie tickets, you should be looking at the theaters themselves.
For example a few years ago I lived near a shitty old one-screen theater which only showed things that had already been released for a while (I don't know that it was a "second run" theater, but definitely staler fare than the multiplexes). No cupholders, all the seats at the same level, smallish screen. Absolute bare bones moviegoing experience. I think it cost like $5 to get in. I'm not sure what it cost now, or even if that place is still open.
Then you can compare that sort of theater with a multiplex. Stadium seating, great audiovisiual quality, 3D and IMAX capabilities, 25 screens so you have a wealth of choice about what to see and when to see it. Those theaters charge $10-12 per ticket.
And then you have the prestige places. Here in New York it's theaters like the Paris or the Ziegfeld which are almost historical buildings, lavished with TLC, red velvet curtains, gilt trim, the works. They show only the biggest blockbusters and/or the most important arthouse cinema. Seeing a movie there feels like an Event. In Los Angeles the equivalent would probably be something like the Arclight. In other cities I think there are theaters with waiter service where you can order drinks from a full bar, and instead of candy and nachos there's actually a kitchen serving hot food and upscale snacks. These places can charge anywhere from $13-20 per ticket, depending on what's provided.
The movies you watch in these places? Aside from relative demand (the pulp flick that's two weeks from a DVD release vs. the latest thing that won a zillion awards at Cannes), the cost of producing the movies and even the level of production value on the screen don't come into it at all.
posted by Sara C. at 3:35 PM on March 13, 2012 [1 favorite]
Theaters are easing into this with assigned seating, premium auditoriums, and premium display (IMAX, 3D). Expect to see more of it and obviously concentrated on the hottest properties.
posted by MattD at 6:18 PM on March 13, 2012
posted by MattD at 6:18 PM on March 13, 2012
You're paying for seat rental. The theatre needs to make a certain amount per seat for profitability. They try to fill those seats.
The theatre's setting the price. From their point of view, there's no advantage to cutting prices. Instead, if a movie isn't doing well, they cut the number of seats (by putting it in smaller rooms).
The cost to the theater per seat is the same -- cheaper movies don't cost them less. So there's no reason for them to charge less.
posted by musofire at 7:26 AM on March 14, 2012
The theatre's setting the price. From their point of view, there's no advantage to cutting prices. Instead, if a movie isn't doing well, they cut the number of seats (by putting it in smaller rooms).
The cost to the theater per seat is the same -- cheaper movies don't cost them less. So there's no reason for them to charge less.
posted by musofire at 7:26 AM on March 14, 2012
Response by poster: Thanks for all of the replies and opinions.
Why are all of the movies prices largely the same, when other media varies? Who knows?
All new books are not the same price, magazines, CD's, DVD's, etc all vary widely. Movie ticket prices, not so much...
posted by Leenie at 8:45 AM on March 14, 2012
Why are all of the movies prices largely the same, when other media varies? Who knows?
All new books are not the same price, magazines, CD's, DVD's, etc all vary widely. Movie ticket prices, not so much...
posted by Leenie at 8:45 AM on March 14, 2012
Look at the price differences between matinees and regular showings. If you're willing to wake up early on Saturday morning and sit in a theater that's 65% empty, you can see any movie you want on opening weekend for six dollars. If you want to take your date to that same movie at the same theater on Saturday night with a full audience, you're paying more than double. They're selling the movie-going experience, and charging accordingly.
posted by Smallpox at 8:59 AM on March 14, 2012
posted by Smallpox at 8:59 AM on March 14, 2012
The theatre's setting the price. From their point of view, there's no advantage to cutting prices. Instead, if a movie isn't doing well, they cut the number of seats (by putting it in smaller rooms).
Not really true. I worked in a movie theater for six years (for the Landmark chain), and movie studios basically control the prices. Officially prices come from the chain's home office, but studios tend to strong arm chains. My understanding is that a big studio is essentially looking at all of its movies as a total... an lower-budget film that does well (like Paranormal Activity) is basically paying for a higher-budget film that flops. It's all about the averages.
I'm not sure how it works with a fully independent theater, but in a chain, the individual theaters have almost no control. Decisions like which movie gets the big auditorium come from the home office. I remember my whole theater trying really hard to keep Donnie Darko for two more weeks, because we knew it was going to be a huge cult film, and customers were starting to find it. No dice.
posted by Nibbly Fang at 11:19 AM on March 14, 2012
Not really true. I worked in a movie theater for six years (for the Landmark chain), and movie studios basically control the prices. Officially prices come from the chain's home office, but studios tend to strong arm chains. My understanding is that a big studio is essentially looking at all of its movies as a total... an lower-budget film that does well (like Paranormal Activity) is basically paying for a higher-budget film that flops. It's all about the averages.
I'm not sure how it works with a fully independent theater, but in a chain, the individual theaters have almost no control. Decisions like which movie gets the big auditorium come from the home office. I remember my whole theater trying really hard to keep Donnie Darko for two more weeks, because we knew it was going to be a huge cult film, and customers were starting to find it. No dice.
posted by Nibbly Fang at 11:19 AM on March 14, 2012
This thread is closed to new comments.
posted by OnTheLastCastle at 10:42 AM on March 13, 2012 [4 favorites]