AMC’s new plan is … good?
Let’s say I want to take myself to see Magic Mike’s Last Dance on Friday at the AMC 34th Street theater in Manhattan. Could happen! And if it does, I have two options: I can buy a regular ticket for $26.88. Or I can pick a seat in the middle of the theater and pay … $1 more.
If this was a Knicks game or a Broadway show, this would be no big deal: Consumers are very familiar with the idea of paying more, or less, for seats based on desirability and demand: Front-row tickets for Taylor Swift cost thousands of dollars; nosebleeds to see Foreigner in Las Vegas are more affordable.
But for the beleaguered movie business, this is a new idea. AMC Theatres, the world’s largest movie theater chain, announced their “Sightline” plan earlier this week: Most tickets sell for the regular price, but a limited number of seats in the center of the theater will cost $1 or $2 more per ticket. It’s debuting the plan this weekend at some of its locations in New York, Chicago, and Kansas City.
It also rubs a lot of people the wrong way. Which is presumably why AMC CEO Adam Aron, whose company announced the program on February 6, took to Twitter two days later to defend it, chalking the move up to “inflationary times.”
(2/3) In inflationary times, costs rise, so prices rise. Under the old system, our only option was to raise prices on all seats. Sightline lets us raise prices only on our most popular seats, but we can also hold the line on Standard seats & actually cut prices on Value seats.
— Adam Aron (@CEOAdam) February 8, 2023
Aron also noted that AMC will sell the least-desirable tickets at a discount (more on that in a minute) and — unlike his company’s earlier press release, which presented the move as an inevitable one that would roll out to all of AMC’s theaters by the end of the year — he couched it as a “test” the company would “carefully monitor.”
That’s uncharacteristic defensiveness from a CEO who has spent the last few years operating at Musk-level bluster (for background on Aron and his recent conversion to meme stock ringleader, see this excellent Businessweek profile). And it shows you just how ingrained the idea of one-size-fits-all ticketing is at American movie theaters. As well as the problems inherent with any announced price hike, particularly at a time when Americans have been seeing price hikes on everything from energy to eggs.
So maybe pay-by-seat movie tickets won’t be here to stay, but they probably should be. They make sense, and the theater business has deep, systemic problems — some created by its own missteps and the rest by big changes in the way we consume entertainment. If you still like seeing movies in a room with other people instead of on your couch or on your phone, you’re going to have to roll with some changes.
“They should have done this years ago,” says Wedbush Securities analyst Michael Pachter. “I’m amazed that no one has done it yet.”
Pachter, like Aron, points out that variable pricing exists in just about every other entertainment venue, along with plenty of other transactions that we all intuitively understand: When you’re on an airplane, you’re well aware that the person sitting next to you could have paid much more, or less, depending on when they bought their ticket.
We’re also used to paying different amounts for movies based on the time and place we view them: You can shell out the US average of $11 a ticket for a movie when it comes out, or wait months and pay less to rent it at home. Or wait even longer, and pay nothing (not really nothing, but it will feel that way) when it shows up as part of your Netflix or Disney+ or HBO Max subscription.
The movie business has also periodically floated attempts to do variable pricing based on the kind of movie theaters show. In the late 1990s, then-Universal Studios owner Edgar Bronfman Jr. suggested that movies that cost more to make should have more expensive tickets, and was roundly panned. But AMC played with the idea in 2019 without much fanfare, and got very little grief for it; by the time last year’s The Batman debuted, AMC hiked prices for that movie (as did other exhibitors) and bragged about it; it expects to do the same for other would-be blockbusters.
And as Aron has said, variable pricing can also mean viewers pay less to see a movie, though studios generally won’t allow theaters to lower prices beyond a certain level. Still, in theory, AMC’s new seating plan means I could see Magic Mike at a discount, since AMC is cutting the price of “value tickets” — in this case, the ones in the neck-creaking first row — by $2. But in order to get that discount I’d need to join AMC’s fan club, and there was nothing on the Fandango ticketing app telling me that option existed. So let’s be clear: This is an attempt to generate more money per ticket, not less.
It’s also an attempt to generate more revenue for a deeply troubled business. Even before the pandemic, movie-going had become something people do less and less each year, for a litany of reasons: They don’t like the experience, or the movies they used to watch are streaming instead. Or they’re just happy to scroll TikTok and YouTube.
In 2002, Americans went to the movies an average of 5.2 times per year; by 2019, per the Motion Picture Association, that number had declined to 3.5 times per year. The trend doesn’t seem like it’s going to improve post-pandemic: Last year, when the industry celebrated box office hits like Top Gun: Maverick, the per capita average was still an anemic 1.9, according to estimates from media investor Matthew Ball.
This leads to a vicious cycle: Smaller audiences in theaters have pushed more studios to move more movies to streaming — good luck finding a rom-com in a theater these days — which means audiences get trained not to go to the movies, which pushes more movies to streaming. All of which leads to empty theaters.
That’s why AMC is frequently mentioned as a bankruptcy candidate. And why the owners of Regal, the second-biggest theater chain in the US, filed for bankruptcy last month and will shutter 39 locations. The industry is still trying to figure out novel ideas to get people back into theaters: As analyst Rich Greenfield notes, this month Paramount and theater chains seemed to successfully lure older audiences to see 80 for Brady, a movie about … older people who like Tom Brady … by charging lower prices. But any clear-eyed industry observer will tell you that there are simply too many movie screens and that more of them will go away in the future.
In the meantime, theaters are figuring out how to reduce costs, via smaller staffs and online ticketing, and raise prices in less obvious ways, like pushing more expensive food. (Though that still didn’t save Alamo Drafthouse, a really excellent chain of boutique theaters, from filing Chapter 11 a couple of years ago, either).
Eventually, they’re going to want to raise prices on tickets, one way or another: “They’ve done a great job of jacking up concessions,” says Pachter. “The next thing is to charge us more.”
That’s probably not what you want to hear. But if you still like going to the movies, you’re going to have to get used to it.