Blog Post

Mark Cuban’s Challenge – My Answer…Buzz

A few days ago, billionaire Mark Cuban (who owns various entertainment assets, including a film production studio, theatre chain, etc.) posed an open challenge on his blog:

… How do you get people out of the house to see your movie without spending a fortune. How can you convince 5 million people to give up their weekend and go to a theater to see a specific movie without spending 60mm dollars.

So if you… have a great idea on how to market movies in a completely different way. If your idea works for any and all kinds of movies. If it changes the dynamics and the economics of promoting movies, email it or post it. If its new and unique, i want to hear about it.

Since Mark and I have a little bit of history debating issues that are vexing the entertainment industry, I thought it would be appropriate (and fun) to respond to his challenge openly with this post. So with that… Mark, here’s what you should do.


Whenever anyone goes to a movie theatre, they end up with a ticket stub. I would propose that you create a program/system to make those ticket stubs into currency… essentially a coupon that can be passed around, traded, bought/sold, etc.

Allow me to illustrate with a hypothetical. Let’s assume I went to see The Pirates of the Caribbean on opening day and I paid $8.00 for my ticket. I leave with a ticket stub that has been date/time-stamped. Then sometime during the following week, I run into my friend Sarah at Starbucks.

During the course of our conversation, I tell her that I had seen Pirates and recommend that she should see also it. As a friendly gesture, I pull out my wallet and give her my ticket stub. Sarah decides to go see the movie the following weekend, and since exactly one week has passed since my ticket stub was stamped, she is entitled to receive a $1.00 discount. Now, had she waited two weeks to see the movie, she would have received a $2.00 discount.

In other words, the stub becomes more valuable as time passes… up to the point where the ticket price post-discount begins to approach the value of DVDs entering the rental release window. Sarah, delighted by my kind gesture, returns the favor by presenting me with a stub of her own… a 3-week old stub for The Devil Wears Prada. Although I hadn’t been planning to see Prada, I decide I might as well since Sarah’s stub means I’ll get $3.00 off my ticket price.

These days, word-of-mouth is the single most influential factor that drives a film’s success. And what I am proposing is akin to institutionalizing word-of-mouth into a capital market, where the ticket stub becomes the currency. Not only is this concept likely to increase the volume of movie-goers (as any consumer goods promotional expert will attest), it is also likely to impact the distribution curve of box-office receipts… when the vast majority of movies are released into the theatrical exhibition window, they normally go through a fairly consistent demand/revenue curve at the box office… essentially, box office receipts are cut in half with every subsequent week.

So if a film grosses $100 million opening weekend, it’s likely to do about $50 million the following week, then $25 million the week after that, etc. By turning ticket stubs into coupons, week-to-week box office numbers are likely to get impacted by increased demand and volume of viewers… which consequently should improve marketing budget yields via lowered customer acquisition costs.

While there are many more implications I could discuss (e.g. stubs will probably show up on eBay, people will list their stubs on their social networking profiles, etc.), I’ll stop here for now. So Mark, chew on the concept… I think it will change the dynamics and economics of movie marketing and promotions.

60 Responses to “Mark Cuban’s Challenge – My Answer…Buzz”

  1. Adrian Smith

    well here is the thing if you are making more than one movie then why make people leave the house many people have huge televisions and also an internet connection so why not set up a web site where people go and watch the movie keeping in mind you will have to use a good codec for the video encoding and you will have to have 256bit encryption or higher to keep the pirates away as payment you could have prepaid vouchers like phone companies do and also a credit card option but thatsjust an idea that could possibly make millions and may cut down on the amount of pirates if you like this idea please email me at [email protected] kind regards Adrian

  2. roohangiz golbidi

    5ms ago i happily divorced , now i need a soulmate . there are several apparently matched men , one of them seems to be more proper , his name mohammed paigah . give me your idea and help me to deside .

  3. The simplest way to get a new butt in the seat is to give them something they currently don’t have available. There will always be crying babies, high concession prices and talkers. They need a reason to go that all of the negatives couldn’t overcome. The need to know they are going to experience something that is “worth it”. Saving a buck doesn’t matter. Have you stopped driving your car because gas is over $3/gallon? That’s an excuse people use to not go. But when a huge blockbuster hits the theaters, they go because they can’t stand not to experience the “buzz”. My partners and I have been working on our concept of the perfect movie going “experience” for quite a while. We are looking for investors to help us start a chain that addresses this very problem Mark Cuban asks about. I literally could write a book supporting the psychology, physiology and economics of the movie going experience and when you’ve finished reading it, you’d wish you had a million to invest in the concept.

