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The Price Formation in the Movie Theatres

Introduction

In the theater environment, pricing strategies have not been claimed as an advantage for a long time. Currently, the situation is changing and the price formation is becoming a key component in the provision movie theaters with audience. Furthermore, price problems are significantly magnified for a commodity such as an audiovisual product created in the film industry (Cohen, 2017). Price formation is a complex problem, the solving of which requires taking into consideration many external and internal factors. In addition, it needs to overcome the risks and uncertainty of the relationship between demand and supply on the market. Most movie theaters try to reallocate attendance towards times and days of lowest demand by offering cheaper tickets during off-peak periods and slightly higher prices during peak hours. It explains the lower admission price for the first show on weekday afternoons than on weeknight or weekend shows. It is the price discrimination of the second kind: price change depending on consumption volumes. In this case, the film’s total income will depend on the most effective use of all additional alternatives for generating revenue.

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One alternative is to introduce premiums based on the popularity of a particular movie. Inflated prices for movie picture presentation originally appeared for films with long show period, but currently they are based in most cases on expected demand. The logic of the price formation, in this case, is based on the life cycle of the tape; when new blockbusters are released, they fall into the category of the most expensive tickets (Cohen, 2017). Throughout their distribution period, films move between levels as they become obsolete.

Another alternative is a practice similar to air travel – introducing segmented audiences, offering customers different groups of seats and price categories within the same hall. Usually they introduce a choice between two or three sectors. This practice provides a selection between business class and economy class, offering premium positions, for example, for relaxation chairs. Visitors looking for the best guest experience have the option to pay extra for wide seats with more legroom. Apart from it, this method provides customers with more price choices and saves premium seats for ticket-insensitive viewers, making it the best of the two listed alternatives.

Conclusion

To summarize, the price formation is an essential strategic tactic that cannot be ignored, primarily when market players compete far beyond each other. The possibilities of price formation as a factor in the success of a film project, on the whole, are comparable to those in the conditions of mass production. On the other hand, movie theaters’ main feature – its innovative nature – is more connected with the film’s consumer properties than technological ones. It leaves its mark both on the problems of managing a film project and on the methods of the price formation. Although the film’s budget is one of the essential marketing tools, the price formation in filmmaking is less tied to production costs, but primarily depends on its market potential. Simultaneously, the film’s total income will depend on the most effective use of all additional income-generating alternatives. The best of them is the offer to clients of different groups of seats and price categories within one hall.

Reference

Cohen, J. N. (2017). Investing in movies: Strategies for investors and producers. Routledge.

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StudyCorgi. (2022, March 12). The Price Formation in the Movie Theatres. Retrieved from https://studycorgi.com/the-price-formation-in-the-movie-theatres/

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StudyCorgi. "The Price Formation in the Movie Theatres." March 12, 2022. https://studycorgi.com/the-price-formation-in-the-movie-theatres/.

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StudyCorgi. 2022. "The Price Formation in the Movie Theatres." March 12, 2022. https://studycorgi.com/the-price-formation-in-the-movie-theatres/.

References

StudyCorgi. (2022) 'The Price Formation in the Movie Theatres'. 12 March.

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