Movie Industry Needs to Look at Variable Pricing

Warren Beatty isn’t the only one who thinks that entertainment mogul Edgar Bronfman Jr. is on to something when he suggests that movie tickets for at least some films should be priced higher (“Hanging With Warren B,” Calendar, May 3).

Notwithstanding the negative response in the movie community, which is based primarily on the fear that such a move would be viewed as anti-consumer, I believe there is merit to Bronfman’s idea.

It was only 15 years ago that when musical acts played an arena, it was all one price--from the first row on the floor to the last row in the rafters. The brokers were soon making more money than the promoters and the arenas.

The concept of tiered pricing and golden circles was met with industry skepticism and derision. Today, it is the rule. While the consumer did pay more, that money went to the people who were at financial risk--either the performer or the promoter or both--and it was always the consumer’s choice whether to go or not.

Tiered pricing was no stranger to live theater or sports, so why not concerts? And why not movies?

Movies have always been priced differently for matinees. Why not also price according to the demand? Variable pricing in movies clearly needs to be explored. (Notwithstanding the current legal restrictions on studios, which cannot set ticket prices for theaters.)

The movie business has become an opening weekend business. The studios need to be in the top five announced on television on Sunday evenings in order to create marketing momentum for their films, so huge amounts of advertising dollars have to be spent to market and promote a film. Also, films are opened on more than 2,000 screens, compared to 300 to 700 screens only a decade ago.

Last summer showed that there were precipitous drops in grosses from the first weekend to the second weekend, due in part to the large number of screens meeting the demand, the quality (or lack thereof) of the films themselves and the opening of another blockbuster movie the next weekend.

Except for “Titanic,” an epic movie the world can’t seem to get enough of, it is with rare exception that any movie has sustained this kind of momentum for four weeks, much less 15.

It costs significantly more to make and market movies today. It makes sense on Friday and Saturday nights of opening weekend to have higher-priced tickets. Studios and exhibitors should have the flexibility to charge more for their product, certainly on opening weekend and on as many weekends as they think it can be sustained. The argument also can be made for higher prices on Friday and Saturday nights as opposed to Sundays or weekdays.

This isn’t revolutionary; it’s common sense. After movies have played for a period of time, they wind up in the $2 or $1 discount houses.

No one says the product is diluted because the prices are cheaper; the converse is true also. Videos that are released for the rental market are priced at $99 to $115, yet six months later they are released for $14.95 to $19.95.

There should be a premium on opening weekend and where the demand merits it. As the marketplace changes, prices need to reflect it. The impact would make a serious difference.

If a movie grosses $25 million on its opening weekend, it would mean that 5 million people went to see it. If variable pricing were in effect, the “A” markets might be $3 a ticket more; the “B” markets $2 a ticket more and the “C” markets $1 a ticket more. That would increase the gross by $8 million to $10 million.

Every industry has come to recognize this concept. Airlines price for peak periods, hotels and resorts price for seasons, networks price for prime time, radio prices for drive time, and there are many other examples too numerous to mention.

This may be an idea whose time has come. At the least, it merits serious discussion and consideration.