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Why Dynamic Pricing for Movie Tickets Could Be a Tough Sell

People aren’t going to the movies as much this summer. Are they staying away because the films are duds, or is it because tickets are getting too expensive?

AMC is making a bet that cost, not quality, is behind the recent downturn. Last week, the country’s largest exhibitor announced it will be testing a new pricing initiative in which it will charge a premium for movies that are “of the highest appeal.” In turn, less in-demand films will be cheaper.

For now, AMC will limit the pricing model to 30 venues across four cities — Boston; Columbus, Ohio; Indianapolis; and San Diego. The surcharge will be between 50¢ and $1.50.

“Think of it being applied, let’s say, to one or two movie titles each month,” AMC chief Adam Aron explained on the company’s Aug. 8 earnings call. “This is basic economic theory that goes back to the first microeconomics course we all might have taken in college: Charge more in peak periods and charge more for high-demand products, but charge less in the off-peak.”

Aron’s bold gambit comes as box office receipts are struggling. Midway through 2019, the domestic market has slid more than 6% from the same time last year. The downturn has exhibitors reigniting conversations about variable pricing, where the cost fluctuates depending on the movie or time of day. The hope is that reduced fees encourage audiences to see more than just the next Marvel movie

Article source: https://variety.com/2019/biz/news/dynamic-ticket-pricing-for-movie-tickets-1203308067/

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