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Summary:

The film industry has performed well at the box office as of late, buoyed by 3-D releases like Avatar and Alice in Wonderland. And now Hollywood is looking to cash in even further — by raising prices for movies by as much as 10 percent. But […]

The film industry has performed well at the box office as of late, buoyed by 3-D releases like Avatar and Alice in Wonderland. And now Hollywood is looking to cash in even further — by raising prices for movies by as much as 10 percent. But will the increase drive people to look for cheaper entertainment elsewhere?

Beginning last Friday, movie theaters owned by national chains Regal Entertainment, Cinemark Holdings and AMC Entertainment raised ticket prices an average of 8.3 percent, according to BTIG research analyst Richard Greenfield. The increase varies by movie to movie (depending on whether it is a 2-D, 3-D or 3-D IMAX print) and by theater to theater, but the bulk of it is coming from 3-D titles, which have scored big at the box office over the last year.

Growing interest in 3-D films was the top reason that Hollywood box office outperformed expectations last year, with box office receipts rising 10 percent and 3-D movies accounting for 11 percent of total box office in 2009, compared to just 2 percent in 2008. The recent success of Avatar, which has grossed about $750 million domestically, and Alice in Wonderland, which has pulled in $275 million since opening just a few weeks ago, has further pushed demand for 3-D entertainment.

One reason for increased prices is the limited number of 3-D and IMAX theaters that are available for the films to be shown in. Last weekend’s box office opening of How to Train Your Dragon, for instance, pushed previous box office leader Alice off more than 2,000 3-D screens and about 185 IMAX screens last weekend. The limited number of 3-D screens will continue to impact releases, as five major 3-D films are set to be rolled out over the coming months, including Clash of the Titans and Iron Man 2. Given the limited window in which these movies have access to 3-D theaters, theater owners and Hollywood studios both want to maximize their revenues during those runs.

But could Hollywood be overestimating the number of people willing to pay $15-$20 for a 3-D film? While consumers came out in droves to see Avatar in 3-D, the vast number of entertainment options available — from TV to online to gaming — could lead to a potential backlash if they decide that there’s not enough value in filmed entertainment.

And not all 3-D films are created equal. While Avatar was fully shot in 3-D, most films coming out over the next several months were shot in 2-D, with 3-D elements added later. This was true of Alice, which was shot in 2-D with plans for a 3-D release, but is also true of Titans, which didn’t get the 3-D treatment until January.

Furthermore, box office greed doesn’t extend just to the higher-cost (and higher-grossing 3-D titles) — theaters are raising prices across the board. Hollywood could argue that the increased cost in creating a 3-D film, combined with the limited number of 3-D and IMAX theaters that are available, but 2-D titles are also being affected. According to Greenfield, theaters are increasing 2-D ticket prices about 4 percent on average. If consumers begin to believe that their money is better spent on other things, Hollywood could be worse off for its price increase.

Photo courtesy of Flickr user bark.

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  1. I think this post makes a valid point, however, I do not believe that we are going to see any kind of consumer backlash for at least several years. Further, by that point, the movies will be produced in 3-D from the start and will provide truly unique experiences.

    3-D is giving people a reason to go to the theater once again. It is an experience that they cannot have at home right now. I think the theater owners are smart to raise prices for these movies, as they need to cover the tremendous expense of 3-D projectors, and because it will remain a niche that I believe people will be willing to pay for, so long as the movie genre and plot provide a unique 3-D experience.

    I also believe that over the coming years, there is risk that box office for traditional 2-D movies of genres that do not lend themselves to 3-D, such as a romantic comedy, will be on the decline, as windows evolve. The higher ticket prices and box office for some tentpole 3-D releases will cover the declining box office for some of these other titles.

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  2. I agree that 3D is not an experience you can get in the home, yet, however, after experiencing Avatar in a non 3D cinema I was keen to get out and see what an ‘amazingly intergrated’ experience I could get by viewing Alice at an IMAX. What a disappointment. Yes the film is visually luxurious but that has nothing to do with the 3D effects and after all the hype, combined with paying twice the price of a 2D ticket, I was incredibly disappointed for a less than interactive experience and I will definitely not be rushing out to pay those kind of premiums again in the near future. However, once the technology improves and the audience feel as ‘involved’ as the hype has once suggested, I’ll be more than happy to pay more for a richer experience…Until then I’ll stick with 2D HD thank you very much.

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    1. Did you see Avatar in 3-D? I’m wondering what people think about the difference between a 2-D print made 3-D versus the immersive 3-D experience that Avatar provided…

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  3. Perhaps I am in the minority, but 3D doesn’t add anything to any movie for me. I have seen Avatar in both 3D and 2D (going with different groups each time) and cannot recall a single 3D element that was worth it. Same was with every 3D movie that has come out recently. 3D is very VERY limited in what it can do for a movie experience. When you notice it, you really shouldn’t be noticing it as it takes away from the suspension of disbelief. In other words, it reminds you that you’re watching a movie. But lately, it doesn’t even do that. When I asked my group that saw Avatar in 3D what was 3D special about that movie, no one could think of a single thing … other than one saying, “We wore glasses.”

    Personally, I think 3D is a fad. For a very few movies, it adds something to it. A space movie would be one such experience. Perhaps a slap-stick comedy action movie. But for most movies, it is at best a gimmick and at worse a complete waste of money and hurting the movie experience.

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  4. Billyjimjoeybob Saturday, April 3, 2010

    What we need is fewer “groundbreaking technologies” and gizmos and remakes and sequels. Hollywood needs good ORIGINAL writing again. Not holding my breath.

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  5. [...] films then ever before. Box office receipts in 2009 rose 10 percent over the previous year, with 3-D movies accounting for 11 percent of total box office in 2009, compared to just 2 percent in 2008. But despite massive revenue growth, the 3-D technology [...]

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  6. [...] films then ever before. Box office receipts in 2009 rose 10 percent over the previous year, with 3-D movies accounting for 11 percent of total box office in 2009, compared to just 2 percent in 2008. But despite massive revenue growth, the 3-D technology [...]

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  7. [...] Creating another premium-priced window could also alienate consumers, who are already dealing with rapidly increasing viewing costs. The average movie ticket price increased 8 percent over the last year, and consumers are showing their dissatisfaction by voting with their feet. Despite a higher take at the box office over the summer, fewer people actually went to the movies, as U.S. summer movie attendance in 2010 was at its lowest point since 2005. Much of that increase is due to the growth of 3-D movie watching, but the higher prices are already starting to cause some backlash. [...]

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  8. [...] Creating another premium-priced window could also alienate consumers, who are already dealing with rapidly increasing viewing costs. The average movie ticket price increased 8 percent over the last year, and consumers are showing their dissatisfaction by voting with their feet. Despite a higher take at the box office over the summer, fewer people actually went to the movies, as U.S. summer movie attendance in 2010 was at its lowest point since 2005. Much of that increase is due to the growth of 3-D movie watching, but the higher prices are already starting to cause some backlash. [...]

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