$35 for a Movie Ticket?

DebSF -- April 7th, 2008

Locally, the movie market is mostly served by #1 US theater chain Regal Entertainment (over 6,300 screens and 531 sites.  Second is AMC Entertainment, counting 5,586 screens, with Cinemark USA coming in third, with 3598). Right now, the biggest audience for films is teenagers, too young for bars, but still needing and wanting to get out of the house. So, that’s the demographic at which the largest portion of studio movies are aimed. But econ blogs have been buzzing over the last few days about this report from Variety about the long-awaited reaction of movie theater owners to increase competition from DVD’s and rental markets: go for the grownups:

Village Roadshow Ltd., Act III, Lambert Entertainment and the Retirement Systems of Alabama pension fund have partnered to bring the luxury cinema circuit Village Roadshow Gold Class Cinemas to the U.S.

The partners will spend $200 million to build 50 theaters nationwide over the next five years, with the first two venues set to open in South Barrington, a suburb of Chicago, and the Seattle suburb of Redmond in October. Others are planned for Fairview, Texas, near Dallas-Fort Worth, and Scottsdale, Ariz.

Each complex will sport theaters featuring 40 reclining armchair seats with footrests, digital projection and the capability to screen 2-D and 3-D movies, as well as a lounge and bar serving cocktails and appetizers, a concierge service and valet parking.

But the circuit will especially push its culinary offerings — made-to-order meals like sushi and other theater-friendly foods from on-site chefs (a service button at each seat calls a waiter). Moviegoers will have to pay extra for any food they order, however.

Ready to pony up $35 for a movie ticket— the cost of a ticket at one of these high end theaters — plus food, valet parking, etc. to see the Other Boleyn Girl or, even, say, No Country for Old Men?

As of 2007, there were more than 38,000 indoor movie screens in the US. Dan Ackman, writing for Forbes a few years ago concluded that, on average, movie theaters are working at 12% of capacity or less. That’s no surprise given that 80% of the revenue comes in the three weekend days, meaning four days a week most theaters are nearly empty, hardly earning enough to cover fixed costs.

You might think that this large number of theatrical screens across the country would allow for a wide variety of films to be available at one time.

You’d be wrong.

The opposite has happened. At this point, all the chains (Regal is a prime example) have the same business model – show the biggest hits as soon as they are available. If they are megahits, show them on two or more screens in the same cineplex, with staggered starting hours. The best moneymakers bring in a quick-decision making crowd who wants to be in the theatre as soon possible to see the hottest films, generally films that are already pre-sold thanks to: 1) big stars, 2) remakes/sequels and/or 3) enormous marketing campaigns. Those are the ones that the theater chains want; it’s why the same set of 15 to 20 movies plays in every theater at the same time.

So maybe they just need better movies to get the grownups back. I don’t know that I’d pay $35 for a recliner and sushi to see Dark Knight at the Regal Stadium 14 behind the mall. On the other hand, throw in one of these and, damn, you’ve got yourself a deal.

8 Responses to “$35 for a Movie Ticket?”

  1. Justin says:

    More and more and wish every time I go to the theater that I had stayed home in front of my 42″ lcd, two couches, full kitchen and oven and private bathroom.

    I still go for the big movies, but the picture quality, sound volume and mindless air conditioning make it really hard. Even with the $14 Costco movie tickets.

    Netflix gets 95% of our movie business.

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  2. Emmy says:

    There’s no way I’d pay $35 to see a movie, I don’t care what they throw in! I know I’m a cheap person, but I almost hurl every time I shell out a small fortune to take my kids to see something. My ex and his wife have been on a kick lately where we all go to the movies and even with him paying for one of the children, its more money than I spend on most entertainment. The movies have all been really good, but I take issue with paying almost the same price for a ticket for a person who is barely heavy enough to hold the seat down! I guess they’re taking up a seat though, so maybe the cost should be the same as an adult. Either way, I’m still shocked that theaters are still doing as well as they are with all of the other options out there.

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  3. finnegan says:

    Having worked both ends of the film industry (as filmmaker, and as cashier/projectionist at Regal 14) I know the profit margins are sometimes laughable. Ever wonder why popcorn is $7? Because Regal only nets a few cents on every $9 ticket sold. Most of that goes back to the studio that distributes it, which makes me wonder if the old trust bust was worth it.

    The number one thing I miss about Austin is the Alamo Drafthouse. The only $30+ tickets they sold were for their rolling roadshows — well worth the price:

    Every summer, we take off from Austin, Texas for a whirlwind tour of the United States, hosting 35mm screenings of famous movies in famous places. We’ve been to the Field of Dreams in Iowa with Kevin Costner live in person, Devil’s Tower in Wyoming for a screening of Close Encounters and Alcatraz Island for a screening of Escape From Alcatraz.

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  4. Josh says:

    I’d like to see something like this in Harrisonburg:

    Cinema Cafe, Virginia Beach
    http://www.cinema-cafe.com/

    Cheap, second-run movies w/ food & drink service.

    And here’s some more details on the fancy theatre mentioned above:

    http://villagecinemas.com.au/goldclass/

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  5. TM says:

    I second the need for a cheap second run theatre in Harrisonburg. I’d love to see one downtown. That or an “art house” cinema – kind of like the Visulite or, to an extent, The Dixie in Staunton. I’ve never been to those, though.
    I’d love to see more at Court Square, but the start times never gel with my schedule.
    I’ll be honest though, the audiences are what keeps me away from the movie theatres most of the time. It’s rare I want to put myself through an opening weekend showing.

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  6. Lowell F says:

    Court Square Theater can be developed into what some of you hope to see. But there’s one small catch. In order to be successful, people have to go there. Much like buy local with food. CST makes much entertainment possible in the area which simply wouldn’t be available here otherwise. But again, people must participate.

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  7. Karl Magenhofer says:

    Harrisonburg had a second run movie theater several years ago at the Valley Mall. It couldn’t turn a profit and closed.

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  8. Justin C says:

    I watched a similar problem when I was growing up in Roanoke. We had one of those theaters that you ordered dinner/lunch at and could eat a meal while watching the movie. Interesting idea, but it was so expensive and the food so bad it never worked. Many people tried to revive it, but it always died in just a few years each time.

    A similar problem has been happening in the music industry where users would gladly download free or cheap music with bad quality because it’s good enough for them. Movies on a huge screen with surround sound is still nice, but it’s consistently losing ground.

    This new luxury service just seems like another desperate attempt to open new mini-markets in a market that is largely disappearing. It is now becoming possible to download an HD quality movie and watch it on an HD tv at home. This wasn’t even remotely possible 10 years ago. Theaters will continue to slowly die nationwide unless they can begin to offer something that American’s CAN’T get at home.

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