    “It pays to know how a man thinks… it pays better to know how he feels.”

  4. No one has responded to the “What’s in it for me” query raised by Dave Zatz in the first line of the first response…

    The essence of his point is key here…There remains NO incentive for the first exchange from the first user to the second…the most crucial communication point in any viral, networking or WOM model

  5. As some have said, word of mouth exists already. One problem with this plan is that you can only give your ticket stub to one person — you can’t tell ten people in your office about this awesome movie you saw and give all ten of them a coupon. So the incentive you’ve added is a rather limited incentive, and it would take a long time for it to “snowball.”

  6. Rasheed Shobande

    Hoping to get a job with a Billionaire!

    Hi Mark Cuban,

    I did a quick search word search in your movie biz challenge and I was looking for just one word, everyone else seems to miss one key point.

    The word I have in mind will definitely get 5 million people in the US every weekend to watch a movie. You will still spend something on advertising but nothing close to 60 million.

    The anticipated problem with my idea is that you will have to change a few fundamentals within the movie business and get stakeholders i.e. advertisers to try something new.

    The movie theater is on e big TV at the end of the day so why don’t you just treat it like one and reverse the concept by bringing the “Home TV Experience” into the “Movie Theater”.

    Basically, HBO brought the Movie Theater Experience in the home and monetized its income along the lines of the Movie Theaters so I propose you bring the Home TV experience into the Movie Theater and adapt your income streams the same way TV does.

    In a nutshell,the word is “FREE”- make it free to watch a movie in the theater and sell advertising in each segment at a higher cost to advertisers; a price that allows for a total re-coup of cost of provisioning the movie.

    Mr. Cuban, Google et al. changed the advertising business for online advertising it’s now someone else’s turn to change the business of advertising in movie theaters.

  7. mannix666

    nice. Mark Cuban: “if you have any great ideas that will change the economics of xyz, send them to me. I want to hear about it”.

    no. send ’em to me. I don’t have a sports team yet.

  8. I bet a lot of people who wait for the DVD would go see more movies in the theater if they could apply their theater ticket price to a later DVD purchase.

    As with rebates, hardly anyone would bother to save their ticket stubs for months, so the actual discount per DVD sold would be much lower. Actually, when you consider the turkey factor (i.e., you see a film in the theater and it’s so bad you don’t want to buy it on DVD, lest it infect your other DVDs with its badness) the average discount would probably fall to a buck or two. Still, it could be an appealing incentive to get more home-viewers to the theater.

  9. Although creative, this is a poor idea.

    People already recommend great movies without any incentives. Because of the necesity to save the paper, etc. this idea will not increase that behavior noticiably. All it will do is decrease the ticket reciepts on great movies and have no effect on poor movies (people are not all of a sudden going to recommend poor movies to their friends just because you can save a buck or two)

    All you are doing is giving someone a discount to incentivise a behavior (recommending a good movie) people already do natually (and for free)

    The bottom line with WOM is the same as it will always be: Spend your time creating something worth talking about (cool, uniuqe, fun, etc. ) and poeple will happily do so for free.

  10. John Galavan

    Your idea is a solid sales promotion tactic and is worthy of development. However, there is an underlying problem that retards any awfully solid promotional tactic- bad movie.

    We all know but rarely expand on this undisputable fact: To be successful you must first fix the product or service.

    But I have to say that you have the nucleus of a great idea… which I would only use to add WOM and extra spin to a good or great movie. Nothing helps crap sell!

  11. I am suggesting a few improvements to the approach –

    1) Immediacy – Mobile (I am surprised that you didnt use the mobile ;-) ) – Have a unique number on the stub and at the end of the movie (or interval in some countries) encourage the audience to SMS(text) ” ” to a shortcode (In your example “SMS ‘PoC 8373AUR 13988973434’ to 98234”) . The system then forwords a full message in the lines of “your friend with mobile number recommends that you watch . If you do decide to watch it, show this code – to get X$ off”
    2) Sweepstake – Enter the folks who send the sms into a sweepstake (the more friends you forward to, the higher your chances of winning)
    Note – You can track redemption patterns (since you have both mobile numbers) much better than a piece of paper passing hands.

