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Current Events

Box Office Prices Going Up

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CNN
3D movie tickets set for epic price hike
By Ben Rooney
March 25, 2010

NEW YORK (CNNMoney.com) -- Ticket prices will be going up at movie theaters across the country this weekend as the entertainment industry looks to cash in on growing demand for 3-D movies following the success of "Avatar" and "Alice in Wonderland."

Starting Friday, prices for adult admission to 3-D movies will increase an average 8.3% at box offices nationwide, according to market research conducted by investment firm BTIG. Ticket prices for IMAX movies are expected to jump 10%, while prices for regular 2-D movies will rise about 4% on average.

The price increases vary by region and will be in effect at theater chains operated by AMC Entertainment Inc., Regal Entertainment Group (RGC) and others.

At one AMC theater in New York, the price for a family of four to see a 3-D screening of Dreamworks Animation's "How to Train your Dragon" this Friday will be $63 before popcorn, soda or candy.

Adult ticket prices for 3-D movies will jump to $15.50 from $13.50 at one theater operated by AMC near Boston. At a Regal theater in Seattle, 3-D ticket prices will rise to $15 from $13.50 for adult admission.

A spokesman from AMC declined to comment, and Regal did not immediately respond to a request for comment.

"These are major prices changes for an industry that has historically instituted gradual prices increases," said BTIG analyst Richard Greenfield.

Greenfield said the price hikes reflect a growing belief among theater owners that consumers are "hungry" for 3-D content and are willing to pay more for an enhanced movie-going experience.

Box office sales nationwide are up nearly 10% so far this year, due in part to the record-breaking success of 3-D blockbusters like "Avatar" and "Alice in Wonderland."

James Cameron's "Avatar" became the highest grossing movie ever, bringing in over $2.5 billion, after it concluded an extraordinary 3-month run in March. "Alice" brought in a record $116.3 million when it opened earlier this month.

With numbers like that, expectations are high for a host of other 3-D films due out this year, including Warner Brothers' "Clash of the Titans," which comes out next month. (Warner Bros. is owned by Time Warner (TWX, Fortune 500), the parent of CNNMoney.com).

However, some industry analysts warn that the price hikes could spark a backlash among consumers still struggling in the weak economy.

"They're probably over estimating the appeal of 3-D," said Brandon Gray, president of Box Office Mojo, a Web site that tracks ticket sales. "It's more of an industry push than an audience push, at least currently."

Gray warned that 3-D technology has come and gone in one form or another over the last five decades, and the current popularly could prove to be nothing more than another fad. Much of the success or failure of this year's 3-D fare will depend on the quality of the story, he added.

Still, the stakes for the industry are high and it's possible that 3-D could pay off if the films resonate with audiences.

"If consumers absorb the price increases without issue, we believe it bodes well for the pricing power of the movie exhibition industry, particularly their highest quality product," Greenfield said.

Questions

1. Define: market research, backlash, fad, resonate

2. Why are movie prices about to increase? Would you pay the higher price to see a 3-D movie?

3. Are the price increases reasonable due to the popular demand of 3-D movies? Why or why not?

4. Why do you think box office sales are up while we are suffering from a weak economy?

5. How have 3-D movies been so successful with connecting to audiences?

6. How does market research help companies fuel innovation?

7. If consumers are not willing to pay the price increase what would a likely outcome be? What does this tell you about the relationship between consumers and businesses?

 

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