With the recent completion of a pair of 1.2 billion dollar deals, the parent company of AMC has agreed to purchase Odeon and UCI Cinemas Group in Europe, and Carmike Cinemas here in the United States. The Dalian Wanda Group now owns the largest theater chains in China, Europe and the United States, making them the largest theater group in the world. If you are a member of the AMC Stubs program, there are now over 600 US locations where you can use your benefits. The good news, however, may end there because one of the driving forces behind the acquisition of Odeon and UCI is to gain their inside knowledge about flexible ticket pricing.
Starting in 2014, Odeon altered its variable pricing plan that already says you will pay more or less for a movie based on location, time of day and your age; during the first few weeks of release for a major Hollywood production, you would have paid an extra $1.25. That price did not last long, though, because for current major releases, such as Captain America: Civil War, the charge has already increased by 50%. Attendance has continued to fall after reaching a peak of almost 1.6 billion tickets sold in 2002. Almost 300 million fewer tickets were sold this year, costing the movie industry around 2 billion dollars. The reason a theater may want to adopt this policy is simple: they are more reliant on the number of people going to the movies than the cost of a ticket. On average, when a studio releases a new film, it takes 70-100% of the ticket price. As the weeks go by, that percentage swings in favor of the movie theater. At that point, the attendance is down, so the theaters are getting a larger percentage of just a handful of tickets. If less people are going to the theater, that means fewer people are buying the snacks that make up nearly 90% of a theater’s profit. Therefore, by adding this charge, they will make money, even if a person purchases no concessions and the studio is taking 100% of the ticket price. In addition, you can expect to see the trend of assigned seating continue to grow in popularity. Studies have shown that when people are not rushing to find a good seat, they are more likely to purchase snacks. To add to the bad news, the CEO for Odeon has discussed their plan to implement flexible pricing based on where you sit in the theater. If you want to sit half way up in the middle of the row, you will be paying more than if you sit in front or on the edges. This is a common practice for concerts and sporting events and is already in use by some theater chains in Germany.
I know you must be thinking, “That was a lot of numbers and speculation involving other countries but what could it mean for me?” Odds are that we will not see this flexible pricing implemented in the next couple of years, but I think a safe bet would be the next 3-5 years. So what could that mean for the price of seeing a movie here in the US? On average, ticket prices increase by $1 every five years, if that trend holds, 2017 will be the last year that ticket prices are below $9.00. This past year will give an average somewhere between $8.60 and $8.70. (The exact numbers are not in yet.) That takes into account all matinee, prime time, discounted and free tickets, so in some areas the price of a ticket is well beyond $9.00 already. In 3-5 years, we can safely expect tickets to be between $9.30 and $9.70, based solely on normal increases. If we add to that a premium movie fee and a preferred seating fee of $1.50 each, we could see average ticket prices for the first couple of weeks of a major motion picture release hit between $12.30 and $12.70. That means it would cost a family of four $50 in tickets, and if they want snacks, two large popcorns and two large sodas to share cost an additional $28.73 in today’s prices. In five years, that will be closer to an even $30.
Just remember that if you are a person who can go to the movies without a snack or you are willing to sneak your treat in, you are lucky. If it were not for the overpriced concessions, those costs would be added to the cost of a ticket and you would not have any choice but to eat that extra cost. This could affect movies in several ways. More people may be forced or decide to wait and see a movie after it has been out for a while, or not at all. We may have to become more accustomed to seeing movies after being “spoiled”, which is a major issue for some, but according to some UC San Diego psychologists, not very harmful to ones enjoyment of a story. If AMC chooses to adopt Odeon’s strategy for accompanying flexible ticket prices with Groupons, email based flash sales, time banded sales, and increased ticket giveaways, they may actually see a dramatic increase in attendance just like Odeon is experiencing. With those extra benefits, the public may not feel like they are losing anything while paying more. Blockbuster fees seem to be unavoidable but let’s hope for the best, and try and get to the theater a little more often, before we see the prices jump.