Shocker: The Pay-Us-Extra-For-Nothing Business Model Breaks Down
from the at-the-movies dept
Again and again, movie theater owners have chosen to point the finger at non-factors like piracy and shrinking DVD release windows as the biggest “threats” to their businesses, rather than realizing their biggest problem is their own failure to improve the movie-going experience. The real issue is one of value: with the ever-increasing cost of a movie ticket, going to the theater becomes less and less worthwhile as long as the experience doesn’t improve. It’s hardly surprising, then, to find that online ticket-selling services that tack on usage fees — without adding much customer value in most cases — aren’t very popular. These sites tend to charge a dollar or so per ticket for booking, and while that might be worthwhile to moviegoers wanting to see the latest blockbuster on the Friday night of its release, it really isn’t to most customers, who are content to walk up to the box-office window and buy a ticket with a pretty minimal, if any, wait. It’s a simple equation — for people wanting to see a movie that might sell out, the ability to buy a ticket in advance without going to the theater is worth the extra dollar. But for all the people seeing an older or unpopular movie that’s not likely to sell out, or aren’t going at a peak time, there’s no real added value for that dollar. So, after only several years, the ticket sites are realizing they’ve got to tinker with their proposition to draw in more customers, with the biggest potential change being variable usage fees that would charge people less for tickets to unpopular movies or showings at unpopular times. Perhaps that’s a start, but it’s unclear why these sites should charge usage fees at all, particularly at a time when more and more industries are pushing customers to use automated systems as a way to cut costs, and actually charge them for transactions made face-to-face with a human employee. In any case, the situation is indicative of what seems to be the movie theater industry’s current strategy: get customers to pay more, while offering no more value in return.
Comments on “Shocker: The Pay-Us-Extra-For-Nothing Business Model Breaks Down”
It's Not Just The Theaters
The movie producers demand about 98% (my exaggeration) of every dollar taken in, leaving the movie chains to really be in the business of selling popcorn, candy and soda. If this country really takes the obesity problem seriously, movie houses will go out of business.
Seriously, the business is controlled by the studios and they’re not about to give up one penny. If they had it their way, admissions would be $25 and buying food would be mandatory.
Re: counter service...
Since the bulk of theater’s profits is in the 10 cents worth of popcorn they sell for $5 I am always amazed at how poorly they manage this very important aspect of their business.
Often the line takes 5 minutes – it’s almost always longer than the ticket line. If there is more than one person ahead of me I simply don’t bother. That is one place they could get an immediate return on investment from a small improvement in management and training.
Ticketmaster does the same thing, but they have enough of a monopoly to get away with it…
Support your local theater
My wife and I live in a small town with a 5 screen theater (and by small town, I mean 6,500 people). Until about 5 years ago, the closest multi-plex was an hour away minimum. Now, we see probably 2-3 movies a month, always at the matinee price of $4.00, but we never blink at getting popcorn and pop every time – because we know THAT’S where our theater will survive.
Given all the stinkers that are out there (how the hell did Pirates 2 make 130 million in the first weekend????), we like this arrangement.
as a teen I worked at the local movie theatre. The rule was we could eat as much popcorn as we wanted, and drink as much soda as we wanted, all for free as long as we brought our own cup for the soda and a bag for the popcorn.
Neither product costs very much. The cup cost was far more expensive than the soda, hence why we had to use our own.
This was almost 20 years ago – the price for a movie was about $2 for a matinee and $3.50 for an evening. Of course a soda was about $1.00 then and popcorn was only about $2 for a large.
Re: movie theaters
About the bring your own cup issue for workers. Very often the cost of the soda was calculated by the number of cups sold. So as long as a cup wasn’t used, the cost of the soda was close to 0.
I would pay extra for.....
I would pay extra if they guaranteed seats.
I have a larger family and we often go in groups of 5 or more. We sometimes have to sit separately if we don’t make it to the movie really early. This is exacerbated by the fact that people have a tendency to leave an empty seat between them and people of another group.
So, if I could get reserved seating, I would pay a few bucks extra per ticket online.
Re: I would pay extra for.....
In Japan you buy a ticket for a specific seat at many theatres for no additional cost (though tickets are about ~12$ to begin with, at least!).
