3 thoughts on “Steven Soderbergh on Dynamic Movie Ticket pricing”

  1. This is a pretty standard economics puzzle, but without substantial amounts of innovation to provide new data, there’s no way to know which hypothetical explanation is actually correct. I don’t know how credible the ticket-price breakdown here at DoughRoller is, but if theater owners always get 45% of the ticket price, they’ll be bearing the burden of handling the dynamic pricing despite being the minority profiteer on the outcome. A lot of the innovations in running movie theaters that drew people into theaters during cinema’s golden age happened before United States v. Paramount Pictures, Inc. (1948). (Popcorn concessions, double bills, AC, etc.) Overall, I think that the breakup of vertical integration was a good thing for cinema, but it’s possible there may be some innovative ways to bring back the incentivizing advantages of vertical integration without squashing interstudio competition, especially because there are so many more studios now.

    One could imagine forming several different entitites that were each half consulting group, half private equity group. Let’s call these the Ticket Helpers. Each Ticket Helper corporation would be owned equally by every American studio releasing a film in a given year. You release a film, you get one voting share in each Ticket Helper for a particular fee which is proportionate to the number of films you release. It doesn’t matter how many movies you make, you only get one share of each Ticket Helper. Theaters–the four big chains and independents–can then select one of these Ticket Helper to work on dynamic pricing and related tricks for its theaters. Ticket Helpers would get 1-2% of each film’s revenues, taken from the studios cuts, which would indirectly go back to the studios via their ownership of the Ticket Holder. The bonuses of every employee of a Ticket Helper will be directly tied to the number of theaters who choose their particular Ticket Helper. This would protect the studios from violating the Paramount Decrees, but allow them to benefit from infusing some cash into this problem. And b/c each Ticket Helper is owned by all the commercial movie makerst that year, it will not focus its efforts on helping any particular movie, but helping the industry as a whole. The Principal Agents of any particular Ticket Helper company is incentivized to compete against the others b/c if they perform poorly, the movie theaters will switch to a better performing Ticket Helper. And the people deciding who is doing the best job of getting more bodies in the seats will not be the far-removed studios but the theater owners.

    I doubt, of course, that the studios would ever be willing to enter into such an outlandish arrangement. But setting it up as a contest, with a term limit–5 years, say–might be an interesting survival strategy.

  2. When Mark Cuban wraps a new movie through his production company, Magnolia – he offers 2 free pre-release showings on his TV channel. Then, he sells the DVD at the theatrical releases from Day 1.

    Drives the MPAA bonkers.

Comments are closed.