Movie theaters move beyond the ticket price

AMC movie theater in Monterey Park, California on May 22, 2012.

The president of the National Association of Theater Owners, John Fithian, just announced plans to test the idea of offering discounted movie tickets one day a week. He said he is working with one state in particular -- but wouldn't name it. Box office attendance is on the decline in this country, and yet, at the same time, box office revenue hit an all-time high in 2013.

The simple explanation is that fewer people are going to the movies, but they are paying more for their tickets. Mostly we're talking about 3-D movies, which are more expensive. But higher ticket prices aren't necessarily great news for theater owners. Theaters have to share box office revenue with studios, says business professor William Greene of the Stern School of Business at NYU.

So it's not always in their best interest to raise ticket prices. And for the most part they haven't. When adjusted for inflation, seeing a movie today isn't much more expensive than it was decades ago.

"Most of the revenue theater owners make is through concessions and ancillary revenues," says *Abraham Ravid. That ancillary revenue includes money that theaters are now charging studios to show trailers for upcoming films, like Divergent.

 

Because tickets are already relatively cheap, a discount day probably would not raise attendance dramatically, but it could be a good marketing strategy. Ravid says: "Nevertheless, you would expect the decline in theater attendance will continue as more ways of delivering movies become available."


*CORRECTION: An earlier version of this story misspelled Abraham Ravid's name. The text has been corrected.

About the author

David Weinberg is a general assignment reporter at Marketplace.

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