The people in the business of profiting from movies don’t seem particularly troubled that theater attendance has dipped by 10% since 1999. And why aren’t they worried? Because during this same time period, ticket prices have risen steadily, easily outpacing inflation.
From the pure business perspective, it’s acceptable—preferable, in some ways—to sell less of your product, so long as the overall profits are higher than if you’d been selling more units at cheaper prices. The auto industry has been coming around to the idea that it makes economic sense to sell small economy cars at relatively cheaper prices. But over the last decade or so, the movie business has fallen in love with charging higher and higher ticket prices, most obviously by asking a premium of $5 or so for mediocre 3-D movie after mediocre 3-D movie.
As consumers grow wise to the game and increasingly avoid movies with pricier 3-D tickets, the knee-jerk approach—film everything in 3-D, jack up ticket prices whenever possible—may be making less business sense, reports the New York Times.
In 1999, the average movie ticket sold for slightly over $5. Since then, the number of people buying tickets has dropped 10%. Not so coincidently, it was during this time period that ticket prices rose steadily and swiftly. The average cost of a movie ticket in 2010 was $7.89, and even after prices dipped slightly in early 2011, by year’s end the average is expected, like clockwork, to outpace inflation and be up another 3% or more. People who live in big cities, of course, pay far more than the average, which is weighed down by much cheaper prices charged in small towns and second-run theaters.
A few notables (Steven Spielberg, Peter Jackson) have gone public with wishes that 3-D movies will soon cost the same as 2-D films, but overall, theaters and movie studios are plunging ahead with plans to produce more and more 3-D films and charge a premium for viewing them.
What about the actual movie goers? Do they want 3-D films, so much so that they’ll pay an extra $5 for the show? The answer depends largely on what’s on screen. In the case of the latest Transformers movie, the answer seems to be yes. But when it comes to family films like this weekend’s surprising #1 film (“The Smurfs,” which tied “Cowboys & Aliens”), most moviegoers seem to be lukewarm about, or even anti-3-D, if it means more expensive tickets, not to mention having to wear the goofy glasses. The Los Angeles Times reports that most people elected to skip the 3-D version of “The Smurfs”:
The film didn’t sell an overwhelming number of 3-D tickets, with about 45% of the crowd opting to see the film in the pricier format.
Regardless, the thinking among the movie studios is that if they can convince large audiences to pay good money to watch something along the lines of “The Smurfs,” then the audience can be convinced into doing almost anything.