As long as people feel they are getting a better experience than they could at home, enough of them will be willing to pay.
Going to the movies used to be one of the most democratic experiences available to us, but not any more.
Offering punters something they can’t get at home is the exhibitors’ best hope of staying in the game
As our not-entirely-unscientific analysis (see below) shows, the cost of a ticket to the latest blockbuster movie could vary by as much as a factor of four, depending on which cinema, which suburb and which format you choose to see it in.
At its cheapest, a ticket to Dawn of the Planet of the Apes, which opened this week, will cost you $10. At its most expensive, it will set you back $40. And that’s not including popcorn, soft drink, parking or any of the myriad other hidden costs that make a night out at the pictures more of a mad indulgence than a regular occurrence for most of us these days. Oh, and if you book it online – as people increasingly do – it will incur a booking charge of between $1 and $5 a ticket, too.
These wildly varying, and generally escalating, prices are the result of a creeping crisis in the industry.
Since 1999, Australia’s population has increased by 22 per cent but cinema admissions have fallen by 7 per cent. There are way more cinema screens now than 15 years ago but the number of seats has stayed pretty much the same (about 445,000) as cinemas have got smaller and closer to where we live.
Despite those declining numbers, box office has grown by more than 50 per cent. Why? Because we’re being charged a lot more to sit in those seats than we used to.
The business is fighting declining attendances by driving us towards “premium” cinema experiences, in which customers pay considerably higher prices for essentially the same product.
The exhibitors – a club dominated by Village, Hoyts and Event, with Readings, Palace and a sizeable number of independents rounding out the numbers – are increasingly abandoning the one-size-fits-all approach to the business.
In its place is a tiered experience, in which the standard cinema of old is now effectively an “economy” offering, Vmax and its equivalents are “super-economy”, and Gold Class and Co something like “business” (with the option of an upgrade to first class if you can afford to book a whole cinema with your corporate group or a bunch of mates, or if you take the full wine-and-dine package).
The major players have all identified the premium end of the market as the place where growth lies – and well they might. For while the cinema business in Australia is in reasonable shape – box office last year was $1.1 billion, only fractionally down on 2010’s record $1.13 billion – it is increasingly reliant on raising ticket prices to stay that way. And to justify those price hikes, it is beefing up the “experience” on offer.
Two of Village’s Crown cinemas were recently refurbished with new seats, a wider screen and, most importantly, the state-of-the-art Dolby Atmos sound system, which features 45 speakers dotted throughout the cinema, in walls, across the ceiling and behind the screen, to create a genuinely all-encompassing sound experience (by way of comparison, a typical cinema has just seven speakers, plus a sub-woofer – the fabled 7.1 surround-sound system). It’s genuinely impressive – but it also allows Village to justify charging 15 per cent more for a standard ticket.
In Asia, they have been trialling 4D systems, in which the audience is bombarded with mist (to simulate being at sea or in rain) and various odours, while having their chair jerked around to replicate on-screen movement. One of the leading proponents of the technology, the Korean company CJ, is mounting a push into the US.
For now, that kind of thing is confined to the theme parks and tourist attractions in Australia (there’s one in Melbourne, in the Theosophical Society building in Russell Street, showing 15 to 20-minute packages of short computer-animated films). But it is worth noting that our exhibitors have generally led the way in the premium cinema experience, either originating or being early adopters of the cinema-as-lounge and cinema-as-dining-room concepts.
Now, the US is beginning to follow suit. America’s second-largest cinema chain, AMC, this week announced plans to introduce “fully reclinable” lounge chairs (similar to Gold Class-type seating) in more than one-third of its near-5000 cinemas. The move would cost up to half a million dollars for each theatre and reduce capacity by between 50 and 70 per cent, yet it is still expected to increase revenue. In cinemas where the company has already tried it, attendances have reportedly increased by an average 80 per cent.
According to The Wall Street Journal, the company anticipates raising ticket prices in these refurbished cinemas by between $1 and $2 (and given that the average price of a cinema ticket in the US is just $8.13, that amounts to a boost of up to 25 per cent).
What’s driving all this innovation, though, is desperation. The incursions of home cinema, piracy and the availability of a multitude of other entertainment options have wreaked havoc on the cinema business. Offering punters something they can’t get at home is the exhibitors’ best hope of staying in the game.
According to data compiled by Screen Australia, the average price of a cinema ticket rose by 69 per cent from 1999 to 2013 (from $7.93 to $13.41). But the most expensive tickets increased by far more than that, up from $12.50 to $27 – an increase of 116 per cent.
Of course, those years have also seen massive improvements in the comfort levels of most cinemas, the widespread introduction of digital and 3D projection, and an explosion of screens closer to where people live. But the elephant in the cinema for the local industry remains: how much more can you charge people before they decide it is simply too much?
For now, the exhibitors are banking on the theory that as long as people feel they are getting a better experience than they could at home, enough of them will be willing to pay a premium price for a premium experience to make the investment worthwhile. And yet …
Buried in the 2013 annual report of the Canadian company IMAX was this nugget of information: “In December 2013, the company announced a joint venture … to design, develop, manufacture and sell a premium home theatre system.”
It’s a startling revelation from a company that has done more than most to differentiate the cinema from the living room. But in such uncertain times, you can’t really blame them for wanting to have a bet each way.
How much a ticket to Dawn of the Planet of The Apes would have cost you this week
If you'd seen it in 2D:
$10 in a standard cinema at Readings in Dandenong (plus $1.50 booking fee if bought online)
$18 in a Titan XC (large-screen, Dolby Atmos format) cinema at Readings Waurn Ponds (plus $1.50 b/f)
$19.50 in a standard cinema at Village Crown (plus $1 b/f)
$22.50 in a Vmax with Dolby Atmos cinema at Village Crown (plus $1 b/f)
$30 in a Gold Class cinema at Crown (plus $5 b/f)
$39 in a Director's Suite cinema at Hoyts Melbourne Central (plus $1.10 b/f)
If you'd seen it in 3D:
$12.50 at Readings in Dandenong (plus $1.50 b/f)
$19.50 at Readings in Waurn Ponds (plus $1.50 b/f)
$25.50 in a Vmax with Dolby Atmos cinema at Village Crown (plus $1 for 3D glasses if you didn’t bring your own, plus $1 b/f)
$27 in an Xtreme Screen cinema at Hoyts Melbourne Central (plus $1.10 b/f)
$39 in a Village Gold Class cinema in Albury (plus $1 for 3D glasses if you didn't bring your own, plus $5 b/f)