Would you see more movies in the movie theater if it cost nothing?
You might not know who Chris Anderson is. Some people know him as the editor-in-chief of Wired Magazine. Others know him as some sort of tech futurist, having coined the term The Long Tail in an acclaimed Wired article, which he expanded upon in the 2006 book The Long Tail: Why the Future of Business Is Selling Less of More. His newest book, due out in early 2009, is called Free. It examines the rise of pricing models which give products and services to customers for free.
So you’re probably asking yourself, “What does this have to do with movies?” I say, everything. More to the point in a second. Let me first give you a brief explanation of why Anderson believes that “$0.00 is the future of business”:
“The rise of “freeconomics” is being driven by the underlying technologies that power the Web. Just as Moore’s law dictates that a unit of processing power halves in price every 18 months, the price of bandwidth and storage is dropping even faster. Which is to say, the trend lines that determine the cost of doing business online all point the same way: to zero.”
Remember when you had to pay for digital services? Remember when you had to pay to read the New York Times? Remember when you had to pay for e-mail? Now Google and Yahoo have options giving you almost unlimited storage… for free. I watched the whole Season 3 of LOST for free on ABC.com. And I’m not talking about on a little youtube player, we watched the whole season in High Definition, connected to a 61 inch television, and you could barely see a quality difference compared to our Comcast HD cable channels. And guess what, they offer all four seasons of LOST in HD for free. Free is taking over the world.
Now to the future of movies possibly being free. In a preview article, Chris brings up the following scenario:
“Low-cost digital distribution will make the summer blockbuster free. Theaters will make their money from concessions - and by selling the premium moviegoing experience at a high price.”
Now is this really a possibility?
Let’s say I owned a movie theater that has 5 shows a day on one screen, 7 days a week. The theater has 300 seats, and only sells out 7 of the 35 screenings. I sell movie tickets for $10, and give roughly half to the movie studio (during the film’s opening week, the studio might take 70 to 80 percent of gross box office sales, but by the fifth or sixth week, the percentage the studio takes usually shrinks to about 35 percent. The end figure is usually around 50% split), the rest I make in concessions. Popcorn reportedly makes 90 cents on the dollar, a $4 Soda costs around 10 cents. Concessions is almost 90% profit. A movie theater usually makes $2.85 per moviegoer on concessions. For the sake of arguments, lets say the gross profit is on average $1.50 per person. With the numbers given above, I should have roughly 3000 paying ticket holders per week in today’s way of doing business. I can make probably $1 per head through in theater advertising, and Movie studios pay theaters to show trailers based on how many people saw them (but I don’t have those figures)
Now if I start giving away tickets for free, could that help me sell out 15 more screenings? Probably… Let’s say that I could sell 9000 free tickets. I’m guessing that since the ticket price is free, moviegoers would probably be twice as likely to spend money on concessions. Would my movie studio be able to make money based on free entertainment, run by digital distribution?
Maybe.
But looks what happen when you merge the free model with a pay premium service. By that I mean that the middle 5 rows are $20 a ticket and include comfortable leather seats, unlimited popcorn and soda. In my little imaginary movie theater, those five rows would equate to 80 seats of the 300. Now look at the numbers if you add in the premium option:
Now I understand that I might be missing 100 different other factors involved like leasing the space, paying more employees to handle more people, reserved seating, and more concession traffic. Would 2000 people a week pay for the premium option? maybe not… My point is not to show you a set of numbers and say “This is how it WOULD BE”. Please instead take my work as a broad estimation of what instead COULD BE.
The fact of the matter is, Chris Anderson is onto something here, and it may change not only the way you watch movies, but the rest of your life as well. But for the sake of this little movie blog with its imaginary little movie theater, lets bring the discussion back to the future of the moviegoing experience. As we become more engulfed in the on demand world where you can watch anything, anytime, anywhere, movie theater attendance will no likely fall. But what if they were free?
Discuss: What do you think of the idea of Free movie tickets? Could this be the answer?
March 5th, 2008 at 4:02 pm
Hm, that really does make sense. Though I think big cities wouldn’t be able to handle the crowds but out in the suburbs this could really work. Or even with the mom and pop theaters. This idea sounds promising.
March 5th, 2008 at 4:06 pm
As a prospective theater owner, I am very interested in this idea. I think this has the capability of not only keeping the theater experience alive, but also helping independent theater owners thrive in addition to the big chains.
March 5th, 2008 at 4:09 pm
This idea has been tried before, actually many times, in fact in retail they call it a “loss leader”. Recently the Cable industry used this FREE idea to get consumers to use and adopt VOD and DVR services, hoping that by giving the consumer those choices for FREE they would opt in to premium offerings. It worked to varying degrees.