  12. Two other things.

    1. Put ads on the stubs for related movies/product… this can help offset the cost of the movie discount.

    2. Allow people to build referral points. That way them THEMSELVES will get a discount…

  13. hello! i am a cinematographer and not too sure of the feasibility of the stub idea. it may work sometime and many-a-times it may not. i may just postpone a movie because i am not getting a stub that discounts. i take discounts for granted. but then again, sometimes I may have too many stubs in my pocket and may decice to watch a movie BECAUSE i am getting a discount…however, as a film maker, I do think some steps need to be taken care of :
    1) movies are becoming more and more expensive by the day, especially for younger people. newly married couples, esp those with very young kids, never go to theaters. all such friends of mine havent visited a theater for years
    2) the theater going experience must be made more pleasurable. i once went to a PVR theater where they refused to let me in with my laptop case, AFTER i had bought two expensive tickets and refused refund as well, asking me to sell my ticket to whoever i could AFTER 15-20 minutes of the movie having started. (once the same theater refused me because i was carrying a stills camera). Even refreshments are priced to blackmarket levels. Its cheaper to hang around a Mall…I dont go to PVR anymore.
    3) Film reviewers should be requested NOT to give ratings to a movie. Its sick. People spend endless amounts of energy and money and emotions making a movie and some reviewer, who are mostly just some passing journo with a JOB to rate movies will use personal subjectivity and will rate a movie as whatever. that discourages people from even TRYING it out. Let the consumers decice. For example, this week, in India, Omkara is rated higher than Lady in the Water, by a particular daily. What gives the writer the right to say that?
    4) I think the whole thing is emotional. Give the customers a great emotional experience and they will want to come back again next week…

    and of course, keep making great films.. ;-)

  14. Personally, I go to watch a movie because I WANT to watch it not because there is a discount available on it.
    Once I decide to watch, then I may look for discounts.

    There are several factors that make people want to go watch a movie, discount on prices may be one of them, but I don’t think it is a major factor.

    And If someone thinks they got better things to do than going to a movie, this stub idea is definitely not going to help.

    The segment to be targetted is the one who want to watch the movie but instead decide to watch it at home on a DVD.

    Why?

    Price of the ticket, (Will a $1 or 2 off make a difference) – Nah.

    Comfort – Can’t beat the home.
    Ambience of the theater – Can’t beat that

    and many more,

    I guess, what I am saying is make movie going more worthwhile – create a unique experience that is worthy of my time and money.

    My .2 c

  15. The idea of giving a discount is hardly likely to make people flock to see a film, however I’m sure jolly nice chaps like Robert would religously save their vouchers for friends.
    I think it needs some anti-marketing, instead of these huge media blitzes, putting film imagery on every TV, shop, restaurant etc.
    If the studios keep it quiet and seed a few thousand people, who can then invite their friends to see the film (they would still have to pay). No invite, no see! If you have something that is basically crap and overpriced, you need to create exclusivity to sell it at a premium price.
    Stop trying to feed the masses, and concentrate on finding the real audience.
    more on produktiv.com/pj/ramble.html…

  16. I like the “ticket as coupon” idea. Not so sure about the specific details though.

    “What about a frequent flyer type of deal, see 5 movies, get the 6th free?”

    The major chains do have programs like that already. I’ve got somewhere north of 1000 points on my AMC Moviewatcher card and have earned quite a few free movie tickets (and other stuff) from it.

    The one thing that really keeps me and most people I know from the theaters lately isn’t money though. Not directly anyway. It’s all the commercials we’re forced to sit through. If I’m paying more and more for ticket prices, I shouldn’t have to be sitting through 20-30 minutes of commercials. If the theaters cut back on those and/or better yet put some actual programming into their preshows, I’d bet there would be at least a partial upswing.

  17. Robert, I like the overall idea and I think Mark should try it at least once. I think it would be better for multilogies (TM) i.e. something that has more than one planned part with a known release schedule (Harry Potter, Pirates, LOTR etc) then get the discount on the subsequent sequel attendance and maybe a seat in a pre-release for the fans.
    The real world implementation is difficult, I live in Thailand and here you get a two week window of opportunity, any longer than that and the film is off-circuit.
    What you’re basically suggesting is long tail meets cinema.
    I have to agree with Michael, for most people the event is as good at home (big TV, home theatre) and the seats are generally more comfortable :)
    So maybe the asnwer for Mark is scale down, rather than bring the cinema to the home (DVD etc) bring home to the cinema. Smaller screens of varying sizes depending on number of friends and have a back catalogue of films that people watch to their schedule, Cinema on Demand…

  18. I don’t believe it should be based on physical tickets. The alternative requires an electronic system, but hey, the original idea would need some systems work.

