Why Are All Movie Tickets the Same Price? | Hacker News Reader

Why Are All Movie Tickets the Same Price?

marginalrevolution.com

16 pointsmhb25 comments

I think the OP misconstrues the product of the movie industry (as opposed to the filmmaking art). They're not making movies as such, they are making films for people. That is, the real cost must be considered as amortized over the set of viewers. A $100M movie watched by 1M people is the same as a $10M movie watched by 100K people.

I read somewhere that Ford spent more money developing the first-generation Focus than Boeing spent on the 777. We wouldn't expect a Ford Focus to cost as much as an airliner, because the development costs are divided over a larger base of customer.

Good point.

It also applied to the music industry. The latest Britney album would have cost a lot more to create and market than the album of a obscure indie band.

Because for the theatre chains, the costs are fixed? Doesn't sound to unusual to me. It costs me as a theatre owner the same amount to show Gigli as it does to show Titanic.

One could argue the length of the movie is a factor, but most people see movies at set times, and at two showings a night it doesn't really matter how long the movie is.

Exactly - it costs the same amount whether the theater is full or there is one person in it. Therefore if the theater is empty, they should be charging LESS to get more people inside it, since the marginal cost of each additional viewer is very near zero.

Empty theatres are desired, because you always need somewhere for the people who can't get into the box office smash hit to go.

Let's say you go to see Titanic. You get to the theatre and surprise, sold out. What do you do? Go home? Nope. You go see Gigli, even though that movie would never have brought you to the theatre in the first place. And, you pay the same price as you would have paid to go see the movie you did want to see.

You're suggesting that these people pay less. You're also suggesting that if Gigli was $3 instead of $12, you would actually get off your butt and come to the theatre to see that steaming pile of excrement - knowing full well that everyone reviewing it is telling you it's crap. I think not.

Why do you think the studios position the movies that they know will be very good/in high demand to come out at staggered times? Yup, to ensure that there is always overflow.

If that's true, then an overflow movie could gain a great advantage over the other overflow movies by lowering its ticket prices.

Um, except that they are all in the same theatre?

The theatre owner doesn't give a damn what you watch, as long as you're watching something and buying $10 popcorn.

In other words, blockbuster hits entice you to enter the theatre, his job is to make you stay. If he fills up all his theatres with non-customers paying $3, he is unable to achieve this task. Knowing that it is extremely rare for you to make it to the theatre and not see a movie, there is no incentive for him to offer any lower prices.

If you make it to the theatre, the sale is but guaranteed. Lowering prices after the sale is guaranteed is a stupid way to do business.

You paint a plausible scenario. But the ticket price isn't all going to the theater owner. Most of it goes to the studio (theaters make most of their money off of concessions as I understand it). Since different studios are competing with each other in the same theater, there is definitely room for price reduction.

Another thing to keep in mind is that discounted movie tickets run into another problem - home rentals.

If the choice becomes, watch Titanic for $10, Gigli for $6 or return home and watch last year's Titanic for $5, you're introducing a choice that the consumer would have never before considered.

There was a trend ten years ago to take all those 80's style multiplexes in malls and turn them into cheapo discount theatres. Most of these theatres no longer exist, most likely because the product can't compete with the home rental.

EDIT: You changed your comment, so I'll respond.

Theatres make about 25-55% of the ticket price, and their take increases the longer the movie is shown. That's why you don't have 12 theatres of Titanic. It's also why there is no real incentive for them to reduce the price.

Pricing is a signal. Lowering the price of tickets to "lower budget" movies would be a pretty effective way to make sure fewer people watch them.

Of course, this article seems to assume that the cost of producing a movie is directly proportional to the quality of that movie.

Quality, again, doesn't signal value to the consumer.

The three Evil Dead films have grossed ~38 mil profit (IIRC). The first film cost $375,000 to make, but pulled in ~2.5 mil on its initial release and has now made considerably more, about $30 mil by last figures (2006). Essentially it made ~80 times its budget, compared to the ~10 times Titanic has made.

Consider that The Shawshank Redemption barely made over double its budget, but is the #1 IMDB movie with nearly half-a-million votes. Titanic, by comparison, doesn't even appear on the top 250 by a considerable margin (lowest rated is 8.0, Titanic has a 7.3, the bottom 51 movies are all 8.0, assuming the same trend of ~50 titles per .1 (doubtful) it wouldn't even hit the top 500).

If the producers knew Shawshank would be the best made movie ever, they would undoubtedly have charge more for admission than Titanic, which would likely have made it tank.

