An essay about the future of cinema as I see it.
Tyler Cowen of Marginal Revolution posed an interesting question recently, Why are all movies the same price?
Well, not the same price in all cases. Before 6 p.m. is cheaper, there are numerous dollar theaters, and not all films allow for discount coupons. Nonetheless a multiplex will charge the same ($9.50 in my case) for the number one movie and for a flop. Nor is the price more expensive for Saturday night, or during the summer when demand is higher. Can any economic model predict these results?
This was of course of interest to me and is a subject that I’ve been considering recently so I posted the following comment there.
I’m a cinema manager in the UK and there are variations in prices at our cinema throughout the week depending upon the day and time of a screening.
We haven’t tried varying the price for different movies but film distributors are very resistant to any change and wield a lot of power over us. There are actually very few distributors so if one of them decided to not supply us with their movies we would suffer a lot more than they would.
It’s true that most of our profits come from concessions we now seem to be in the popcorn and soft drink business with the movie being an extra on top.
I despair of this sometimes, I think the way things will go is that the movie will be free for purchasers of popcorn. The movie companies will use the theatre release of a movie as a method of marketing for DVD sales and the cinemas will use the movie as a lure for popcorn sales.
Which ties in neatly with the following article from the Washington Post.
An Ever-Shorter Leap From Theater to DVD
“I’ll wait for the DVD.”
It’s the discriminating moviegoer’s mantra, one repeated every time we can’t muster the motivation to catch the latest Hollywood offering in theaters. But in many cases that waiting game has changed, as movies make the leap from silver screen to small screen faster than ever before.
These days the turnaround time from cineplex to DVD is 4 1/2 months, on average, with movies becoming available for rental and sale on the same day… It’s no secret that movie studios, which generally earn more money from home video than box office returns, are eager to capitalize on DVD dollars as soon as they can.
The world has changed around the cinema industry and I don’t believe it hasn’t moved enough to accommodate the changes. There has been a gradual decrease in admissions over the decades with brief upsurges such as with the introduction of multiplexes and the general upgrading of older cinemas with modern facilities such as Dolby Digital sound, but the general trend has been downwards.
The response to falling numbers has been to increase the prices so that they far outstrip the rise in inflation. In real terms the price of cinema admission is many times what it was, to the extent that parents are not bringing their children to the cinema nearly as much as they used to.
The prevailing trend in the business of movie companies is that they make most of their income from the DVD release of movies instead of the theatrical release. The millions of dollars that is put into marketing a movie for it’s theatrical release is equally marketing the DVD release if the gap between the two is only a few months.
We should embrace this trend and slash the price of cinema tickets as neither the movie distributors nor the cinema are making much money from the box office receipts. The theatrical release would become yet another marketing tool for the sale of DVDs for the movie companies and a way of attracting customers into the building for popcorn sales and the like for the cinemas.
I would even go so far as to have no charge at all for children under 10 years of age as this would encourage parents to bring their children to the cinema more often as it would no longer cost them ‘an arm and a leg’. I think if children get into the habit of going to the cinema at a young age they will be more likely to continue to do it as adults.
I think we need a diversification in the cinema model as well as in the movies. Cinemagoers range from those who just want to waste a couple of hours and pop in as they pass by to those who make it a part of a night out, the classic ‘dinner and a movie’ date. To accommodate this we need a range from no-frills establishments to a more upmarket movie theatre with a bar and restaurant.
A major change is coming to cinemas in any case with the major investments into digital projection.
In the UK The Film Council, and in the US maverick billionaire Mark Cuban.
What effect it will have remains to be seen, I hope that it will lead to a revolution in the cinema business model but at the very least it will cut costs.
The present system requires a length of film of around about 2 miles (or 3.5km) for the average movie as movie projectors run at a speed of 90 feet per minute. That is a hell of a lot of film and so it costs thousands of dollars to produce each one, plus if you consider that most big Hollywood movies typically open in thousands of screens in the US it can cost millions of dollars just to get your movie physically to each cinema and in front of the audience.
This is the reason why the UK release date of American movies is months later because we get the movie prints that were used in the US after it has finished screening there, it’s cheaper to ship used prints here than it is to produce new copies.
With digital projectors the cost of distribution comes way down as each copy can then be made far more cheaply and delivered on a DVD-like disc or via the internet. Whilst it merely cuts costs for the big players in the industry the move towards digital projection also opens up the market for the smaller independent filmmakers who can then supply their movie to all the cinemas that wish to take it.
Currently if there are only a small number of prints of a certain movie cinemas will have to wait until a print becomes available and then may end up not taking the movie at all if the delay is too long. Thus the filmmaker has lost potential income just because the cost of making enough prints to satisfy the demand is prohibitive. There is no profit in spending a few thousand pounds to get a movie to a particular cinema if there is only enough audience to make a thousand pounds profit there, but if the cost is less than £100 it becomes a viable option.
With the per movie costs coming down to a negligible level cinemas could then adopt far more flexible business models and take advantage of the long tail and show movies for as long as there is an audience for it instead of packing people in for the latest blockbuster before dumping it and moving onto the next.
New multiplex cinemas could be built with many smaller screens in addition to the few large ones in order to show the less mainstrean movies. We could even let the demand affect the supply directly and allow customers to make bookings over the internet many weeks or months in advance and actually show the movies that people wish to see by scheduling the most popular in the larger screens with the most number of performances. Customers would make an initial booking for a movie and then finalise it closer to the date with a specific performance they would like when a schedule has been created.
