Movie Theaters to Adopt Variable Pricing

By Davis Freeberg

Last years scary decline in box offices sales and new competition by Netflix and VOD, has finally started to wake the sleeping theater industry. Despite increasing competitive threats, the movie theaters have been slow to innovate with their business model, but the New York Times is reporting that we may see finally begin to see a shift in business strategies with the adoption of variable theater pricing.

“You will pay more for a ticket on the weekends and less on weekdays. You’ll be able to buy a reserved seat in the center of the theater for a few extra dollars. One of these days, you may even have to pay more for a hit movie than for a bomb. The changes are under way, and they are long overdue.”

The theaters will be smart about how they implement these changes. Rather then increasing prices on Saturday night, they are more likely to decrease prices on the weekdays. I spent a lot of time working at a theater and one thing I can tell you is that you get slammed on the weekends and on the weekdays it’s dead.

Anything that can drive traffic to a theater during the weekdays will be a big benefit to them. Unfortunately, over time it will only be natural to see the theaters adopt price increases or changes to the policies. These will ultimately make a weekend out more expensive then it used to be.

“It is not entirely rational, but shoppers usually need to be tempted with a discount first. Companies can sneak in a surcharge later, as part of a broader price increase. Or they can offer obvious benefits to people willing to pay more. That is how the theaters are proceeding: slowly and quietly, so that people won’t notice the change until it’s too late.

The chain that probably has the best understanding of this is National Amusements. It has recently opened 10 upscale multiplexes, mostly in the East and Midwest, and has plans for more. In each, at least two theaters have wider seats and sell only reserved tickets. Every ticket costs about $2 to $3 more than in the other theaters.”

One of the biggest frustrations for many theater goers is having to wait in line for a sold out show. When we had the opening of Jurassic Park at our theater, we saw a huge stampede as soon as we opened the doors. Everybody wanted to get to the theater as quick as possible for the good seats. By introducing reserve seating, customers don’t need to wait in line and the theater will make more money.

While these are smart moves for the theater industry to be making, I can’t help but wonder if it’s going to a hard pill for consumers to swallow. They can bait us with weekday matinee’s right now and no one will complain, but between tickets, concessions and parking, going out to a theater isn’t exactly cheap already. If we start adding reservation fees and online booking costs to this, it’s only going to further discourage people from going out on the weekends. If the theaters aren’t able to draw those customers back to them on the weekdays, then this whole experiment could quickly backfire.