AMC Theaters raised some eyebrows when CEO Adam Aron announced on Thursday that America’s largest theater chain would introduce dynamic pricing to its locations by slightly bumping up ticket prices for the opening week of Warner Bros.’ “The Batman.”
But analysts and studio insiders say that AMC is continuing a trend that was already in motion with the release of Sony’s “Spider-Man: No Way Home” three months ago, and may be a key tool for theaters as they continue to dig out of the financial hole created by the COVID-19 pandemic in a market where only franchise tentpoles are driving ticket sales.
“Theaters have discounted matinee shows forever, have experimented with $5 Tuesdays and premium formats proved out that people will pay more to see the film the first two weeks,” Wedbush Securities analyst Michael Pachter said. “This is long overdue, and is a faster path to health than sticking with the old model of fixed pricing.”
Even with DC, Marvel and other big tentpoles like Universal’s “Jurassic World: Dominion” coming this year, the slow start to 2022 has shown that the dry spells in between big event films are getting longer and deeper. While some February films like Lionsgate’s “Dog” and Paramount’s “Scream” have enjoyed low-budget profitability, they haven’t brought substantial turnout for theaters. Annual domestic revenue for the year still remains 40% behind 2019’s pace and hasn’t reached $1 billion yet despite the $134 million opening weekend for “The Batman.”
Though major theater chain execs may chalk this up publicly to the ongoing impacts of COVID-19, the question of whether older moviegoers and mature films that appeal to them will ever return to theaters in a big way looms large over the industry, with the topic set for a panel at next month’s movie theater industry convention CinemaCon.
With that in mind, Aron’s announcement during his company’s earnings call last week that opening weekend tickets for “The Batman” would be a dollar or two higher isn’t too surprising. Box office sources noted over the weekend that similar dynamic pricing was tried during the opening weekend of “Spider-Man: No Way Home” by fellow national chains Regal and Cinemark.
If the past year’s trend of big opening weekends for blockbusters followed by long periods of much slower weekends continues, then theaters will have to look for every way they can to squeeze whatever extra money they can get out of the feast periods to get through the famine.
“This is just where the market is now. Beyond the superhero films, the films that have come out have been more miss than hit,” Exhibitor Relations analyst Jeff Bock said. “There’s less reliability than ever that smaller films between the big blockbuster releases can drive revenue as much as they used to, so the theaters need to make the most out of concession sales and whatever 40-to-50% of the gate they keep from films like ‘The Batman.’”
Younger audiences have already shown that price isn’t a problem for a film they want to see as soon as it comes out. This weekend, 30% of domestic ticket sales for “The Batman” came from Imax and other premium formats. If the film is big enough, hardcore fans will pay the extra money to see it on the biggest screen possible before social media spoils all the plot twists for them.
And while regional chains and independent theaters may not all have premium screens to lure the opening weekend crowd, Pachter expects them to soon adopt dynamic pricing as well. “With the exhibition window shrinking to as short as 45 days, the theater owners all have to maximize profit. People will pay more to see a film opening weekend, and I think everyone will emulate that,” he said.
What’s less clear is whether dynamic pricing will work the other way, with theaters expanding discount offerings beyond the traditional midweek periods for films in the late stages of their theatrical run or for films aimed toward older or family audiences who may be harder to lure back.
“Right now, inflation is raising prices for so many things, but we haven’t had a family film come out yet to show us whether that is affecting whether parents are willing to come out to theaters even with COVID infections dropping,” Bock said. “If ‘Sonic the Hedgehog 2’ doesn’t do as well as the first ‘Sonic’ next month, do we see dynamic pricing change ticket costs for that to entice families on a budget? There’s still a lot of experimenting that could happen.”