Warning: Soaring Movie Ticket Prices Have Reached the Breaking Point

Attendance so far is barely down, but exhibition worry-warts warn about what could happen in the fall

The price is right … but probably not for much longer.

At least so far, theater owners have gotten away with the biggest year-to-year increases in ticket prices ever — with average admission costs spiraling upward more than 40 cents in 2010, or over 5 percent. Meanwhile, attendance has stayed largely flat, dropping less than 1 percent, according to the National Association of Theater Owners.

But with domestic theatrical revenue on pace to shatter 2009’s record $10.6 billion haul, it's becoming increasingly evident that exhibitors are close to maxing out consumer patience.

At least to some degree, a price revolt had something to do with the surprise $10-million debut under-performance last weekend of Weinstein/Dimension's "Piranha 3D," which had scored impressive reviews (81 percent Rotten Tomatoes score) and viral buzz going in.

Certainly, some of the movie's youthful target audience chose to see Fox's cheaper 2D "Vampires Suck" rather than shell out $16.50 for a ticket to see a genre film in a format that has shown to be more and more audience-resistant in the year since "Avatar."

“There’s certainly not much room for the price increasing further,” said an exhibition-chain executive who, like everyone else TheWrap spoke to for this story, was unwilling to lend his name to a discussion on the sensitive topic of movie prices. “The big question is going to be what happens in October and November. Once we get away from the big tentpole movies, what’s going to happen with (3D) movies like ‘Jackass 3D’ and ‘Megamind’?

But with several chains rolling back matinee showtimes from the 4 o'clock hour to no later than 1 p.m. this summer, it's not just about 3D up-charges. Between ticket prices and the price of popcorn and a Diet Coke, moviegoing overall has become an expensive proposition.

While not bombs by any means, neither "Knight and Day" nor "Eat Pray Love" matched the box office power of their stars, and despite good reviews and a Rotten Tomato score of 77, "Nanny McPhee Returns" opened to only $8.4 million — the original "Nanny" in 2006 opened to $14.5 million … in January.

Then there's Universal's "Scott Pilgrim vs. the World" came in two weeks ago with equally strong pre-release credentials — it remains the No. 1 trending topic on Twitter — but it, too, was rejected at the box office. Perhaps it wasn't just an audience weary of Michael Cera that caused "Scott Pigrim's" young targets to steer clear. 

Curiously, with summer season up over 3 percent according to Hollywood.com, studio distribution executives have adopted a rather blasé what-me-worry? mindset.

“I don’t think there’s been any pushback,” one major-studio distribution president told TheWrap. “Look at how the box office has been flourishing. Admissions aren’t up the way we’d like them to be, but the market has accepted the higher ticket prices. You can’t expect to pay $5 to go to the movies anymore.”

Concurred a rival distribution chief: “These ticket-price stories are things you read in the press, but I don’t believe any of it. Ask anyone if they should pay $20 for a movie ticket, and of course they’re going to say, ‘no.’ There are always a few who might rebel, but at the end of the day, they’re not your core audience.”

But the bad news for the movie business could be in the mail.

With the consecutive weak openings in the last month of three 3D genre movies — “Piranha 3D,” “Step Up 3D” and “Cats and Dogs: The Revenge of Kitty Galore” — there’s anecdotal evidence to suggest that moviegoers have found their financial limits in terms of paying premium prices for marginal fare.

Notable was an AMC statement in late May, which called the $20 list price for an IMAX-3D “Shrek Forever After” presentation in Manhattan “incorrect.” Just two months earlier, the chain had raised its premium 3D admissions cost from $16.50 to $19.50.

Passing the $20 threshold had clearly set off the consumer alarm.

“AMC got very aggressive, and I honestly think they went overboard,” said the exhibition-chain CEO. “It hurt the business. People aren’t that convinced the economy is rebounding. And they’re already becoming more selective about the movies they choose. If they go one film less frequently, it’s a loss, not a gain."

According to this CEO, the bigger chains began to realize that they had maybe gone too far in May when Memorial Day ticket revenue declined to its lowest level since 2001. With only 24.2 million movie tickets sold in the U.S. and Canada over the holiday, the industry also registered its worst theatrical attendance since 1993.

“We had a year that was going really well, with films like ‘Avatar’ and ‘Alice in Wonderland,’" added another exhibition executive. "And then in around May, you started seeing lots of articles in the newspaper about price increases. I think people voted on how much they like that with their pocket books.”