The movie going experience is FRUSTRATION
I agree! The mainstream commercial movie going experience has not improved for years. I went to Pirates at midnight, and watched as 300 people fought their way to 3 cash registers. Oh, there was support for those who were planning on missing all that by buying their tickets online; about 90 of us stood in line for ONE kiosk to pick up internet tickets. Then the mob at the concessions…. Then we get inside and there are mobs of unruly teenagers each blocking out about 12 seats…. Then the string of normally annoying previews didn’t play correctly so they were annoying and not working either, which was even more annoying. Not really worth it all.
One more thing....
…is that theaters have done almost nothing to improve the experience over the last 25 years. The last improvement was when the added those comfortable, reclining seats. Other than that, zilch.
In a world where the entertainment options just keep on growing, theaters have to do something to justify the increasing prices. Heck, even assuming zero price increases they should start thinking of offering more value.
Still Standing in Line
At the 2 multiplexes nearest me (14- & 17-screens) unless you’re attending the showings between 7pm & 9pm (roughly) on the weekends, you STILL have to stand in line even if you bought your ticket online. Neither cinema has the “express lane” open for any other showings. To make the online purchase of tickets meaningful and worthwhile we should be able to print a scannable receipt and never have to stand in line. Until this happens, I’ll just buy my tickets at the window.
"I'd buy THAT for a dollar"
I won’t bother seeing a movie the first weekend it’s out. I mean, it’s the same movie two weeks later plus I can avoid a crowd. On the other hand, if theatres would sell me a specific seat, I *would* see a movie sooner. Assigned seating works and people are willing to pay for it to avoid having to get to the theatre an hour early and wait in line for rush seating.
clean it once in a while
thearers are just plain nasty. why would i want to go sit in filth, and pay for it.
also at the risk of sounding pompous, there are some people that are “less than desireable” at the thearers, not to mention people with cell phones, and loud talkers.
combine all that, with my 50″ hdtv and 5.1 surround, comfy couch and $5 for a rental, and $3 for a box of microwave popcorn, and $3 for a 12 pack of sodas. its kind of a no-brainer.
I have an easy request that would make me go to movies more often.
BRING BACK THE GUYS WITH THE FLASHLIGHTS.
Im so sick and tired of people thinking they can yell and scream their way through a movie and I have to miss part of the movie to go complain. We need ushers again to tell people to shut it or leave, turn off their cellphones, and generally be respectful of the other people who just spent their $7.50 a ticket to see whatever they are trying to see. Hell….when we went to see The Incredible Hulk (now that was a stinker), we started having problems with 4 guys. We asked nicely for them to chill, we later complained to the management 3…count them…3 times. At the end of the movie the guys were screaming out the ending, standing on the backs of the chairs, and jumped over us all to sling soda in all our faces. The management gave us movie passes, but that was it. And this was at the theater in the richest, snobby shopping area in town. And we got to enjoy all this for $7.50 a seat.
Raising ticket prices and lack of crowd control is making it so I see fewer and fewer movies in the theater. I used to go once a week because I enjoy films so much…now I’m down to only ones I just HAVE to seen on the big screen.
$1.50 Service charge
I have a large family, we recently bought tickets online for a show. We got to the theatre where we of course had to wait in line at the booth to collect our tickets, then, once we got in the theatre there were only 5 seats available! Of course even these weren’t together, we complained and were basically told that because we bought our tickets online we weren’t gauranteed seats! So, what exactly is the point of buying tickets online? If you established some protocol that gauranteed my seats, I certainly would pay the $1.50. As it stands my family will never buy tickets online again, and we for the most part avoid the theatre in general, not just because of the one incident, but because this is the general trend of movie houses, they don’t care, they won’t correct issues, and the movies that come out for the most part aren’t very good.
TIVO is same thing
I buy a hard drive equipped DVR and want to place content on my hard drive. But in order to do so I am supposed to pay TIVO $12/mo?!? Why exactly do I pay them to record on my hard drive? What value is being delivered there? And don’t tell me about the little program schedule becuase I get a sat signal and have had that for over 10 years. I think cable customers get a channel guide too don’t they?
The old adage that one cannot underestimate the stupitidy of the US consumer is true.
…Here’s to hoping the populace demands value for their $$.
Prime example of a worthy movie going experience is the I-MAX.
They have assigned seating, and know how to manage a crowd, and have a minimal amount of previews.
I saw Superman Returns on the I-MAX 3D for $15- may seem a bit high, but it was worth every penny. Granted the movie was only so-so, but the visual experience alone of the cutting edge effects made it worth the price of admission.
