Sunday, June 24, 2012


The movies are overpriced.

There, I said it.

Going to a cinema is one of the few experiences where you get a variable quality product for the same highest price. The costs of production don't factor into the final price at all.

Imagine you went to a restaurant and had to pay a flat fee of $75. For that one price you could either choose the gourmet hand-fed lobster and truffle rissoto...or McDonalds chicken nuggets.

Which would you choose? The risotto, of course, to get your money's worth. 

That is a normal economic decision of a normal human being.

And that is exactly what happens with cinema tickets. The $200 million blockbuster, with all the bells and whistles, costs the same to see as a small independent film that costs $500,000 to make.  

It is absolutely bizzare, and the end result is empty cinemas and underperforming small independent films. That is what happens when you take away real choice from a consumer group. People choose the most 'bang for their buck' option.

The other result is that many independent producers have been quite vocal in saying they will release their film in cinemas, but only for a short time as a marketing tool. The hope, the producers say, is to then actually make a profit on the other platforms like DVD and Video on Demand (VOD). The trade-off is that the film will actually LOSE money during its run in the cinema.

You may be inclined to ask, who is to blame for this situation?

It's not a simple answer, everyone wants their cut after all, but the most fault lies with the exhibitors. The people who run the cinemas.

Exhibitors are like the spoiled only child we all knew in primary school. They always wanted it their way, even when they contradicted themselves.

Like when the head of the National Association of Theatre Owners, in the USA, announces that releasing a film in cinemas should not be thought of as 'just a marketing tool'. The implications from this and other announcements by the Association is that the cinema experience is at least equal to the other platforms, like VOD and DVD.  

The hilarious irony of such an announcement is that exhibitors have shown a penchant for wanting to be held in higher standing than the other viewing platforms.

As recently as the Brett Ratner film 'Tower Heist', which the producers wanted to release onto VOD in as little as THREE WEEKS after it started in cinemas, exhibitors have threatened the boycott of a film.

It it was released on VOD in three weeks, the exhibitors said, we will not show it in cinemas at all.

In the end, Universal Pictures had to back down to the exhibitor's demands. 

So, what does this little stoush mean?

It means that exhibitors believe they are at least the equal of the other movie viewing platforms...but...they want to be first!! Don't hold them as equal to the others!


I'll cut through the rhetoric for you. The exhibitors want things to stay the same, where they have a captive audience, can charge what they want and raise prices with impunity. 

But the world has changed. 

The internet exists. Piracy exists.

The exhibitors want to pretend that the world is still flat.

How is the 'flat earth' map business going these days? 

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