Sunday, September 18, 2005

All You Can Eat

What Hollywood and the Movie Theater Industry Need is a Good Kick in the . . .
go to original article ... or email me for article text
"Companies like Netflix, Gamefly, Napster & Comcast all make it possible to subscribe for a fee instead of buy or pay per use. By charging per month, these services bring in substantially more revenue than businesses that charge per use. This revenue, by the way, is the magical reoccurring revenue that every business so covets.

My name is Davis, I am a TV addict. While some people are proponents of the ala carte pay per use pricing menus for their entertainment, if I was forced to pay for every show I watch on TV, I would either watch a lot less TV or pay a hell of a lot more. Some people like to go outside and play in the sunshine. I do not. At present by paying cable "only" $39.99 (plus $10 in taxes that they really should pay for) per month I am the equivalent of the super fat man who spends every day gorging himself at the smorgasbord.

So this brings me to my point. Why not offer a monthly subscription fee to your local movie theater chains. Consumers would be happy to spend $30 or $40 per month in order to have the privilege of seeing films the way I did when I worked for the theaters. Instead of collecting $40 per year from me now, theaters could instead bring in $480 each year with an all you can eat model."
The idea of including a membership pass offering at movie theaters is another old favorite of mine. I've often thought this would be a good idea (and it's worth noting that this is already in place in several places in Europe), particularly for the theater owners -- who don't get very much reliable revenue. But reading this call for subscription based movie-going, jumpstarted my imagination for realizing the potential of this idea.

It hits close to home, because I've tossed around a number of concepts on this blog that would be affected/addressed by taking a measure such as this. The foremost of these was briefly addressed in an old blog post about doing the math behind going to the movies. The beauty of serving movie-going in a buffet line is that theater owners can now compare their services with those that use the predominant model of charging for modern entertainment or digitally enabled services (both classifications apply to the digital cinema). And once they compare, they can compete.

Put another way, movie theaters won't have to look so unattractive next to the prospect of digital cable or cell phone service. The unfavorable comparison between "watching as much TV as I want for $30 a month" vs "paying $10 for one movie ticket" will look much better when movie theaters can offer unlimited movies at $30 a month. Now moviegoing and cable can match up feature for feature. Both have a similar price point and both involve some form of unlimited access.

People might not even end up watching more movies for their money. But the peace of mind that comes with knowing you're getting a much better value and that you have the freedom to watch as many movies as you want will, I suspect, prove irresistible. Some might argue that the added value of this freedom is totally imagined if you don't end up watching any more movies than you pay for. But in a way, using this model, people pay for something that they should have been paying for the whole time.

I don't think, I've covered it on this blog, but I have often considered the fact that people who go to movie theaters less frequently than others, disproportionately benefit (cost wise) from the services of a movie theater despite the fact that the frequent moviegoers actually do more to support the theater. The thought goes something like this: Even if you doesn't go to a local movie theater, you always have the option of going. There is some value in the availability of the theater that people tend not to think about. Furthermore, the theater can't stay open for free, even if you don't go (this verifies that theater availability has a legitimate price). Operating costs are pretty much the same for the theater whether it's full or empty. So, by this logic, a person who goes to a theater once a week pays for his share of the theater's weekly operating costs, but a person who only goes once a month is off the hook for 3/4 or the time. And the person who goes 4 times a month doesn't carry as much of the burden as one who goes 4 times a week. And so on...

The question of who should pay for this value seems open to debate. Should people pay for it indirectly through taxes paid to the local government -- who in turn subsidizes the theater's rent? Should the cost show up more explicity in higher ticket prices for less frequent movie goers?

Neither seems particularly feasible, as the local governments have plenty of people asking for tax dollars, and the more expensive ticket prices for infrequent patros would discourage a lot of people from even trying the theater.

Ah, but how about those subscriptions? They accurately address the "hidden" value of theaters always being available, since you pay a set amount and can come whenever you want. More importantly, it opens peoples imaginations to the prospect of going to the movies regularly. It is doubly succesful because it not only fairly charges everyone for their share of going to the movies, but it increases the value for the frequent moviegoers whose role as patrons is invaluable for any theater (for a variety of reasons from concessions sales to word of mouth marketing to loyalty.)

But is a monthly pass feasible? Obviously movie theaters suffer certain constraints that don't always apply to cable television, netflix, etc. The most obvious is capacity. Theaters can't always accomodate the maximum audience they draw. A related problem is needing to have a print in order to show a movie. Aha! Here's an intriguing place to plug in the possibilities of digital cinema. With unlimited digital copies of a movie, a theater can show the blockbuster film du jour to every seat in the house if they wanted to. All they would need is an accurate projection of how many people want to see a movie and how many screens need to be dedicated to a film. A good way to arrive at this projection might be to request that passholders "reserve" a spot by signing up online or going to a box office.

In a best case scenario, there would be no need to "black out" certain popular dates in the schedule. Having black out dates would certainly reduce the value of monthly pass, possibly defeating its purpose for some people. With accurate projections for satisfying the boom-like demand for brand new theatrical releases, theaters should still have the chance to even accomodate walk-in viewers by reserving a screen or two for them (who might then be enticed by the value of the monthly pass). Hopefully then the blockbusters could serve as loss-type leaders to bring in people to watch the rest of the films being featured at the multiplex.

And if the monthly pass becomes successful in driving people to request the films they want to watch before they arrive at the theater to watch them, it could team up with digital projection in another powerful way by tapping into the entire film library.

And I'm talking about the whole damn thing.

Since digital cinema theoretically allows viewers to watch any film at virtually the flip of a switch, people can start to approximate the freedom of choice they enjoy with cable, pay-per-view, or internet downloads. A savvy interface would allow people to share film preferences and resonate with each other until they filled a single theater with a bunch of people who wanted to watch the same movie. And again, since any movie is fair game, people don't have to be subject to a slow season from Hollywood, they can turn to old favorites or films on a "limited run" (although that distinction may not exist in the world of digital cinema)

What could make this even better (for the moviegoers at least) would be to have a pass that worked at any theater, regardless of chain ownership or affiliation. This would be a huge win for the moviegoers who could limit their movie budget to one monthly pass and not have to worry about multiple subscriptions. Participants might have to take a leap of faith with respect to profit sharing but an umbrella monthly pass ticket provider that a theater could just "plug into" might be a benefit to everyone. In fact, this would probably have to be the case for smaller arthouse theaters in the same area that tend to work like a decentralized multiplex anyway.

I find that I alternate between favoring ideas that encourage unlimited use and choice, and those that model a more efficient and conservative model of using (and paying for) only exactly as much as one needs. After a life of going to the movies and about a year and a half of thinking and writing about it, I've realized, the core of moviegoing is its value as a habit. And having an unlimited usage model (whether it's a library card or a monthly internet fee) is crucial to nurturing a habit.


At 9:20 PM, Blogger Andrew said...

For years I've wished they would implement a pass system like you talk about. Especially since in these times people are much less willing to spend money going out to movies, ticket $10+, popcorn $6, drink $5, candy $4 total per person = $25+. and instead are renting from a blockbuster in store pass or online or netflix, I have all 3, and I never go to the movies, maybe 2 times a year.


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