Would a different ticket-pricing structure bring more people to movie theaters?


This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

The box office again found itself in a lull this weekend, dropping 9% from the comparable weekend last year despite a diverse group of new releases. It provided the latest sign that we may be in for a long-term slump instead of just a cyclical dip. This was, after all, the fourth straight weekend that box-office receipts dropped compared with the previous year. And things weren’t much better before that: Through Presidents Weekend, box-office dollars were down 24% compared with 2010.

It would seem like a sharp wake-up call after the outsized success of movies such as ‘The King’s Speech,’ ‘Black Swan’ and ‘The Fighter’ at the end of last year. But for all the successes, film attendance in 2010 endured its largest drop since 2005. The declines in moviegoing, apparently, won’t be reversed by a surge in quality.


On Twitter, the suggestions have been flying for some time on what, in fact, will reverse it: more in-theater amenities, more 3-D releases, fewer 3-D releases, across-the-board price reductions (unlikely to happen), assorted other recommendations. But the sales slump also calls to mind another idea that has been alternately floated and dismissed over the years: variable pricing.

A jargony term for a straightforward concept, variable pricing basically means that ticket prices will rise or falling depending on a slew of factors, most notably how much people want those tickets in the first place.

Many theater chains, of course, already practice a form of it with their afternoon matinees. The concept, which economists have been examining for a while now, would extend the variability to other factors: where assigned seats are located, how close to the showtime the tickets are bought and, most critically, how in demand the tickets are. Basically, it’s the airline and hotel model for movie tickets.

How would it work? Essentially, prices for all movies would start at the same baseline as they do now ($7 to $12, or even a little lower, to give filmgoers a break). But as supply and demand shift before and during a film’s release, the prices would fluctuate accordingly.

For instance, this weekend, as demand for ‘Limitless’ increased, the amount that it cost to see the film would tick up. Prices for ‘The Lincoln Lawyer’ and ‘Paul,’ less in demand, would slide down.

As more people took advantage of the lower prices, prices for it would start to climb back up. At the same time, as the higher prices deterred some ‘Limitless’ patrons, the price for that film would start to drop. If the system were set up right, you should, many economists believe, see more revenue on ‘Limitless’ and more tickets sold on ‘The Lincoln Lawyer.’ It’s a system that attempts to solve the dual but disparate problems that currently afflict moviegoing: Film fans say ticket prices are too high, and studios and theaters say they’re not making enough money.


Of course, ‘Limitless’ is only a marginal example of an in-demand movie; the price and revenue uptick would apply most heavily to highly anticipated franchises, the ‘Twilights’ and ‘Harry Potters’ of the world. And therein lies perhaps the biggest obstacle to this sort of flexibility. Studios, which wield influence over but cannot legally dictate ticket prices, have historically opposed variable pricing; they fear it will dissuade filmgoers from coming to see their biggest movies. Do you want to be the company bringing out ‘The Dark Knight Rises’ and explaining to fans that the movie they’ve been waiting years to see will now cost them $20 or $30?

Yet most studios don’t just peddle big releases but also mid-range and smaller movies (relatively speaking, anyway), and this system should help those films. And even if attendance drops for event films, there’s no reason the system couldn’t be calibrated so those losses were offset by revenues from the higher prices.

More important for all of us in the general public, variable pricing would offer an incentive to buy tickets early and with some resourcefulness, the way frequent travelers seek out the best flight deals. It would reward planning and enthusiasm -- that is, it would reward the hard-core filmgoers, which isn’t at all a bad thing. Sure, none of us want to pay more for movie tickets. But if you’re a big Christopher Nolan fan and bought tickets right out of the gate, it would cost you a lot less than if you sat and dithered, a proposition that has a kind of pristine fairness to it.

And for those of us who are a little more lazy or indecisive, variable pricing would still carry a benefit: tickets for non-event releases would cost less than they do now. Since that encompasses a fairly large amount of movies on offer, it means that for many trips to the theater we’d experience lower prices.

There’s a potential democratizing effect to this, too. People say they’d like to support smaller movies that aren’t big blockbusters. Variable pricing builds that support into the system -- as prices drop, audiences would be lured to a movie they wouldn’t have gone to otherwise. (Lionsgate tried to induce this itself with Groupon discounts for ‘The Lincoln Lawyer’ this weekend.)

Every ticket-pricing system has its flaws and critics, and the logistics of implementing a system like this wouldn’t be simple. But with moviegoing sometimes seeming like it could be heading for rigor mortis, a little flexibility might be a welcome thing.


-- Steven Zeitchik


Bradley Cooper’s ‘Limitless’ breaks out of top 5 horse race at box office

Groupon sells 190,000 tickets to ‘The Lincoln Lawyer’

Box-office receipts are down in 2011