And this is different from ATM’s how?
To me the biggest rip off is the movie that lasts 1.5 hours instead of 2. Shouldn’t they reduce the price by 25%?
They should have less adversising and more previews. I go to the movies, I’m there, make me interested in coming back.
The assigned seating idea would work if most people buy tickets in advance. The fly in the ointment is that for most people the decision to go to the movies on a particular date at a particular time is spur-of-the-moment. Reserved seating and mandatory pre-purchase for opening night of a major release is a great idea.
Another idea I just got would solve the problem of the “spacer seat” that vexes so many people. If cinemas would mount the seats on movable rails movie-goers could have the freedom of putting a few inches between themselves and the person sitting next to them. These days most people don’t like sharing an armrest with a perfect stranger anyway.
Arclight gets it right
One of the best things about living in LA is being able to see movies at Arclight Cinemas: tickets are $11 at non-peak times and $14 at peak, seats are reserved, tickets can be purchased on-line with no service charge and printed out at home, there are no pre-show commercials whatsoever just coming attractions and the feature presentation. I don’t suppose it’s a business model that would be viable everywhere, but it really is what the movie-going experience ought to be like. Unfortunately there doesn’t seem to be any price level, amenity, level of sophistication or reminder that will convince everyone to turn of their damned cell phones…
You couldn’t pay me to attend a movie in a theater that was going to be full.
AMEN. I saw pirates 2 matinee on Monday and guess what there were maybe 10 people in the whole theater.
The REAL Catch
They’ll charge less for unpopular/old movies in effort to make some profit, but does that also mean they can charge more for opening weekend blockbusters?
I’d be concerned about the result of flexible pricing.
Furthermore, I’d like to rant on the hollywood business model: how can they cry about bootleggers stealing all their profit, when Pirates just did so well with its opening weekend sales? It seems obvious to me that they just aren’t producing what people want to see, or perhaps just plain producing too much… going to a movie just isn’t as exciting anymore, especially when you weigh the crappy and overpriced experience versus waiting to view in your own home theatre.
Ticketmaster is proof this won't change
I have to agree on the Ticketmaster comment. The fact that Ticketmaster has been able to control their sleezy monopoly for well over a decade since Pearl Jam called them on it… well, that’s just downright b*shit.
I’d rather ride public transportation than go to a movie in a gigaplex. The seats are cleaner, the crowd is less rude, and the price isn’t as exorbitant.
“particularly at a time when more and more industries are pushing customers to use automated systems as a way to cut costs, and actually charge them for transactions made face-to-face with a human employee”.
Most of you young punks on here don’t remember when ATM machines first came around. They were great at first. Then the banks started charging money to do things like make a deposit at the teller instead of using the ATM. My old bank, Mellon Bank, actually wanted to charge me $2.00 to go in to the teller and make an $18,000 deposit! I said so you want to charge me to give you my money to use until I withdraw it? They said yes, or I could use the machine outside for free. I said FU, closed my account and went to a different bank.
Damn punk banks!
Re: I AGREE WITH YOU TOTALLY!!!
You know what? If more people not only think like you do but do like you do… This would set alot of companies straight!
Well for one, I don’t go to stare at an ATM for 2 hours.
I especially enjoy paying to be force-fed commercials… I go to the movies because I don’t want commercials. If I didn’t care then I’d watch it on TV instead.
What's not to understand?
The online ticket sellers aren’t affiliated with the studios or the theaters and as such don’t get a price break on the ticket, so they add a surcharge to cover CC processing fees and make a profit. So functionally, it’s the studio’s/theater’s fault for not selling tickets to them “at cost”.
the change in attitude in hollywood pisses me off.
hollywood acts like they are doing us a favor with it’s very existence. they are all overpaid (talent, crew, and management) and way too self absorbed. it’s been that way since the 70’s and i am willing to put up with it to watch movies and TV.
the thing i can’t stand is the shift in attitude in the last 10 years or so. hollywood used to be this place of risk taking and big dreams, now it’s like an investment bank. there’s no creativity, it’s all just formulas now.
maybe wallstreet should start making movies and TV shows.
Never had much problems
For Pirates 2, my local theater has DLP projection at the same matinee price, $4. The picture was amazing, I could see the difference when I watched Pirates 2 at a different theater. I think for $4 it was well worth it, plus I ordered off Fandango.com. It was a huge screen as well, huge.
I think DLP projection is worth going to the theater for, at least now that I’ve seen it.
