Regal Cinemas is about to test out surge pricing for movies, much like Uber has surge pricing for in-demand times of the day. Regal Entertainment is going to try demand-based pricing for movies at some of its theaters beginning in 2018. Moviegoers will pay higher ticket prices for hit movies and less for flops. Regal is partnering with the online ticket service and application Atom Tickets to test the program. Movies playing at less popular times during the day would also cost less or movies that are less popular, much like Uber's surge pricing for their car service.
If successful, the new pricing plan could give theaters a much-needed boost. Shares for Regal, AMC, Cinemark, and IMAX have all fallen this year due to poor box office sales. Regal CEO Amy Miles had this to say.
"Changes to the historical pricing structure have often been discussed but rarely tested in our industry and we're excited to learn even more about how pricing changes impact customer behavior."
Regal hopes that more people will come out to movies during the peak times, therefore paying more for a movie or less depending on how the movie is performing at the box office. Overall, Regal is trying to figure out a way to maximize profits in a time when many aren't attending movies. Miles had this to say.
"If an alternative pricing model is going to be successful, we believe that one, it must provide a clear economic benefit to both exhibitors and our studio partners, and two, it should provide a compelling value proposition for our consumers. This test could be the first step towards a pricing model that drive incremental revenue in peak periods and incremental attendance in non-peak periods."
It isn't clear at this time how Regal will figure out its surge pricing, but the company is taking a "wait and see" approach to the new model. The experiment comes at a time when the average price for a movie is $9. Regal and other companies are bucking against the MoviePass model. This subscription-based service charges $9.95 per month and, in return, allows members to see one movie per day, but theater chains such as AMC and Regal have criticized what they believe to be an unsustainable business model. MoviePass is expected to have a huge subscriber boost next year after dropping their pricing from $30 dollars a month to just $10 dollars. The company expects to jump from 20,000 subscribers to a whooping 600,000 by next year.
Regal, like AMC, is not interested in the MoviePass business model, but they will continue to work with the subscription service. Amy Miles explains.
"We will take a wait-and-see approach, and we're going to continue to enjoy the benefits of the full-priced movie tickets that we're receiving for all MoviePass customers. We will not entertain is a discounted ticket arrangement or any participation in our concession sales as part of the arrangement."
This will be an interesting experiment for Regal and nobody is quite sure how it will do, but the company is hopeful that it will help failing movie theaters to get some much-needed revenue. You can read more about Regal's surge pricing experiment via Bloomberg.