But usually this tactic is used to introduce a NEW service and movies are anything but new. With the rise of on-demand services it is difficult to imagine this actually happening. And that has nothing to do with it being a good or a bad idea, but more with resistance from the Studios, Owners, distributors, etc. An entrenched system is the hardest to change. And that change may be too late anyhow. I know of local theaters that already offer premium seating options and they’re having a hard time filling those on a regular basis.
March 5th, 2008 at 4:19 pm
So even MORE ruder, louder, crazier people surrounding you!
Where do I sign up!?!
March 5th, 2008 at 4:22 pm
giantman, we’re talking about something totally different than a loss leader. Please read Chris Anderson’s article, which is linked in this blog post.
Big corporate entities will always be unwilling to try something new. I’m not saying this is what is going to happen, but the moment someone can prove it will be more profitable for both the movie theater and the movie distributor, it will happen.
Your point about Movies not being a new production might actually have some merit, but in a totally different perspective. Say for example that the movies only became free 3 weeks after release, or something like that.But then again, the movie distributors would have more to lose in that situation then day and date free-tickets.
March 5th, 2008 at 4:47 pm
yaa welll i pay 12 bux everytime i wanna go to the theater and for a senior ticket and childs ticket its 9 bux …wtf the deal with that iam just another human goin to the movies whats the difference…
March 5th, 2008 at 6:25 pm
estrus: EXACTLY!!!
i can’t stand going to movies because people don’t know how to behave themselves in public anymore… talking during movies, answering cellphones, bringing kids into r-rated slashers…etc.
and plus, i have to fight traffic, pay for parking… and pay $4 for a soda. why would i ever do this?
the ‘theatre experience’ is, unfortunately, a negative one for me. i will, however, pay 10 bucks to buy the pay-per view on opening weekend through my cable provider.
JS
March 5th, 2008 at 6:44 pm
Good idea, but whether it’d work is another thing.
I work at a (not-very-busy) cinema, and the times we’re busiest are for ‘talker’ screenings, where the studios hire the screen, preview new films, and give the public free tickets.
People take the free tickets, but don’t go anywhere near the concessions. So hoping that people’ll buy a £3 pepsi because they got the tickets for free is a bit dangerous.
March 5th, 2008 at 7:01 pm
estrus, no kidding. This would only work if those $20 seats had some sort of “cone of silence” that woud isolate them from yaking, cellphone using idiots.
Vic
March 5th, 2008 at 7:15 pm
Most movies suck that is why attendance is low. So free or not free no more people will come to the theater. The American public, unlike International Audiences, is tired of being feed one line of shit after another when it comes to movie quality. Hollywood Business Execs make movies for the lowest common denominator-an average IQ of 93.
March 5th, 2008 at 7:56 pm
I’ve read the article, and it’s still a cross-subsidy and a loss leader, no matter how Anderson tries to package it. (quote from the article: “It’s as if the price of steel had dropped so close to zero that King Gillette could give away both razor and blade, and make his money on something else entirely.” Note those last seven words.)
It’s a nice idea, but then so is utopia.
March 5th, 2008 at 8:16 pm
Free will atract more dumb idiots.
It should cost twice as much and you should answer what’s the square root of 152 in order to get in.
Btw i don’t know the answer.
March 5th, 2008 at 11:00 pm
It’s 12.328828. Might want to pick a more root-friendly number for your purposes, Maxx.
The biggest practical problem is, as others have mentioned, the behavior of people who aren’t paying to be there. There could be a “premium” section that is closed off, of course, or stricter security…but both would require a lot of money.
There are already “premium” theaters in some cities that charge a lot more for tickets, and offer a much nicer viewing experience. They stay in business, so people ARE willing to pay for comfort.
However, I’m not sure I understand the need for a theater revolution. Is attendance that far down due to rising prices/digital downloads? Given the rising cost of living, ticket prices seem pretty reasonable to me. Sure, they’re not what they were when were kids, but what is?
March 6th, 2008 at 12:19 am
I think that indie/art house theaters that are struggling should latch onto this idea and push it. The usual customers will still come and I am sure be happy to support the films and I think you would get a lot more people who never visit these theaters come by out of curiosity and I notice in the smaller more layed back personal theaters people are always buy from the concession because it’s more of an experience.
Whoever does it first is going to get a shit load of press.
March 6th, 2008 at 2:17 am
I think it’s a horrible idea. Giving something for free takes away its value; There are plenty of other brilliant solutions, many of which have already been applied in Europe.