Things are a bit different here...
Here in Hong Kong, that is.
They do tend to charge a booking fee, which is pretty annoying, but the cinemas all have reserved seating with live online ‘maps’, so you can see exactly what you’re buying. I have ruled a showing out before because while there were available seats, they were all either singles or right at the front or side of the room. Also, most cinemas have automated ticket machines for online bookings, which normally have a much shorter queue (if any) than the regular box office, and except maybe for a popular showing of a popular new film at the most expensive cinema in town (in one of the poshest malls), you’d struggle to pay more than US$10 for a ticket, even including the booking fee. Okay, different value of money, but in pure cash terms, the prices are pretty decent…
Some Free Ideas for Movie Theater Owners
I don’t want to give away every idea of mine, but since you are on the subject… here’s what theater owners need to do to fight back — and quit blaming Hollywood.
1. First realize we are in a ADHD society. Movie times like 7:40, 7:55, etc are for the 1960’s, not the year 2010. First theater owner who can GUARANTEE that every movie starts on EVERY top of the hour wins the city. No more calling those ridiculous recordings, looking at tiny invisible newspapers ads (who reads the papers?), and surfing your favorite ticket site (which is sometimes wrong). You just show up at 4:00 and pick a movie. Simple – and no advance planning needed.
2. Fee-based movies. Superman Returns should be $10.00. Waking Ned Devine – $3.00. Also simple. Why in the world a theater would sell $4.50 matinee tickets for a blockbuster (no pun intended) like Mission Impossible III the day after its midnight release which was sold out on four screens is beyond any logical business sense. Then, movies could pull people in long after a release – “Superman Returns now only $2.00!”.
3. Keep the ads in the pre-movie slideshows. We don’t mind them and if we get there a bit early, no problem. But having to watch ads from Verizon and Coke for 6 minutes before the previews even start – that is kind of lame and makes us think twice about our time commitments — and our nice DVD players back home.
4. Play a few classics. I hate going to a theater to see a movie to discover that I’ve seen the only two “good” movies out – and the rest are children’s movies, lame movies, a few low-budget horror flicks, and a documentary. I’d rather see a really good film from 10 or 20 years ago on the big screen than that stuff. Run a few oldie’s but goodies (especially ones that would benefit from a big screen). Don’t tell me Braveheart wouldn’t sell out a few shows.
5. Someone has to think of a better admissions system than the present one. It was developed over 50 years ago. Standing in line to buy a ticket, to stand in line to hand it to some kid (who tells us to go “right” or “left” – like we can’t read), so that we can stand in line at the concession stand? Come on. Where’s the innovation? One local theater finally combined the ticket line with the concession line (a decent improvement – buy everything at once), but we still have to take out tickets for them to tear – while holding popcorn and a drink. How often do they REALLY want us to come visit? Make your guests comfortable.
6. Do you know how much time and money is spent… counting money? Theaters have only slightly less cash than a large grocery store. If they want to save money, stop taking cash. Give people an incentive to pay with debit or credit cards. $1.00 more for cash tickets. Easy. You’ll be counting $50 each day – instead of $5,000. No risk of theft, either.
Re: Some Free Ideas for Movie Theater Owners
I want to order my drinks and popcorn when I buy my ticket (at a kiosk or live cashier) and have my order waiting for me when I walk up to my particular theater.
Where is the innovation? My local theaters still hand out buggy whips as promotional items when you buy a large popcorn and a large drink!
Whaddaya mean, the times are wrong?
Another deficiency that I’d like to point out is that sometimes – not frequently, but enough to be a problem – online ticket-sellers will have incorrect showtimes for particular theaters (I’m guessing it happens to smaller theaters more often than larger ones). I can’t imagine how it must feel to pay someone a $1 premium to get the wrong ticket sold to you.
How To Bring People Back to the Theaters
I’ve experienced this problem as well. Studios complain about the decline in ticket sales, but theaters and studios produce crap. I wrote How To Bring People Back to the Theaters with some ideas on how to turn the situation around.
Europe: seating & time
I live in Germany, and they always have assigned seating, in every theater. They usually have a way to book your seats in advance. The stupid thing is, if you book your seats in advance you have to be there 15 minutes before the show, or they give your seat away. 15 minutes isn’t much but they seriously have 15 minutes of commercials before the actual movie, so 30 minutes before the movie actually starts, you’re there! Only worth it if it’s possibly going to be packed, because usually I’ll show up 5 minutes after the show time and still get a decent seat and only have to wait through 10 minutes of commercials and previews. Better yet, buy your tickets, go have a drink at a local bar, come back for the show.
