Wednesday 4 January 2012

Why Do All Movies Cost the Same?

There's a wonderful piece in the current issue of Atlantic Monthly, titled the above. It raises an excellent question, in my opinion. Almost every other product has at least some ratio between its manufacturing cost and its retail price, but for some reason this does not apply to movies. The price for a ticket to see a $4M movie is the same as the price to see a $500M movie.

1. Why is this?
2. Wouldn't there exist at least a slight possibility that low-budget movies, viewed at low-budget prices, might put more bums in the seats of mostly-empty cinemas?
3. Can you think of a more logical way for cinemas to compete against NetFlix et. al.?
4. Why not extend this model to include second-, third-, etc. week seats? Rather in the fashion of the Dutch auction: an initial price is posted, which descends each day, or in this case, week (for easier accounting).
5. This ought not to be egregious to the owners of said cinemas: the price of popcorn, soda pop, chocolate bars, etc. wouldn't vary, and allegedly that's where the real profit lives, so wouldn't it act as an incentive to put bums in seats?

I read the article, and the history doesn't add up to this insane policy of equal pricing. If it did, the auto industry should adopt it: all cars should cost the same! Actually, come to think of it, that might be an interesting model, so to speak.

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