Coming Soon to a Theater Near You: Higher Ticket Prices

If you think James Cameron is a “game-changer” for what he has achieved on a visual scale with Avatar, well you’re right. But he’s also had a reciprocating effect on theater chains and movie studios.

The Wall Street Journal has a story on movie tickets and how they are getting costlier as movie chains seek to cash in on consumers’ willingness to pay more for 3-D. Since 83% of Avatar‘s $2.6 Billion gross was because of 3-D presentations, now you have studios doing retroactive 3-D for films shot to be presented in 2-D. And with the influx of 3-D entertainment in theaters, movie chains are upping the price of premium entertainment which are “some of the steepest increases in ticket prices in at least a decade.”

The new prices take affect today. No formal press release on behalf of the theater chains announced the change in price, but were evidenced by movie-ticketing Web sites like Fandango.com.

The increases vary from theater to theater, but many cinemas are raising prices most—or even solely—for 3-D showings. Last year, 3-D movies accounted for 11% of domestic ticket sales in 2009. In 2008, it was just 2%.

It will be interesting to see how theatergoers respond. 2009 was a banner year for box grosses, in large part because people wanted to escape reality for 90 minutes or two hours. It was them who allowed 32 films to pass the $100 million barrier. Though with production costs increasing, if a tentpole release doesn’t make $200 million domestically, it could be considered a failure.

I have the feeling that studios pushing for more and more 3-D will backfire. Unless the 3-D is in fact real 3-D (shot with the intended purpose to be presented in 3-D) a la Avatar, studios need to stop with the “3-D or Bust” notion. And depending on how large a theater is your looking at what, two to four screens dedicated for 3-D presentations. So what happens when two tentpole releases open up against each other and are in 3-D?

Some media analysts believe that a “consumer backlash” is eminent, especially in such a weak economy. But Dan Fellman, president of domestic distribution for Time Warner Inc.’s Warner Bros., is in favor of this “experiment to raise prices even more. There may be additional revenue to earn here.” Perhaps that is why at ShoWest it was announced that all of Warner Bros.’ major, tentpole projects like Green Lantern in 2011 will be in 3-D.

You have this situation where studios are producing movies at a higher cost and passing the buck on to consumers to help make up the difference. Though this is done by the ticket prices set by theater chains. I don’t believe studios have a claim at what a chain must charge, but they can pull films if the price is not to their liking. The proceeds from ticket sales are split roughly 50-50 with movie studios. But with the incentive of smaller release windows, theaters could get upwards of 60 to 65 percent of the proceeds, while studios will recoup production costs on the home market through sales and rentals.

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