Movie Ticket Pricing Strategy: Should all movies cost the same?

Should ticket prices of all movies, irrespective of its star cast / budget / director / genre, be priced the same? For example, following are the ticket prices of a few movie releases at a PVR multiplex in Mumbai (night show gold class tickets):

• PK – Rs 500
• Happy New Year – Rs 450
• Kick – Rs 450
• Special 26 – Rs 350
• Jai Ho – Rs 350
• Ugly – Rs 350
• Aankhon Dekhi – Rs 350

As you can see from the examples above, ticket prices of much-awaited festive releases like PK, Happy New Year and Kick are on the higher side – which is fair, because they are the most-awaited movies of the year featuring the biggest stars in the country. But tickets for all other films are priced the same. Which brings us to the big question – Would the audience be willing to buy the tickets of Ugly and Aankhon Dekhi at the same price as Special 26 or Jai Ho – both of which have a much bigger star cast and budget? If not, wouldn’t it make sense to keep the prices of smaller budget movies a little lower, to attract more audience and thereby increase the opening day occupancy?

We have all studied about the co-relation between price and demand. When the price increases the demand may suffer, i.e in case of movies, if the ticket prices are too high, fewer people will be inclined to go watch a film in theatre. At the same time, if tickets are priced too low, it could affect the business of a film.

Today the number of movies that release every week has increased considerably, if earlier there was one movie every week, now we see at least 2 movies releasing every week apart from all the Hollywood and regional releases. Can the audience afford to watch a movie every week or at least one movie every two weeks?

Various movies which are critically appreciated, take for instance films like Aankhon Dekhi, Zed Plus, Suleimaani Keeda do not find many takers. At the end of every year there are various films being deemed as under-performers, even though content-wise they deserved to be successful. We always grieve about films that find ‘4-star ratings’ in the tabloids, but fail to even recover their release costs.

There may be many factors related to their under-performance for instance the lack of face-value (films without stars), lack of good music or bad marketing. However, the trade continues to strongly believe that there is always a chance for a movie to pick up, as WOM (Word of Mouth) remains the most powerful marketing tool that exists. But without a decent opening, even good word-of-mouth may not be enough as exhibitors may reduce / cancel shows due to extremely poor occupancy in the opening weekend.

So what is the solution for smaller films to take a fairly good opening – so that they at least have a chance to sustain over the weekdays and finish as reasonably good grossers? We think the pricing of tickets could be the biggest culprit here and we think we have a solution to this.

There could be a certification for each and every film that releases. Just like a censor certificate, there should be a category certification to classify films into holiday / festive, non-holiday and concept / low budget films with no face value.

We divide all films in 3 categories- A, B and C.

• A-category films stands for (A list actors – Khans, Devgans, Kumars, Roshans – Festive releases)
• B-category films stand for (Relative newcomers or new entrants – Varun Dhawan, Sidharth Malhotra, Arjun Kapoor )
• C-category films stand for (Concept films, unheard actors , content oriented, experimental cinema)

Assumptions

• Take the case study of pricing in only one theatre for explanation. Our standard theatre will be PVR for analysis.
• Generalised templates that should be setup for all films that would help benefit both exhibitors, distributors and as well motivate people to come to the theatres.

A-Cateogry films at PVR

These are the movies and actors that people look forward to. Most awaited movies of the year, the biggest stars the biggest attractions. These films can be further divided into

A Films festive release (For example Kick in Eid, Happy New Year in Diwali etc) our pricing analysis:

• Morning Show – Rs 200
• Afternoon Show – 350
• Night Shows – 450 Normal
• Gold seats Night shows – 550

The most premium rates are charged when an ‘A list film’ releases on a festival. People do not mind paying that extra buck since these festivals are generally a boost for families in terms of income. Also like in case of PK – Christmas and Eid – Kick, people know a Salman film or Aamir film comes once a year hence they do not mind the extra money.

A Films Non Festive release (For example Entertainment, Special 26, Jai Ho) our pricing analysis

We feel the pricing of these films should be high since they feature an A lister, however cant be premium since it’s a normal working day. Hence our suggestions taking PVR as a template

• Morning Show- Rs 150
• Afternoon Show- 250
• Night Shows – 350 Normal
• Gold seats Night shows – 400

B-Category films at PVR (Ek villain, 2 States, Humpty Sharma Ki Dulhania)

These are the films that we would categorise as exciting however the scaling and anticipation of these films may not be of an ‘A list’ film. Hence the ticket prices could be a little lower than films featuring A-list actors.

• Morning Show – Rs 120
• Afternoon Show – 200
• Night Shows – 300 Normal
• Gold seats Night shows – 350

However if a producer feels he needs to hike the rates for his benefit (like in the case of the budget of his film being too high, then he always can break the template, since the risk of people not paying much will also be his.)

C-Category films at PVR (Zed plus, Aankhon Dekhi, Suleimaani Keeda)

Here is the biggest challenge. These films will attract audience on the opening days only if the ticket rates are low and the content is good. While we cannot monitor content we can definitely regulate the pricing.  Take two instances to explain this situation

Instance 1

• A theatre of 350 occupancy which has sold 80 tickets at 250 Rupees each = Revenue 20,000

Instance 2

• A theatre of 350 occupancy which has sold 120 tickets at 150 – Revenue 18000 – But more people watching the movie hence more interaction which may lead to better WOM. Added benefits of more footfalls is more sales of food, drinks etc which will ensure higher revenue for cinema owners.

We feel ‘Instance 2’ is more beneficial to such films. Also, keeping ticket prices low for such films may encourage people to come to watch the theatres as they do not mind spending Rs 150 per ticket on experimenting but may hesitate on spending 250-300 on the same film. It may also discourage piracy as a person may now enjoy an affordable large screen experience. Economies of large scale will definitely help such films attain longevity.

• Morning Show – Rs 75
• Afternoon Show – 100
• Night Shows – 200 Normal
• Gold seats Night shows – 250

Categorise wise differentiation of films will definitely help all kinds of films to survive. It’s near foolishness to ask a consumer to pay almost the same rate for the first day first show of a Shahrukh Khan or Akshay Kumar film and a Rajat Kapoor film. There might be aspects of this that might need more research and a bit of tweaking, however, do share your thoughts on our observation and analysis.