City Passes vs. movie tickets
My wife and I try to visit at least one major US city each year. We’ve found that City Pass understands the consumer.
You buy the pass one time, the face value is 50% off the price of the attractions (if you visit them all, of course. If you visit half of them then you’ve paid full price). But the biggest advantage is that you already have your ticket so you bypass the entire line. This saved us more than an hour each at some of the bigger attractions. That means more time ‘doing’ and less time ‘standing’ so you either get to see more of the attraction, or more total attractions.
Even the airlines let me print my boarding pass ahead of time. This isn’t rocket science, if those guys can figure it out then why not theatre owners?
One theatre that’s got a clue is the Alamo Drafthouse. Not only do they serve beer & meals instead of just over-priced soda & popcorn, they create all kinds of interesting events. That’s about the only place we go anymore unless we just wait for the DVD.
Most Movie Theaters Are Doomed - Can't Wait! Amen!
Want to know the future of successful movie theaters? It’s the exact opposite of the current crop.
There’s a small private chain of theaters in Austin, TX that offers an example.
1. No one under 21 allowed regardless of the movie shown for a) see #3, and b) to assure a quiet, pleasant movie experience without kids, teens and adult yahoos!
2. No rows of theater seats in the normal sense, more like cocktail table in a comedy club
3. They serve alcohol at your table (waiters)
4. They serve good dinner (not hot dogs, etc.) at your table (waiters)
The experience actually works for anyone over the age of 21 who wants to have a nice evening with a movie and not have to do it at home.
*Every* time I go to a theater I’m disappointed and ask myself “when will I learn”. These theaters in Austin changed my mind about what it should be like.
Simply stated: segment the market and tailor theaters to one-and-only-one segment rather than trying to be all-things-to-all-people, or more commonly least-common-denominator-in-everything!
Online Ticket Purchase
I stopped buying tickets online because I still had to stand in line at the theater to pick up the tickets!
I live in the United States but I grew up in India and I visit my family and friends as often as I can. Going to a movie theatre is on top of my list when I go to India. I always compared movie theatres in India vs those in US and wondered why the hell it is so difficult to attract people in US. Here is some information about Indian movie theatres – especially useful for the people who have not been to any Indian movie theatres
1) Your seat is always guaranteed. There are seat numbers on all the tickets that are sold and many theatres will actually give you an option of picking the seats that you want from a chart. I am unclear on why the seat numbers cannot be assigned upfront in the movie theatres in US
2) You can buy tickets ahead of time and it’s called “Advanced Booking” and you show up few minutes before the show starts and enjoy the movie. Look at http://chennai.metblogs.com/archives/2006/04/redefine_your_movie_plans.phtml
3) These days theatres have started selling tickets on-line but not via one common site such as Ticketmaster – may be that’s the next step. As far as I recollect, they do charge the shipping, which is equivalent to a transaction fee but it is not significant
4) Few theatres got creative and started selling e-tickets where you don’t pay anything upfront but tickets are reserved for you as long as you can pick them up an hour early. If you don’t they will sell them to other people – no transaction fees for you and theatres don’t loose anything. Now, what’s wrong with this approach? As Carlo said, why the site should charge a transaction fee. SMS is very popular in India and you can book tickets via SMS http://cities.expressindia.com/fullstory.php?newsid=53798 We are still looking for a killer application for cell phones and look what these guys have done.
5) There is a concept of an “Interval” for India movies, which is a break for 5-10 minutes in the *middle* of a movie. I love this break as you can go out, take a leak, get popcorn or some other snacks and go back to the movie. I think I need a break if I am watching Lord Of The Rings! I always found it a little weird to buy popcorn and soda upfront in US and then find out that you ate all the popcorn only few minutes in the movie as you had nothing better to do but eating popcorn while watching commercials!
6) Some new theatres have couches where you can sit and order food without getting up and they will bring food to you – just awesome! This is an idea of tiered pricing. I am a regular Techdirt reader and Mike says that movie is about a social experience and I could not agree any more. Provide the experience at a premium price and people will come. If you just want to get in, watch a movie, and get out, you have that option too and that should not cost a fortune.
save ur money
save ur money and buy a killer entertainment system.