Lowering the price might also make those "lower budget" movies more appealing to those that choose what movies they see based on price. For instance, we only go to movies if it's "25 bucks good" because that's how much two tickets cost. We end up not seeing anything that has <80% fresh on rotten tomatoes simply because of cost. We'd be willing to see more marginal movies if we didn't have to risk blowing 25$ on a crappy film.

I don't think your method though is the normal behaviour. Most people "go to see a movie". They may have one in mind, but once they get to the theatre they end up seeing something regardless.

If this is the normal behaviour, why would you encourage this customer to spend less?

Because in general you get the same thing: a ticket that allows you to go sit in a theater and watch a big screen for ~100 minutes. You could argue that long movies are worth a bit more (I personally prefer a long movie, but theater owners don't because they can't do as many shows per day, so if it's long it better be a crowd-pleaser).

The price of a movie doesn't have much to do with its overall quality, unless your primary interest is special FX or special stars. But I think a cheaply-made movie (like Pi, say - no stars, shot on 16mm, black and white) is worth the same price as an expensively-made one, for the simple reason that I'm willing to invest the same amount of time in watching it.

It also costs the movie theater the same amount to run the projector, clean up the theater, and rent the print of the film from the distributor, except in those very rare cases where someone self-distributes (called 'four walling') and makes a private deal with the theater owner to rent one theater, in which case they may agree on a special price for that show.

I had similar thoughts about movie ticket pricing but focused on charging different prices for the different seats in the movie.

I came to the conclusion that this hurts business for movie theaters since some people may see that the theater being pretty filled up and not bother going until a future time. On the other hand other people may be willing to pay a lower price for the crappier seats.

I like the fact that seats are the same price and it's first-come first served - if you're really anxious to see a film you can arrive a bit early and get the seat you particularly like. I go to the opera occasionally and although I enjoy it very much it really aggravates me how expensive it is and how the seats are segregated by price, so if your spend is limited there is no way you are ever going to be allowed to get a better seat even if the show is poorly attended and there are empty seats in the box or near the front.

It doesn't help that the San Francisco Opera frequently does 3 different shows on successive nights, incurring tremendous expense in breaking down the huge stage sets and erecting new ones, when they could run the same opera for a week (substituting singers who need a break for their voice to recover) and save a ton of money on set builders. Every time they switch out the set it costs > $10,000, probably a lot more.

I don't think these two issues are contrarian. If there was a way to gauge demand and supply in real time the prices could be improved.

It can be similar to buying an airline ticket - if you buy well in advance or very late you can get cheaper tickets than if you buy a few weeks before the flight.

Not sure why they only do 3 shows, the Met Opera in NYC does a performance over a longer time period but allows multiple operas to occur over that time period. Maybe that's a better solution.

First: Price are the intersection of demand and supply. Lifetime of movies is very short, so it's hard to tell what is the "right" price. Second: Flat pricing strategy make it easier for customers to select their movies. A decision to buy a car is normally not spontaneous.

Indeed. Good Movies should be expensive and the crap movies could just as well be free.

1. It's extremely difficult to determine which movies are "good" and which are "crap" until they're already in theatres. The best minds in the business routinely mis-judge the quality and popularity of films.

2. Individual theatres are mostly interested in selling popcorn. They just want to fill as many seats as possible, pricing tickets at just-above break-even. Since their costs to show "good" first-run movies are about the same as "bad," it makes no difference to them. (They do, however, do capacity planning, allocating more screens to movies expected to draw larger audiences.)

3. The movie industry actually had variable pricing based on production costs, back in the day. ("A", "B", and "C" movies.) It didn't work then, either. Plenty of flop "A" musicals and hit "B" comedies/westerns.

Robert McKenzie goes on about this at length in his book, "Why Popcorn Costs So Much at the Movies." I have crudely summarized his chapter on this subject: http://www.amazon.com/Why-Popcorn-Costs-Much-Movies/dp/03877...

I wasn't really serious (poor attempt at humor I admit) but thanks nonetheless for clearing that up. ;-)

Everyone can tell which movies are good, but no one can tell which movies will be popular. This is no surprise, because there seems to be a weak correlation between the two.

Very good comments too.

because they aren't :)

at least here in Brazil.

from cinema to cinema, it goes from R$2 to R$30. or US$1 to U$15

Well, the lower bound is actually zero, if you know where to go (and some art houses do charge).

Also, the price depends on the theater+day+time, not on which specific movie it is showing, so, while price certainly correlates with movie budget, it doesn't capture most variation.

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