Charging Extra for 3D?

[M Most]

T4 had a budget like 3 times higher than "The Hangover," but I still paid the same price at the box office, and I enjoyed "The Hangover" more. Should we charge an extra 5 bucks for "Transformers 2" because the production budget was 200 million?

Production costs are borne by the studio, the manufacturer of the product. Ticket prices are determined by the exhibitor. The studio's costs are justified based on anticipated revenue worldwide, and in the case of large tentpole releases, are partially recouped by placing the picture on many thousands of screens for its initial release. It's also recouped by getting a very, very high percentage of the box office for those first few weeks (see my other post). The exhibitor's costs have absolutely nothing to do with the picture's production costs. They have to do with the costs of building and maintaining the theater, operational costs, replacement costs, advertising, and personnel. When the costs of building a room are higher, and they relate specifically to certain releases, those costs need to be recouped. It's as simple as that.

 

[Tom Lowe]

Hey Tom,

Ive been around, just been quite busy setting up a film empire ;-) (plus i was a bit ill last year) As you know.. This place is an addiction and very little work gets done!

Wish I could say that I missed you, but Ive been following your magnificent posts around here regularly. I love what you've been doing with the Canon.

Thanks, man. :thumbsup:

 

[M Most]

i profit from the "the" industry every year.
still i find overcharging stupid.

I'm sorry, I must be pretty dense, but I fail to understand how charging more for a room that by definition costs almost $75,000 additional to equip (not to mention more to maintain due to more frequent and more expensive lamp changes) than a "standard" digital projection room is "overcharging." And the notion of a 5 year amortization in an industry whose technology is in a state of revolutionary change is rather naive and unrealistic.

 

[albert rudnicki]

3D costs more.
It's well justified I think; if you want to see it in 2d you can for a regular cost.
At times of novelty you pay the prime price. Nothing wrong with it.

 

[Ace]

No. It's impossible.

If you've ever actually been involved in the distribution/exhibition end of the business, it's clear that the distributors hold all of the cards. The split on revenues for tentpole releases is often over 90% to the distributor for the first 2 weeks of release (the most profitable part of the run, by far, in almost all cases). And it's not negotiable, as you seem to think it is, unless one's idea of negotiation is "we won't give you the film, we'll only give it to your competitor." The exhibitors can only exist because of concession sales, particularly when the revenue split is that one sided.

Personally, I think it's a bit sad - not to mention baffling - that the entitlement mentality exhibited by so many here has now spilled over into the very industry they seem to want to be a part of and, hopefully, profit from.

Its got nothing to do with entitlement. Contrary to my comments, I would like to see nothing more than increased financial benefit flow to the producer and in this regard I would agree with your stance. The future however will not sustain this with competitive exhibition platforms emerging, but more so, the new emerging business models in distribution. Ultimately, I see a restructured business model meaning more money/flexibility to the producer and to the exhibitor. It wont happen tomorrow but it will happen. One thing i do not see is increased pricing for the cinema ticket.

Yes I have been involved in the distribution side of things. Yes it is one sided most of the times. But other times its not. In this country anyway. Negotiations do happen if it means mutual benefit.

What I find baffling is that amidst the revolution of antiquated business models (see music industry) the movie biz still accepts the 100 year old hierarchy that will ultimately lead to structural failure. This is all about to change though. It just wont happen with increased ticket prices.

 

[Ace]

Production costs are borne by the studio, the manufacturer of the product. Ticket prices are determined by the exhibitor. The studio's costs are justified based on anticipated revenue worldwide, and in the case of large tentpole releases, are partially recouped by placing the picture on many thousands of screens for its initial release. It's also recouped by getting a very, very high percentage of the box office for those first few weeks (see my other post). The exhibitor's costs have absolutely nothing to do with the picture's production costs. They have to do with the costs of building and maintaining the theater, operational costs, replacement costs, advertising, and personnel. When the costs of building a room are higher, and they relate specifically to certain releases, those costs need to be recouped. It's as simple as that.

Thats exactly what I was trying to say.. Not sure what your point is. I think we are in agreement.

My point was, things like personell costs dont mean higher costs for a ticket. Things like advertising don't mean increased ticket costs. So why does a fixed asset (3D infrastructure) which can be depreciated over 5 years mean increased ticket costs? It just doesnt make sense.

If your arguing that theatres need to increase their margins overall, then were talking about a completely different subject here.