March 6th, 2008 at 5:29 am
10 + -45= 55? not really no, -35
March 6th, 2008 at 5:53 am
I do think the concept has merit, but I believe any idea like this is going to run into huge resistance from the establishment, the theater owners have proven resistance to new technologies - just look at how long it is taking to get digital projection installed. I live in a fairly large market and we have just 2 theaters with digital systems.
Having said that however, perhaps starting slowly is the answer. Maybe start by offering free tickets on typically slow days, or only during matinee times? Testing is big with these guys, so maybe that is the answer.
It would be good to get some hard data established concerning the free ticket/buying concessions idea - my gut tells me people that come for a free ticket would be less likely to buy concessions, but I could be wrong.
March 6th, 2008 at 6:06 am
Not only would I be likely to get back to the theatres more often if it were free (or way cheaper). But I have to say I was discouraged from going to see Diary of the Dead last night (10 pm show on a Wednesday night) simply because I knew the theatre would be empty except for a couple weirdos. Not only is that not fun (we go to the theatre in part to see it with an AUDIENCE) but it’s sort of unsettling. Now, offer that same movie for “free” (or nearly free) and you probably get a real audience and I would have gone too.
Instead, I’ll probably just wait for the DVD or download.
March 6th, 2008 at 6:11 am
Giantman if you don’t believe the concept has merit may I point you to the latest findings at Trent Reznor University. I know music is way different from a movie but the model does prove something:
Trent Reznor offered a brand-new CD for free download except it wasn’t lossless audio. He offered a Loss-less CD for download in any format for $5, a 2 Disc CD that contained both regular audio tracks on one and an MP3 CD on another and a $300 boxset autographed containing a DVD a CD and 2 Vinyl records, do you know how much money he made? $750,000 on the first night (which was yesterday)
Its proof that it could work.
March 6th, 2008 at 9:01 am
NIN Ghosts purchase options
FREE Download: 9 tracks in 320Kbps mp3
$5 Download : 36 tracks in either 320 Kbps mp3 or lossless
$10 CD : $5 download + 2 audio cds
$75 Delux : $10 CD pack + Data DVD with sessions + BluRay Disc with 24bit 96KHz Hires audio. Plus case
$300 Delux : $75 Delux + 4 Vinyl Albums + Book + Book of Giclees + case
March 6th, 2008 at 9:28 am
I was close enough..
March 6th, 2008 at 11:33 am
“estrus Says:
So even MORE ruder, louder, crazier people surrounding you!
Where do I sign up!?!”
This was exactly what I was thinking after reading the blog. The invitation to anyone period to see these movies would keep me so far from going, I wouldn’t even want to be close to the mall that has this theater.
I’ll just wait til’ it hits HD-DVD in the privacy of my own home then. No way in heck am I sitting in a crowd of freebie’s cackling and yelling at the screen.
March 6th, 2008 at 11:41 am
yes, the answer is to charge MORE for tickets.
the archlight here in hollywood charges something like $14.50 per ticket - whhich you can purchase ahead of time, along with which seats you want.
they have ushers that help you to your seat. an usher comes in and announces the movie beforehand and explains the rules of etiquette.
and you know what? that’s the only theatre i’ll go to here in LA - when i must see something in the theatre.
that, and they have a bar.
March 6th, 2008 at 6:53 pm
This is a great idea because it is becoming harder for cineplexes to grab huge audiences consistently post-opening weekend of a specific movie.
March 6th, 2008 at 8:23 pm
wow…
March 6th, 2008 at 11:27 pm
I have to agree that the overall theater experience for me is mixed.
My biggest annoyance is the cost of the movie tickets.
I’ve never had a really bad experience at the movies, but then again, I don’t go that often.
I think that I’d first try dropping the prices of concessions to reasonable levels. I never get food at a movie since its so obviously a ripoff. If the profit margin is so high, I think you could get a lot more people buying concessions if you lowered the prices, and get away with it.
If people talking/being rude around you is such a big deal, why not try headphone rentals, where you can rent a really good pair of headphones to listen to the movie with? That should eliminate any outside noise, and might actually give you a better viewing experience. I know the sound systems in theaters are supposed to be “good”, but how good are they, or are they just “loud?”
On a different note, how about showing older movies on the big screen again now and then for a cheaper showing? Maybe watch some old Bond for a few bucks, and eat some pocporn (if its not overpriced)? Bigscreen TV or not, there is still something to be had for the theater ecperience.
March 8th, 2008 at 6:16 am
At the large theaters here (Silver City by Cineplex Odeon in Canada), they offer a Tuesday Special where they offer, for the price of admission, a free regular popcorn and a free regular drink, with the choice to upgrade both to “Superhuman Size” for a mere 50 cents per item.
More people go to the theater on this day, and most of that is just because the appeal of “free” is just that. It’s evidence in practice.