Why Do All Movie Tickets Cost the Same? 464
gambit3 sends this quote from The Atlantic:
"Like tens of millions of Americans, I have paid money to see Mission: Impossible, which made $130 million in the last two weeks, and I have not paid any money to see Young Adult, which has made less than $10 million over the same span. Nobody is surprised or impressed by the discrepancy. The real question is: If demand is supposed to move prices, why isn't seeing Young Adult much cheaper than seeing Mission: Impossible?"
Prices ARE different (Score:5, Informative)
I've gone to see plenty of big films whose ticket prices were higher than the other films playing at the same theater in my town. I get that this is supposed to be a ~Big Evil Movie Industry~ article, but the premise isn't true--especially with Avatar, which the article acknowledges as an "interesting exception."
Scale (Score:2, Informative)
Economy of scale.
However it is probably a good time for the cinemas to approach the movie industry about trying this.
Re:Prices ARE different (Score:5, Informative)
Prices are only different within the same cinema complex when there is a premium involved or a across the bored discount. This is normally IMAX or 3D for the premium or matinee prices for the discount. Otherwise prices are uniform.
Re:Prices ARE different (Score:5, Informative)
really? I've never seen a price difference for the same filming type at the same cinima:
price difference breakdown:
3d more then 2d
new run and longer runs the same price at the same cinema
older movie cheaper at less quality cinema's.
I have never seen 2 2d movies at the same cinema at different prices.
Video Games (Score:3, Informative)
What I've found interesting is that video games actually DO follow the rules of supply and demand, even at Best Buy, and this surprised me! Skyrim was on sale for a whopping $60, some less-popular-but-still-new games were in the $50s, and my brother and I got a good laugh when we saw poor Duke Nukem Forever sitting there for a measly $15.
Re:Prices ARE different (Score:5, Informative)
I get that this is supposed to be a ~Big Evil Movie Industry~ article
Actually, that's just to grab your attention. If you read the whole article, you'll see at the end he explains why uniform pricing exists. He doesn't say it's a good or bad thing, but the way he presents his explanations implies he considers it at least reasonable, if not good.
It's the studios (Score:5, Informative)
Ticket prices are the same because the studios mandate the minimum price for ticket prices. The standard agreement between the theatres and the studios specifies what percentage of the gate receipts the studio gets (can be as high as 90% of the ticket price) and that the theatre will charge a certain minimum price. There are exceptions to this, but that is a default situation. Ticket prices therefore don't float in response to market demand because the enitity charging the prices, the theatre, is contracted to keep them fixed above a certain minimum.
Theatres would give movie tickets away in some circumstances if they could, in order to get you to come in and buy the concessions, which is where they make the bulk of their money. Studios counteract this behavior by mandating the high prices in the film rental contracts.
I know this because I used to support a software system that managed theatre accounting for a chain of movie theatres.
Re:False supposition (Score:5, Informative)
oops, that should have read "...pay back the same amount per ticket to the studios..."
Re:It's the studios (Score:5, Informative)
Ticket prices are the same because the studios mandate the minimum price for ticket prices. The standard agreement between the theatres and the studios specifies what percentage of the gate receipts the studio gets (can be as high as 90% of the ticket price) and that the theatre will charge a certain minimum price.
Actually it can be as high as 100% in some instances. Some studios will want to keep 100% of ticket sales for the opening weekend of a major blockbuster and force the theaters to make their money selling foods and drinks. If you have something like a new comic book movie or major action film coming out then you know that the theaters will be packed tightly for that first week.
So for example, Star Wars Attack of the Clones and Star Wars Revenge of the Sith took 100% of ticket sales from my local theater during the first week according to the manager. Meaning they only made money off of candy and soda and nothing from ticket sales for the first week.
Re:Prices ARE different (Score:5, Informative)
Nothing, because infrared isn't visible to the human eye. An infrared LED looks the same to the human eyeball whether the LED is on or off. I think "formfeed" meant a red LED rather than an infrared LED such as those used in security cameras for invisibly illuminating an area at night.
I think that what the human eye sees isn't the point of using an infrared LED. The movie theatre is dark, and if the staff want to spot pirates amongst the paying customers, they will want to use a camera that doesn't require having the house lights turned on, thus an infrared LED would be both very annoying, and likely to get you noticed...
Re:Prices ARE different (Score:5, Informative)
Re:Prices ARE different (Score:2, Informative)
Re:Prices ARE different (Score:5, Informative)
Because the bulk of your ticket price is actually the movie theatre.
This is flat-out wrong...the majority of the ticket price for a first-run movie goes to the distributor (i.e., the studio), and it is a percentage of the ticket price.
It used to be that theaters rented the print of the movie for a fixed price per week and kept all the ticket revenue for themselves. Gradually, the distributors started adding a percentage cut of the ticket sales in addition to the print rental, and now the print rental is really just a token payment (sometimes it's zero), with the 80-90% of ticket sale revenue being the majority of what the distributor gets from the theater. This is why ticket prices jumped so fast in the 90s.
When a theater kept 100% of the ticket price, they could raise prices $1 and keep up with a lot of increase in the cost of the print rental. For big theaters, that $1/ticket could be $5,000 or more per week Now, raising prices $1 per ticket only puts $0.10 or so into the theater bank account. Even without the print rental costs, it means that what used to be a $5 ticket to the consumer that gave the theater $1 in profit now has to be a $10 ticket to get the same profit.
Re:The other way around (Score:5, Informative)
Like so many before you, you're making the mistake of thinking that prices are determined by the manufacturer's costs. They're not. They're determined by what consumers are willing to pay. As you decrease your asking price, you'll get more and more people who are willing to pay, but you'll lose out on money from those who would have been willing to pay even more.
Here's an oversimplified example:
Let's say no one is willing to buy your widget for $100
At $99, 100 people will buy it.
At $98, 200 people will buy it.
At so on, down to 9900 people buying it for $1.
In this case, it is trivial to prove that the optimal price is $50, at which 5000 people buy it, for a total revenue of $250k.
Using the same logic to show a comparison between a blockbuster and a bomb:
Let's say the blockbuster and bomb both cost $10 million to make and $1 per viewer to distribute. The blockbuster will draw one million people for every dollar below $20 on the ticket price. No one's particularly eager to see the bomb, and even those that are will wait for it on DVD if the ticket costs more than $15. So let's say the bomb will draw only 200k people for every dollar below $15 on the ticket price.
The blockbuster's optimal price comes out to $10.50 at which it draws 9.5 million people, for a revenue of $99.75 million, with costs of $10M (fixed) + $9.5M (distribution), resulting in a total profit of $80.25M.
The bomb's optimal price turns out to be $8, at which it draws 1.4 million people, for a revenue of $11.2 million, minus $11.4 million in total costs, ending with a small ($200k) loss.
But if the bomb tries to charge the same as the blockbuster ($10.50), it only draws 900k people, for a revenue of $9.45M, minus $10.9M in costs, ending with a much larger loss of $1.45M.
In real life the relationship between price and people willing to pay isn't linear, but it is still monotonic (i.e. if you get a million people willing to spend $10 on a movie, you won't have two million wanting to see it for $15), so the same logic applies just with harder math.