In a country that’s been “all about the Benjamins” for some time, few have noticed another financial barrier about to be breached: the $20 movie ticket.
With the release in May of “Shrek Forever After,” some AMC theaters in New York City initially priced tickets at $20. After an uproar from audiences and the press, AMC retreated, citing an unfortunate typo.
Sounds more like a trial balloon to me.
Although we sidestepped the $20 threshold for the moment, it's only a matter of time before theaters push past that price point.
I’ve always thought of movies as cheap entertainment and the perfect date night when you couldn’t figure out something else to do. Even as movies got more expensive, they were still reasonably priced compared to other entertainment options.
Once I started working in the industry, I found out just how expensive movies are to create. Sooner or later those costs had to be passed on to the consumer.
Although box office revenues have been up during the economic downturn, DVD sales are flat and movie production costs continue to rise.
The one bright spot in a gloomy financial outlook was the promise of new technologies. After "The Dark Knight," the industry realized just how much IMAX ticket prices could bolster profits. Then after James Cameron's "Avatar" and Tim Burton's "Alice in Wonderland," the same proved true, along with the enticement of 3D. Movies became events once again and exhibitors began whetting their appetites on a new pricing model.
It remains to be seen whether such price hikes will become truly widespread, and whether they will have any impact on a film’s attendance. With tickets at $20 a pop, taking your spouse and kids to a family film (plus buying popcorn and candy) can easily run you upwards of $100. That’s a helluva lot for a movie outing. "Shrek Forever After" was a decent film and probably a good choice to test the price elasticity of movie tickets, but for $100, you could easily buy enough "Shrek" DVDs to last your kids for a week.
A word of caution to exhibitors: The higher the price, the pickier your customer will become. People will fork over $20 only for certain event-type films. If you're showing a big-budget summer film loaded with special effects and big-name stars, a higher ticket price is an easy sell. But try to charge $20 for a run-of-the-mill comedy or an independent film and you’ll have a revolt on your hands. And don't even get me started on the price of popcorn.
Today, people have tons of entertainment choices. DVDs can be sent straight to your home in the mail, you can order a movie straight off your television, or you can download one onto your computer or iPad. As we enter the heart of the summer movie season, theater owners would be wise to keep this in mind before crossing the psychological threshold of the $20 ticket.