WEEKLY CineBUZZ - 8 January 2012

TELL ME SOMETHING I DON'T KNOW

 Movie Ticket Prices Hit A High in '11 

Rehashing the cinema's 2011 performance is futile. Scouring cinema grosses and admissions data and comparing it to prior years is not a fruitful exercise. It is enough to say that there are few bright spots on the cinema industry landscape. Need I say it one more time, "the cinema industry needs to re-script its business model".

To that point, a colleague brought to my attention an historical fact that was unknown to me regarding the pricing of movie admissions (as most of you are aware I have been beating the drum for some time now regarding the tiering of admission pricing, as I believe not all movies have equal box office draw) and that at one time movies were "rated" and priced accordingly.  See next bullet item in this report.

But, tiering admission pricing is but one of a cadre of changes that need to be embraced and implemented by the cinema industry - with exhibitors being the spearhead for most of the changes that need to be made.

Unfortunately, the timing couldn't be worse.  As we witness the challenges facing the industry, manifested by the decade long decline in cinema ticket sales, and currently in the grips of a conversion to digital projection which saps the, ever dwindling,  financial resources of exhibitors. Resources which should be going into revamping and modernizing their business operations - to address declining ticket sales.

Let's all hope 2012 is a turning point for the cinema industry and both distributors and exhibitors began to embrace the operational changes needed to return the industry to solid financial footings.

HISTORY NEEDS TO BE REPEATED

Let us step back in time, oh say about 40 or so years, and look at the way cinema tickets were priced.  Back then, films were given an A, B, or C rating depending upon how much star power and cost went into a movie. An A listed film carried a higher admission price than a C rated one. In the 1970s that pricing strategy (which made extremely good sense) was abandoned and movies were given to the same pricing no matter the content or cost. Cinemas need to go back to the old pricing regime.  The lowering of the admission for second tier movies would increase volume at the cinemas, as moviegoers might not mind paying $5 to see a B rated film.

Now the studios figure that if the folks think that cinema admission is too high they will wait and do a buy/rent of the DVD or pay-per-view.  Too bad because DVD sales/rentals are on the slide. In fact, Bloomberg Business, just last month ranked the DVD sales/rental business as one of the "dead businesses" of the future as more and more consumers are accessing the Internet for their entertainment.

Now, don't get me wrong, their will be cinemas in our future, but they will (must) be different then they are today and tiering admission prices is a step in the right direction.

INCREASING THE HOLDBACK PERIOD

Last week Warners Bros. announced that it was going to extend the holdback period (the period of time when a movie is made available to various content providers) for Netflix and other content streamers.  The new deal between Warners and Netflix, Redbox, and Blockbuster among others, will double the window for new releases.  This means that the streamers/renters will now have to wait 56 days after the DVD first goes on sale, instead of the current 28 days. 

This move by Warner Bros. helps cinemas slightly, but their motivation is to bolster sagging DVD sales.  To be announced this week at the Consumer Electronics Show, the streamers are stating that they haven't agreed to a new deal, but execs at Warners have been talking up the deal.

The move for longer holdover periods is also tied to Warner's push for UltraViolet  (refer to prior posts on UltraViolet)  the electronics/media industries' consortium that allows individuals to have a "lockers" where they can store content of all sorts for retreival whenever they like on whichever device they like.

For their part the streamers/renters, like Netflix, aren't making too many comments.  Coinstar's (parent of Netflix)  CEO Paul Davis, only commented that "Netflix would be persuing 'workarounds' if the studios tried to extend the holdback period". 

Extending holdback periods for whatever reason is good news for cinemas, so long as the period is not tied to Internet streaming or very short periods for DVD or VOD options.

Best & Happy Movie Going!
Jim Lavorato