For those of you new to this (very) occasional writing space, I’m in the process of scoping out the potential to open my own cinema. For those very few of you who have felt a hole in your life in the shape of these film-related missives, I’m hoping that the balance falls in the favour of ‘potential real cinema’ is better than ‘real series of blog posts about cinemas’, but why trade imaginary delights for present ones? This is here now and hopefully I will have time to write more, even if just to exorcise wonderings as I’m going about plotting my own space.
I’ve been thinking a lot about cinema pricing, which has never been more relevant. While exhibition revenue has been steadily climbing in the last twenty years (putting aside the pandemic years), much of this is covered by increased pricing. According to everyone’s favourite ‘is this real?’ statistics site Statista, cinema tickets have increased by 46% above inflation in the last twenty years. In a cost of living crisis is this sustainable?
The real question is: do audiences care? Is there a significant number of people who the cinema doesn’t reach because it’s too pricey? And what can we do about it while also keeping our shirts if so?
As a value proposition, cinema is in the process of change. With chains investing heavily in their estates in the last five years, they’ve also reflected this in ticket prices. While discount wars are often the case in regions with multiple multiplexes, in general, the story is pricing on the up, commensurate with experience. Is there space for a different offer: a non-luxury experience at a reasonable price?
Looking at a market-based and competitor-based assessment of value (i.e. how much can people pay vs how much do other people charge), there’s a huge variation out there. I’ve been with cinemas as they handwring about adding an extra pound to their prices, and usually their current audiences’ response (when expressed reasonably and discussed directly) is usually very reasonable. That’s not to say that there’s not a world of potential audiences that aren’t being reached by having an exclusionary pricing structure, but I’d argue that the initial price is where audiences are won and lost. So, I’m thinking deeply about getting that initial price offer right. How can you make sure that the people who can pay subsidise those who struggle to make it out of the house, all paying into a pot that lets you sustain yourself?
Of course, it’s also impossible to say what ‘the price’ is to go to the cinema. Once you start trying to be forensic about the different pricing offers, especially at multiplexes, there are blooming multitudes. Peak pricing, concessions, different pricing levels for premium seats within the screen, memberships… likely that there must be sixty or more variants on the average multiplex price card. Does this amount to a pricing strategy? Or is this more of a ‘spackle on’ approach from a baseline starting point? What does it do to forecasting to have such a range of prices? Anyone in multiplex world, I’d love to know!
Even with these dizzying different levels of pricing, every so often someone will try to apply dynamic pricing models to cinema. It makes sense in a high capacity business where getting more bums on seats is paramount for concessions sales, that a method for filling those hundreds of empty seats would be helpful. But I have my doubts. Compared to aviation – where dynamic pricing is king – there is both too much freedom for dynamic pricing to work. Wide release films are playing in different locations, rather than having a limited pool of flights to start with. If you want to go and see a film, the major motivator is not price. It starts usually with product (what do I want to see?) and then place (where can I see it?).
Except when the choices are entirely different universes of pricing (hello to Odeon Luxe & Dine Angel’s £27.50 for Saturday night Guardians of the Galaxy 3 and Peckhamplex still at £4.99 for the film, if not the same experience), people will generally simply pay or not. There’s a rough bracket for ‘a night out’ and if the cinema fits within that, you’ll go. In the aviation industry, the balance between ‘I’ve got to go now for a business trip’ and ‘I could go any point in the summer months on my holidays’ is worth creating different price points for, because the difference between these two points is tens or hundreds of pounds, not incremental difference. And in my experience, audiences are more likely to be frustrated or confused by feeling they aren’t getting the best deal rather than seek out the benefits of different pricing offers.
Here’s a few pricing approaches that I’m thinking about lately that might help combat the exclusionary aspects of pricing. If you have experience of any of these or want to talk about running a trial (I’d happily take on some pro bono work to test these out and write a report), let me know!
Is the future Unlimited? A major indie site is shortly due to launch an all-you-can-eat approach, replacing their current membership scheme. As with all things, the future lies in the past: would indie cinemas do better if people returned to going to ‘the movies’ rather than a trip to ‘a movie’? Multiplexes instinctively know that this is the audience for their limitless card – open-minded folks who will give most things a punt rather than pick out the three or four films a year that they are
bludgeoned into seeing by mass marketingkeen to seek out – because they are the audience they offer free talker screenings to. If the cinema has sufficient curatorial chops and audience trust, could this usher in a new age of regular, casual attendance? In a world of hundreds of independent releases barely registering for audience awareness, this route at least has the benefit of derisking attendance. But is there a concern that you’re cannibalising revenue from your own best customers, who are already attending frequently enough to make it work? Cinema is not like the gym; the best customer is not someone who pays monthly but never comes. Are there enough people out there who are in the medium-high frequency to make it work?If unlimited isn’t right, how about bulk buy ticket discounts? Sold at big discount, but with a ‘use it or lose it’ policy in place, this could push people to attend more frequently and take risks. Perhaps it only applies to certain types of programming (e.g. indie films). Any loss of revenue is likely to be made up with from unclaimed voucher value (a huge market which you don’t have to split with distributors…).
Is it time we rethought concessions? While I know there are older people who struggle, the statistics don’t lie: people over sixty have nine times the amount of wealth than people in their early thirties. Less likely to own homes, struggling more with job uncertainty, on the other side of a pandemic and facing another recession… Older audiences are dependable, but could we also remove them from concessions and enhance the amount of discount offered to young people? A lot of indies now have a younger person’s ticket, but given the consistency of iniquities in our society, it should be a standard at this point. Building up frequent cinema going as a habit is also a form of futureproofing for your cinema.
While we’re on social justice and pricing, I’ve yet to see any cinema adopt a suspended ticket model that I sometimes see at gigs. Basically, when you buy a ticket, you have an option to either buy outright or contribute a portion of a ticket sales to someone else who couldn’t afford to attend otherwise. People in need can then ask if there are any suspended tickets when they come to box office. Knowing what I do about cinema ticketing systems, this isn’t the easiest thing to implement (not impossible), but it is a free way of leveling the playing field, while also feeding into the ecosystem. Or to be honest, what about another DIY gig staple that indie cinemas could adopt: ‘no one turned away due to lack of funds’. For a distributor, what’s really the difference between one of the dozens of empty seats and a minority seeing the film for free?
What about the possibility of returning your ticket if you can’t attend, without consequence? Either the credit is added to your account simply or returned to you. Given most screens are lacking in occupancy, removing the pain threshold of booking is a good idea. Only in the smallest screens (where margins are razor thin) does it matter for the screen to not sell out, and people reserved are more likely to get over the line and attend.
My eyes were opened a few years back to the idea of ‘last chance alerts’ within Movio. If a logged in user had browsed a film or entered into the ticketing process but not completed, they were targeted with a ‘last chance to see’ email midweek when holdovers were complete. This is a good idea (though it relies on a very specific set of customer behaviours so scale is key), but, having decried dynamic pricing, what about adopting a similar model for rush ticketing? Inevitably, especially for events, there are screenings that are undersold. What if (carefully segmenting so users who paid full price don’t receive and feel shortchanged), a special pricing offer was sent out to previously engaged segments? Popular film festivals have been following a similar model for years, and BFI’s young people’s rush ticketing was a success, but making it digital rather than relying on young people’s access to time and limited access to money. This is a good read on harnessing the latent demand.
Okay, that’s it for pricing. I’m open if there’s a topic you’d like me to write some thoughts about in the cinema space. Or if you want to have a catch up about my plans for a cinema, I’m looking for allies!