New research shows that movie theaters could increase their profits if they charged different prices for different movies. But this would involve movie studios knowing what customers will like, and since there are plenty of surprise hits, this is not an exact science, by any means.
Right now, consumers pay the same price for blockbusters as they do for flops. But many studios feel that their flops would be liked by a wider audience if they could only get people into the theater to watch them. Maybe lower ticket prices would lure them into the theater and start up good word-of-mouth, which is much more powerful than advertising or publicity, when it comes to creating a hit.
Researcher Barak Orbach says, “There is no solid economic justification to charge one price for all movies, seven days a week, throughout the year.” Today, the only exceptions to uniform pricing at most theaters are matinee rates.
Until the early 1970s, the industry used sophisticated price differentiation schemes based on timing. They charged more on weekends and holidays, and they charged more for what were known as ?A? movies, and less for “B” movies, which were often shot in black-and-white (when this film stock was less expensive).
“Recent developments in the motion-picture industry, primarily the improvements of home-theater equipment and the quick releases to cable television and DVDs, should force the industry to reconsider its pricing model,” says Orbach. During the past year a few theaters across the country have experimented with variable pricing, so you can look for more of it, coming to a theater near you.
Art credit: freeimages.co.uk
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