AMC is about to become the largest theater operator in the world and that means they have a lot of power. They will also be making a lot of money, but they aren't content with a lot, as they are looking to add some more revenue to their stream. The problem? It is going to come at a cost to the consumer and make it more expensive to see the year's most popular movies.
The Hollywood Reporter was present at the recent MKM Partners Entertainment, Leisure and Consumer Technology Conference. During the conference, AMC Entertainment CFO Craig Ramsey spoke and talked about potentially doing "variable pricing in the U.S." Here is what he had to say, according to THR.
"They [Odeon & UCI] are further advanced in variable pricing, where tentpole movies are priced up on release. That's something we've talked about in the U.S. We expect to learn a lot with what they've done. We think it will position us to start having those conversations about pricing opportunities in the U.S."
AMC recently purchased Odeon & UCI, the largest theater chain in Europe, for $1.2 billion. As Craig Ramsey points out, they are "further advanced" with that they call variable pricing. What that really means is that they will price movies based on interest in seeing them. So for example, people would likely have to pay more if they wanted to see Fantastic Beasts and Where to Find Them this weekend, or they would have to wait a couple of weeks for the price to go back down. Basically, if you want to see big movies early, it will come at a cost.
Theater chains are trying a lot of new things to keep people going to the movies as things like VOD rentals and TVs with increasingly amazing quality make it less justifiable to spend money at a theater. AMC Theaters seem to be banking on the idea that those who want to see something like Transformers: The Last Knight or Avengers: Infinity War will come opening weekend regardless of the price hike. Other theater chains, like Regal Cinemas, are taking different approaches to increase revenue streams. In their case, they are implementing reserved seating and reclining chairs in more theaters, which is increasing concessions revenue, according to Regal Entertainment CFO David Ownby.
"As we turn on reserved seating, and a customer has come to the theater and bought their ticket and they know they have a seat, and don't have to rush in to avoid sitting in the front row, they feel much freer to stop at the concession stand."
The idea of "variable pricing" sounds pretty negative up front, but there are potential upsides, depending on how it shakes out. Assuming the movie ticket price could drop over time, movies you are less sure about paying full price for or just don't feel the need to see opening weekend could wind up costing less a few weeks later. So you might have to pay $15 to see Guardians of the Galaxy Vol. 2 opening weekend next year, but you may only have to $5 when you decide to go see something else a few weeks after it has been out for a bit. In a way, it could even out for the regular moviegoer. It all depends on how AMC decides to implement this variable pricing model. If they succeed, other theater chains like Regal could follow suit.