Movie Tickets and Price Discrimination

Movie Tickets and Price Discrimination

        The writer of this article is discussing the price discrimination in all movie theaters. At the AMC every evening ticket is $12, plus tax. The price for the ticket does not consider how much of money the movie made, and how much it was popular. A movie ticket would cost the same, whether the film had made more than a hundred million dollars in the last two weeks, or it made less than ten million dollars. From an economic side, the increase in the demand for something would increase the price for it, and vice versa. So, for a movie that made less than ten million dollars the ticket price should be cheaper than the other one. However, seniors and students discounts do exist, but the theaters do not charge people different prices for different movies showing at the same time. The writer is also talking about the history in pricing films, and how the movies were priced according to certain conditions. For example, popularity, length of the movie, and the stars. If this rules ruled today, the ticket price for the movies would differ. “Everything had changed, since the Paramount anti-trust case broke up monopolies between producers and distributors.” “Over time, the system moved toward pricing one price for all films.” At the end of the article, the writer concludes few theories of how theaters ticket pricing works. For instance, first, they do price discrimination with space. Big movies get more theaters and better technologies. On the other hand, smaller movies get older and small screens theaters. Second, it would destroy the meaning of opening weekends, if after a successful opening weekend, theaters drop their ticket prices. Just because people are smart enough to wait for the time the tickets prices would decrease. Also, price may be a signal of quality. Furthermore, price discrimination offers that other movie theaters more opportunities to steal each other’s audience.  

        The article implies that the movie theater is one of the places that practice price discrimination. Although, it did not talk about this in depth in the article, movie theaters are just like airlines in practicing price discrimination. Price discrimination is charging different prices to different consumers for the same products, while the costs for it won’t change. Price discrimination in airlines occurs when you purchase your ticket early they would charge you less price than if you purchase it in the same day of the flight. In movie theaters, price discrimination appears in different phases, like the seniors and students discounts. In addition, it clearly appears in charging different prices for different time of the day. For example, the morning ticket prices before 12pm is $5, the evening from 12pm-4pm the ticket price would be $7.5; while, after 4pm the prices would rise to $10 or $12. On the other hand, what was discussed in this article that what maybe lots of people thought about “why charging same price for all movies?” The writer made it very clear why! Talking about how we think that the demand should affect the prices of the movie, so the theaters would charge different prices for different movies. Also, recall the history of different price tickets in the earliest days, and how things that happened changed the system moving toward one price ticket for all movies. It is good point to mention that half of the movie theaters income comes from amenities like popcorn, that’s why they don’t have price discriminate the popcorn. The writer conclude his article with some theories to support his article about why we are still stuck with the $12 tickets for all movies. It is worth to mention, a couple of points I liked in the conclusion that explains perfectly why theaters would have constant price tickets for all the movies at the same show time.  First, if they consider dropping their prices after a big opening weekend, the people may want to wait for it, which would destroy the meaning of opening weekends. The second point, the people might feel that the price reflects the quality of the film. Therefore, very few people would see the cheapest movie.