February 26, 2021

Charging a Premium for Movies, at a Cost

“Yes, absolutely,” said Sarah Galvin. “We go twice a month, we’d go every single weekend.”

Ms. Galvin had shown up to see “Captain America: The First Avenger,” in 3-D, at the AMC Santa Monica 7 theater here on Wednesday.

She had a little one in tow, in superhero costume. Adult tickets were $15.75, children’s, $12.75. “It costs so much,” Ms. Galvin said.

After years of grumbling about steadily rising ticket prices, consumers achieved the nearly unthinkable earlier this year: they forced a momentary drop in the average cost of a movie ticket, to $7.86 in the first quarter, down from $8.01 in the fourth quarter of last year, partly by opting out of costly 3-D tickets for movies like “Mars Needs Moms,” and watching films in cheaper 2-D.

But prices started rising again this summer. In a conference call with investors on Thursday, executives of the Regal Entertainment Group, the nation’s largest theater chain, predicted the usual average price increase of 3 percent or more across the industry by year’s end.

If so, it will be the 17th consecutive annual increase in a business whose prices have outpaced the effect of general inflation by more than half since 1999. Theater attendance has fallen by about 10 percent in that period, or even more when measured as a share of the growing population.

Executives from Hollywood’s major studios are generally reluctant to discuss prices. But with domestic box office down 5.55 percent — to $6.42 billion from $6.80 billion — from last year at this time, according to Hollywood.com, even some of the best-compensated players are beginning to wonder whether exhibitors and studios are pushing their luck with consumers.

At the Comic-Con International fantasy convention in San Diego last month, Steven Spielberg and Peter Jackson, two of Hollywood’s most prominent directors, voiced a strong hope that ticket prices for 3-D films would ultimately fall into line with the lower charge for 2-D movies. Consumers are being charged an extra $5 to see a movie only to find out it is “as bad as the one you saw in 2-D,” Mr. Jackson said.

Their plea brought a sharp response last week from Jeffrey Katzenberg, the DreamWorks Animation chief executive, who has been an advocate of 3-D and the increased price that comes with it.

“They’re not getting complaints at the box office about pricing, it’s just not happening,” said Mr. Katzenberg, who spoke by telephone on Thursday. Mr. Katzenberg said his own company’s recent experience with “Kung Fu Panda 2,” which took in about 45 percent of $161 million in domestic ticket sales from the higher priced 3-D tickets, showed that a substantial number of consumers would still pay a premium for good films.

“Whatever Peter and Steven are talking to, maybe they’re following their instincts,” Mr. Katzenberg said of the Spielberg-Jackson pricing critique. “But there’s actually no factual data.”

Asked whether 3-D pricing had been too aggressive, David Passman, the chief executive of Carmike Cinemas, said by e-mail: “Perhaps in some markets, but generally, no.”

Historically, the big theater chains like Regal, AMC Entertainment, Cinemark Theatres and Carmike or their predecessors have been reluctant to raise ticket prices because their profit margins were higher on the sale of popcorn and other concessions than from tickets. Thus, they had an interest in raising the number of attendees, rather than maximizing film revenue that would be shared with studios. (The studios and exhibitors typically split the proceeds from each ticket sale, although the exhibitors alone set the price to consumers.) Patrick Corcoran, the director of media and research for the National Association of Theatre Owners, points out that a ticket purchased for the average price of $1.65 in 1971 would cost $9.20 today — higher than the actual industry average, if adjusted according to the general inflation rate.

Article source: http://feeds.nytimes.com/click.phdo?i=2f1b50586dede3fb41242b6e9cd7a385

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