 

[Sven Seynaeve]

Over here (Belgium) they charge you more as well... For me that's no reason to complain, because it's actually becoming the only reason to get myself still going to this brand new 8screen complex instead of watching on bly-ray on my hd projection system in a more comfortable situation. But it seems that most of my friends and girlfriends are having problems with this and are feeling being ripped off... this won't actually be in the benefit of promoting what they'd love to become the new standard

 

[M Most]

What I find baffling is that amidst the revolution of antiquated business models (see music industry) the movie biz still accepts the 100 year old hierarchy that will ultimately lead to structural failure. This is all about to change though. It just wont happen with increased ticket prices.

I think that's one of those things that's very easy (and popular, especially around here) to say, but I see little evidence of the alleged demise of theatrical exhibition. One could say that the business models of professional sports are quite old as well, but I don't see that going away either. Group entertainment - movies, concerts, plays, sporting events - is a social activity as well as an amusement. It isn't replaced by solitary viewing environments, and it isn't replaced by staying home. The economics will adapt, and even the methods used to present the material will change, but the notion that everything is going to disappear is, to me, rather fanciful. And the example of the music industry in this regard is a poor one, because concerts and live music performance are still very much alive. In fact, they're probably the primary source of financial survival for many musicians these days.

 

[Ace]

By the way, the distribution game needs to change. Mmost, i agree with most of what you are saying. But im talking from a much broader perspective here and I am specifically talking about the business models that exist between the distributor and the exhibitor. It must change for there to be progress.

I agree with you that the exhibitor doesnt make enough money to justify increased expense per head. What I disagree with is who foots the bill for it and what implications this has on the cinema industry as a whole.

 

[Ace]

I think that's one of those things that's very easy (and popular, especially around here) to say, but I see little evidence of the alleged demise of theatrical exhibition. One could say that the business models of professional sports are quite old as well, but I don't see that going away either. Group entertainment - movies, concerts, plays, sporting events - is a social activity as well as an amusement. It isn't replaced by solitary viewing environments, and it isn't replaced by staying home. The economics will adapt, and even the methods used to present the material will change, but the notion that everything is going to disappear is, to me, rather fanciful. And the example of the music industry in this regard is a poor one, because concerts and live music performance are still very much alive. In fact, they're probably the primary source of financial survival for many musicians these days.

The future of cinema depends solely on its relevancy as a cultural and habitual form of entertainment.. Not as a viewing platform.

Aha.. I totally agree with you. See my post about the "family".

mmost, im not referring to changing the exhibition platform of the cinema.

I'm talking about the business models between the exhibitors and distributors changing, and to a degree, the definition of the cinema changing (micro-cinemas).

 

[Justin Anderson]

Why do you think it's unfair to charge you more for something that costs the exhibitor more? Do you also think it's unfair to charge more for a BMW 3 series than a Toyota Corolla?

Because 2D movies are overpriced as it is.

 

[M Most]

My point was, things like personell costs dont mean higher costs for a ticket.

Of course they do. Why do you think tickets cost more than they used to? Utilities, maintenance, personnel - these are all costs that go up over time.

Things like advertising don't mean increased ticket costs.

Well, no, because advertising costs are constant regardless of the pictures that are being advertised. Advertising a 3D picture costs the same as advertising a 2D picture. It's actually presenting it that costs more.

So why does a fixed asset (3D infrastructure) which can be depreciated over 5 years mean increased ticket costs? It just doesnt make sense.

I'm sorry, but I must be getting dense again. You actually think that depreciation means that something is free? And if not, then what exactly is the point that you're trying to make?

If your arguing that theatres need to increase their margins overall, then were talking about a completely different subject here.

No, I'm not. I'm arguing (and I can't believe I even need to argue this) that if a business sells a product that carries higher costs, it needs to recoup those costs by charging their customers more for the product. In other words, it's not sensible for businesses to give things away at a loss. What am I missing here?

 

[M Most]

Because 2D movies are overpriced as it is.

Really? Compared to what? Have you taken a look at the balance sheets of theater chains lately?

 

[Justin Anderson]

Really? Compared to what? Have you taken a look at the balance sheets of theater chains lately?

Compared to what I want to pay, which is why I don't go. And why many other people don't go as well...or they pirate. As long as the theaters are fine with losing our ticket sales, I'm fine with not going.

Most big business can cut 15-20% of their costs if they can streamline their processes and fix their inefficiencies. If forced, they COULD make things cheaper. They just don't feel forced yet.

 

[M Most]

Compared to what I want to pay, which is why I don't go. And why many other people don't go as well...or they pirate. As long as the theaters are fine with losing our ticket sales, I'm fine with not going.

Most big business can cut 15-20% of their costs if they can streamline their processes and fix their inefficiencies. If forced, they COULD make things cheaper. They just don't feel forced yet.