    Tickets issued should have printed on them a reasonable length , unique string – something like an MD5 hash of some secret. This code can then be sent via email, SMS, instant message, carrier pigeon, whatever, to someone you’d like to give it to.

    Each code can be used once and is invalidated in a centralised database once used at the point of sale. It is then also possible to perform good marketing analysis of the exchange of codes – e.g. do people attending Cinema ‘X’ send their codes more often than people attending Cinema ‘Y’ – is that because they had a better customer experience? etc. etc. etc.

  19. Hey Nitin,

    Thanks for clarifying the authorship of the piece ;-)

    And you’re spot on when you say… “The issue is not the physical stub but creating an encoding of the movie-going experience that can be virally communicated and that carries a discount.”

    I’m digital-to-the-bone… do you really think I would have limited this concept to atom-based stubs? :-)

    Thanks for the great comment.

  20. Hi guys,

    I think a couple of major points are being missed here

    a) The article is by Robert Young, not Om ( hi Om :-) )

    b) The issue is not the physical stub but creating an encoding of the movie-going experience that can be virally communicated and that carries a discount. In fact tracking a physical stub and incorporating that into the ticket machine to give a discount is pretty much a non-starter. So that is just an “idea-prototype”.

    However, decouple the idea from the stub and make it an electronic token of some kind that can be emailed to multiple people and the more people redeem the coupon ( for a discount ) the more of a distributor credit you get. Sort of an Amazon affiliates program for each movie.

    Hook this into movie sites like Fandango and into MySpace
    and watch the thing explode as credits are automatically tracked and applied when you purchase your tickets for the next movie.

    Now everyone has a motivation to do the thing that will increase audiences. Smart sites will add a rating feedback loop that rates how good a person’s movie recommendations are. So being a promoter of a movie just for credits will get damped out real fast by the first wave of viewers and the guy doesn’t get credit if too many people complain … etc. you see the point.

    Good recommenders rise above the noise – creating a long-tailed “Ebert and Roper” with kickbacks.

    Mark Cuban, if you need more ideas like these ask Om where to find me :-)

    Now if like Dave you just don’t like the theater experience then maybe the credits and discounts can be applied to affiliated entertainment – after all by the time it gets going it’s a currency.

  21. Prashanth Pappu

    Instead of the value of the stub increasing with time (greater discount after more waiting time), it should increase with the number of people who have passed on the stub. First buyer gets it for $8, next buyer uses it to get a ticket for $7, third buyer uses second buyer’s stub to get it for $6 etc. Else, there is an implicit incentive for second buyer to wait it out till he/she can get the ticket for a buck.

    Also, there should be some reward for the first buyer etc.,

    Looks like Mark Cuban needs to hook up with Amway and launch another scheme of pyramidal proportions! Ah, an’t wait to see all those movie-goers accosting strangers and pestering them in malls to join in their little scheme.

  22. I can’t say that I have immediate complete answers for Cuban. But five questions pop up:

    * What is the job that people are 'hiring' movies for when they go to the cinema?
    * What are the barriers to the consumption of movies?
    * Are there ways to eliminate or reduce some of these barriers?
    * Are parts of the market overshot?
    * Is there a simpler, lower-cost approach that appeals to a neglected or underserved market segment?
    

    The first two questions are relatively straightforward and I will take a quick crack at them.

    http://www.ondisruption.com/myweblog/2006/07/disruptingthe_.html

    The last three questions get at the heart of the issue and I will attempt to address them over time. It would be a disservice to rattle of quick answers on those issues.

    [email protected]

  23. Couple of questions:

    What purpose does the stub serve in the first place? Why not just drop the rates for the movie ticket as time passes?

    Are all the movie theatres owned by the same owners? If I take my stub to some other theatre running the same movie, would I still get a discount?

    As a theatre owner, why should I keep giving consecutive discounts as each subsequent stub owner shows up? Will the studios reimburse me for the discount?