Friday, February 5, 2016

Flexible cinema seat pricing may be a force to be reckoned with



After a fallow 2014, Hollywood last year released a plethora of blockbuster movies: between them, the new James Bond, Marvel Avengers and The Hunger Games films, Jurassic World and the Pixar smash Inside Out took £274m at the UK box office.
Then there was Star Wars: The Force Awakens . Released at the end of the year, it made £108m in its first month, a new record in the UK.

The challenge for cinemas is to make hay while the sun shines — and that involves being more sophisticated about how they price tickets and sell out their theatres. “The seats you do not sell today do not make you any money tomorrow,” says Ian Shepherd, the chief commercial officer of Odeon, the UK’s largest cinema chain by the number of venues. “From our company’s point of view, you want as many people filling as many seats as possible.”
Until now, he says, the cinema industry has solved its problem in a simple way. Prices have varied a little bit depending on time or day of the week and whether the customer is a student, a child or a pensioner. Other than that, pricing has been pretty static, he says, adding: “What we have been doing for the past year is to say that this simple solution is suboptimal for everyone.”
The Odeon group is experimenting with a flexible ticketing model, pioneered by airlines and hotels. This will see prices change in real time depending on demand.
“We are experimenting in a small way in one or two cinemas that are not in the UK,” says Mr Shepherd. “The early results have been very positive.”
But while he suggests the chain would eventually move to a fully dynamic pricing system, this is still some way off. Until then, Odeon and other cinema companies have started to price their tickets to reflect the value to customers of being one of the first to see a newly released blockbuster.
“In the opening couple of weeks of a very large film, when you know you are going to be sold out, we are adding £1 on a ticket, sometimes a tiny bit more. The logic that says tickets are more expensive when there is lots of demand is something that people get,” he says.
Some seats may become more expensive than others. Mr Shepherd points out that it is normal in Germany for every seat to be individually priced.
The chain is also being cleverer about selling tickets to less popular films. “We are doing Groupon deals, online flash sales and time-banded promotions. We use social media or email to put out a flash sale. As a result, our market share has increased,” he says.
The logic that says tickets are more expensive when there is lots of demand is something that people get
- Ian Shepherd
Customers who come to watch a successful film may also find an offer to come back the following week included with their ticket.
Other cinema chains have also used technology to improve their ticket sales. AMC, the US chain now owned by Wanda, the Chinese conglomerate, moved from selling tickets through individual cinema websites to an open-source ticketing engine that makes all of its 865,000 seats available on a wide number of websites.
In the first year after the change, there was a 45 per cent increase in online ticket sales. AMC said in November that the change means customers are less likely to change their minds about a visit to the cinema because they have already committed to a buying ticket. It also said it can see in advance how much demand there is for a showing, allowing it to change auditoriums for more popular films.
Meanwhile, ticket-selling websites, such as MovieTickets and Fandango, are also experimenting. MovieTickets.com signed a deal to sell tickets through MovieQu, an iPhone app that identifies movies from the sound of their trailers — on a laptop or outdoor screen, for example — and searches for nearby screenings. MovieTickets customers who visit 320 shopping centres across the US will also receive alerts with trailers and movie content after a separate deal with Mobiquity.
Fandango already has a service that shows film trailers embedded with options to buy tickets on Samsung smart televisions, phones and tablets.
In China, WePiao — which sells cinema tickets through social media platforms including WeChat and QQ, an instant messaging platform — is valued at £1bn after raising £150m in its last round of funding.
Using WePiao, customers can pay through their mobile phone-linked bank accounts and preselect their seats, drinks and popcorn. The number of Chinese buying film tickets online grew by 42 per cent in 2014, with mobile phone bookings rising by 109 per cent, according to EntGroup, a research firm.
In the UK, the increasing penetration of technology means more tickets are being sold at the last minute, especially through websites acting as secondary markets, such as StubHub.
According to the site, theatregoers tend to plan their trips in advance, but sports and music fans often buy tickets within 72 hours of the event.
StubHub also saw strong rises in bookings made through its mobile app and its mobile website. Almost a third of all its sales in 2015 came through mobile phones, suggesting that more customers are buying on a whim, arriving at a venue and seeing if they can buy a ticket on the secondary market.

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