Which brings me back to something I was saying a few posts ago. You want free stuff, and for some reason you feel you're entitled to it. You think that you should set the price for anything you buy, regardless of the reality of what it costs to create it.

Good luck with that. I hope when it comes time for you to actually make a living that there's still some way to do it.

 

[GlennChan]

Most big business can cut 15-20% of their costs if they can streamline their processes and fix their inefficiencies.

I don't think it necessarily works that way. And the flipside of that is that you really don't want them cutting costs sometimes. e.g. movie theatres pay their employees minimum wage... they can be underhanded and find ways to pay employees less, but we don't really want that.
Or they can run the bulb dimmer, or use cheaper projectors, or make movies run faster (heh, what about speeding them up? and cutting off the credits).
They can also run more advertising before the movie.

They are already doing a lot of things to streamline their processes so I don't see how much lower they can go.

2- In Canada, there is a little chain called Rainbow Cinemas that charges about $6 when other theatres charge around $10. They have made things cheaper, but I don't believe that they draw in as many people as the other chains and they are considered lower class. Because they are lower class, their landlords prefer Cineplex/Silvercity over them so in a local mall near me they kicked them out when their lease expired (or maybe it's because Silvercity brings more people into the mall; anchor tenants are important).

So it doesn't necessarily make sense for the theatre businesses to make things cheaper.

2b- In theory, post houses could cut their costs by not spending so much on client service and pretty furniture. But it doesn't make economic sense for them to do so, so I don't think asking for them to cut costs is necessarily sensible for them as a business.

3- A 3-D screening costs more than a 2-D screening due to the costs of the glasses... so some price premium does make sense. And of course there are the costs of the 3-D system.

Not quite.. Although I understand that Imax screens are getting smaller..

They haven't made money in years, so they have to do something.

Some people feel ripped off about the brand confusion though... IMO Imax should have branded the smaller screens as "Imax digital" or something like that.

 

[Joseph Ward]

No movie should be more than $10. GREED plain and simple. The newer tech should be cheaper, not more, also. Theatres one day, on my opinion, should be 4K with stereoscopic capable with movie distributed through a private intranet.

 

[DCC Erickson]

Businesses are market-driven. They'll charge what the market will bear, take a loss in one area to make more in another, etc... . Welcome to capitalism - it's what drives most of the world's major economies. Things cost what they cost. When people stop going to movies, the price of a ticket will drop and the quality of the films will drop with it. And then someone will complain about THAT.

 

[Jeff Kilgroe]

Exactly. What the fuck is 10,000$ for the glasses cost plus 50k for the projector upgrade amortized over 5 years?

Thats like saying they had to raise the ticket prices $4 because they had to hire an extra usher!

By the way, Movie theaters make their money on the candy bar.. Not on the ticket sales. Just keep buying them $20 cokes and $50 skittle bags.

Amen...

The wife, kids and I always bring our own snacks to the movies. I let my kids keep the glasses if they want, not that they can use them for anything else and they're usually destroyed within a day or two anyway. Considering it costs $60 after tax to take the family to see a "3D" movie and that's just the tickets. Not a good deal at all for 90 minutes of entertainment, especially when the theater is usually too hot and I have a kid behind me that won't stop kicking my seat or I have to listen to some toddler scream his head off...

Most glasses I see at the theaters must be returned to the manufacturer for recycling because they always give us new ones in packages and we drop them in a large cardboard bin when we're done.

 

[M Most]

No movie should be more than $10. GREED plain and simple. The newer tech should be cheaper, not more, also. Theatres one day, on my opinion, should be 4K with stereoscopic capable with movie distributed through a private intranet.

Except that the newer tech is NOT cheaper. It is more expensive. Considerably more expensive. You have no reasonable basis for setting a price at something you just happen to want it to be. You seem to consider any attempt to turn a profit to be greed. I could say something like no car should be more than $3000, but that doesn't make it so, and it doesn't make it financially sensible. I don't understand why people here seem to think theater owners are somehow getting rich by somehow ripping off every customer who comes in to see a movie. Or that digital projection equipment - something that is largely a combination of mechanical and electrical engineering, along with precision optics - "should be" cheap simply because computers are. That's probably the same mentality that leads to posts here that somehow conclude that all software should cost less than $3000 because that's the price Red originally announced for a Scarlet camera - as if there's any actual connection between software companies and a camera company.

I guess asking for any understanding of business, fiscal responsibility, or technical reality here is becoming a waste of time because it just doesn't hold up to "I want it and I deserve it for free," or "I want it and I should be able to pay what I want to pay," which in most cases is nothing or close to it. So I, for one, am done with this topic, because this discussion has gotten way past the point of intelligent discourse.