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Hollywood’s lackluster

With movie attendance declining and box office dollars dipping, the theater industry is considering new pricing strategies
Tuesday, May 2, 2006 | 12:00 a.m. CDT; updated 3:18 p.m. CDT, Monday, July 21, 2008

The surge in affordable state-of-the-art home theater systems, online DVD rental companies and plenty of other public entertainment are among factors keeping Americans out of the cinemas.

According to the entertainment research company Exhibitor Relations Co., 2005 movie theater attendance dropped over 8 percent compared to 2004. In this third year of declining attendance, the theater industry hit a record-low number of customers last seen in 1997.

“We haven’t felt the effects of the industry recession because we recently upgraded two theaters to stadium seating,” said Brian Pitzer, assistant manager at Forum 8, operated by Goodrich Quality Theaters. “But the effects have been felt throughout the company.”

While only some theaters can afford significant upgrades, such as stadium seating, a new industrywide trend that may be on the horizon is more extensive price discrimination. Possibilities include charging matinee prices for weekday evening shows, charging less for movies after opening weekend, and charging more for highly anticipated movies. These price incentives would likely draw more customers, but it is uncertain whether theaters would also receive higher profits.

Michael Mulligan, a patron of Forum 8, goes to the movies about once a month, but he would probably go more often if tickets were cheaper.

The rising cost of movie tickets is likely keeping some patrons from the cinemas — the average ticket cost $6.41 in 2005.

Yet for Beverly Deis, of Kingston, a change in prices would not have any effect on the amount of movies she sees in theaters. “We live an hour away from a theater, so we don’t see movies often.”

Another problem faced by movie theaters is the inundation of supposed “blockbusters” from Hollywood. According to the Motion Picture Association of America, there were 549 new films released in 2005 – a 5.6 percent jump from the 520 in 2004. Many people delay going to the theater until they’ve heard reviews from friends or critics, which is why Pitzer doesn’t like the idea of a new pricing scale.

“On opening weekend, we’re hardly making anything,” he said, contributing the majority of revenues to the second or third week after a movie has been released. Theaters would have to proportion the price scale correctly to make a change to the system profitable, he said.

The RagTag Cinemacafe, an independent movie house, does not experience such dramatic effects from changes in the movie industry. Not only do people come to the RagTag because they know they will see “the cream of the crop,” but also to support the theater, said John Westhoff, assistant manager at the RagTag.

“We’re such a small theater, so we have a modest quota of business to meet,” he said. “The other theaters haven’t really affected our business.”

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