In Defense of Dynamic Pricing
It's not that bad of an idea, seriously
AMC Theaters recently made headlines by announcing that they will begin testing dynamic pricing in some of their theaters - with admission prices for films increasing if guests choose to sit in “Preferred Sightline” sections - i.e., the good seats.
Reaction to this announcement was decidedly dramatic - with many film fans deriding the theater chain’s strategy and mocking the company’s seeming focus on increasing revenue over increasing the quality of the experience. Here’s the thing - I actually think dynamic pricing is a great strategy that more movie theaters should explore. I don’t know if AMC went about it the right way (only time will prove whether their test bears fruit) but I also think that the idea of varying ticket prices is key to the industry’s survival.
AMC’s focus is on seats - and that’s certainly one aspect of it. When you go to a concert or play or live performance of any kind, seats cost different amounts of money depending on where you sit. Why should movie theater seats be any different? The key, though, is that theaters need to offer a different experience with this increased price.
iPic, Star Cinema Grill and other theater chains already do this - offering specific seats at higher ticket prices but offering a higher experience for those prices. These experiences include nicer seats, free popcorn, a complimentary blanket to use during the experience or even barrier walls that separate you from your neighbors. The Alamo Drafthouse Montecillo in El Paso recently installed Sofa Seats in their front row at all auditoriums - selling the sofa at an increased price (basically, double the cost of a single ticket but you can sit two people in each sofa). Basically, if you’re going to charge more for certain seats, you need to make sure guests are getting more for their increased buck.
I do like the idea of charging less for seats on the front row. The truth is, in a good theater there should not be any bad seats in the house - it should all be a matter of individual guest preference. Ideally, the front row of a theater should be at a distance far back from the screen as the screen is tall but that’s rarely actually the case in most major theater chains. Because of this, in most theaters, the seats in the front row don’t fill up. Guests are just trained to think of the front row as less desirable seating because it usually is.
As a brief aside - I once went to a theater in Houston that I shall not name that had actual weight-bearing columns installed in auditoriums - if you picked the wrong seat you would have a giant chunk of concrete covering half your sightline.
True dynamic pricing should be run by an algorithm - analyzing trends on an hourly basis and discounting and increasing ticket prices based on user demand. Is there a movie that isn’t selling as well as other movies? Discount tickets across the board. Is there a blockbuster - something from the MCU, for example - where demand is particularly strong? Increase prices until demand trickles off. Dynamic pricing should go both ways - setting a fair ticket price based on a specific seat in a specific theater at a specific time for a specific film. It’s really no different from matinee pricing or discount day deals that most theaters already do - but writ large. Prices should be in flux at all time - staying within a certain market threshold but always reflecting consumer trends as they are currently playing out.
If this newsletter sounds awfully commercially focused, it’s because it is. The truth is that the theater industry is in dire need of revenue right now. Admissions are higher than ever but they still aren’t where they used to be pre-COVID. More so, as I wrote about last week, the theatrical industry is always going to be capped to a certain degree - never quite hitting the highs it saw in the days before the pandemic.
Dynamic pricing will help theater chains in a lot of ways but the number one thing they need to do is still focus on the guest experience. Change projector lightbulbs, serve quality concessions, police theaters for guests who are causing distractions and curate stellar programming that reaches beyond the first-run films put out by major studios. All dynamic pricing will do is get people who only go to the theater a handful of times a year to pay slightly more (or less) depending on what they see.
Running the best possible movie theater you can is how you get those guests to stay.