Should Dynamic Pricing Come To The Megaplex? Regal Plans Tests In 2018

With dynamic pricing unlocking new revenue for some ticket sellers in the theatre and music industries — not to mention travel, hospitality and other economic sectors — Regal Entertainment Group plans to test the concept in movie theatres.

The major exhibitor says it will team with ticketing startup Atom Tickets for trials in several markets. “This test could be the first step towards a pricing model that drives incremental revenue in peak periods and incremental attendance in non-peak periods,” Regal CEO Amy Miles told analysts during the circuit’s third-quarter earnings call. “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.”

She was correct that numerous proposals through many decades have pushed the concept of variable pricing. Because the movie business relies on the delicate balance between exhibitors and distributors — one that has been strained even further as digital media has exploded in recent years — there has never been widespread agreement on new pricing concepts. And newcomers like MoviePass, which has proposed a flat-rate, subscription-based model, have quickly run afoul of major theatre chains. AMC has been vocal in saying it is looking at legal options to block MoviePass.

Aiming to invigorate their balance sheets with new ticket-price approaches is a logical response to the discouraging reality facing exhibitors. Average U.S. ticket prices in the second quarter were $8.95, according to the National Association of Theatre Owners. With fewer than 10 weeks to go in 2017, year-to-date box office revenue is down more than 5% from last year and is at risk of declining for the first time since 2014, barring a run of spectacular November-December receipts.

Many analysts already believe Regal has shown positive results, posting gains in spending per customer even in a quarter when box office sagged. Few are concerned about new ticket models threatening the primacy of the traditional theatrical experience. In an analysis of the exhibition sector last week, MKM Partners managing director Eric Handler dismissed the notion that MoviePass poses a threat.

“Fears are rising on concerns MoviePass could eventually force exhibitors to discount its prices as attendance from the subscription service rises,” Handler wrote. “Near-term, MoviePass could possibly provide an attendance lift for the industry. Ultimately though, we have yet to find a company succeed with a business model where it loses money on nearly every transaction and as a result do not view MoviePass as a long-term threat to the cinema economic model.”

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