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Stub Rub: Does Exclusivity Hinder Sales Of Movie Tickets Online?

Besides the typical $1 to $2 broker fee, one of the factors limiting the growth of the online movie-ticket selling business has been its complexity: The two dominant online players in the domestic market, and Fandango, don’t have deals with every theater chain, meaning consumers often have to visit multiple selling platforms to find a convenient location and showtime for the movie they want to see. A lawsuit filed in a Florida Circuit Court against exhibition chain AMC illustrates this conundrum.

On Wednesday, MovieTickets joined the suit against AMC, one of its founding shareholders, claiming the exhibition chain violated an exclusivity agreement when it signed a deal to make online sales of its tickets available through rival Fandango. The breach-of-contract suit had been filed earlier by another cinema chain, National Amusements, which along with AMC co-founded MovieTickets in 2000.

Fandango’s deal with AMC, publicly announced Tuesday shortly before MovieTickets made its disclosure, lets Fandango sell tickets to about 3,000 additional screens scattered across the U.S. Fandango, which is owned by Comcast (NSDQ: CMCSA), is now able to sell tickets to about 70 percent of domestic theaters that are equipped to handle online transactions.

The suit also claims that AMC used its market clout to thwart an attempt by Comcast to purchase MovieTickets for up to $160 million.
The suit seeks unspecified damages and injunction of Fandango’s ability to sell AMC tickets.

Our question: Does exclusivity in the online movie-ticket business impact consumer demand and the growth of the industry? Would more people buy advanced tickets online if they knew the service they were using covered all or most of the theaters in their area?

For its part, Fandango says 2011 was its biggest year ever in terms of ticket transactions, though it didn’t release any specific figures. A report issued last year by Global Industry Analysis Inc. projected the overall online movie-ticket business will sell $13.72 billion worth of admissions worldwide by 2017 — which, measuring the growth rate of the global box office, should account for about a third of the global market at that time.

But at least in the U.S., it’s hard to imagine that growth for Fandango and MovieTickets will be explosive, given the overall recessionary movie-ticket market. Last year, only 1.27 billion cinema admissions were sold in the U.S. and Canada, the lowest total since 1995.

Certainly, as Comcast officials quietly concede, having Fandango cover all or the vast majority of available screens instead of only 70 percent might benefit its conglomerate parent at a time when it’s trying to figure out what to do with Fandango, which it acquired in 2007. During the Super Bowl, Comcast’s Universal Pictures division ran an ad for its upcoming blockbuster Battleship. That ad included a Fandango tag, directing the 111 million viewers who watched the game to visit the admission-selling site and sign up to be apprised of Battleship showtimes and advanced ticket sale opportunities.

Not only is Comcast looking to emerging second-screen integration to more closely tie its own movie ads to Fandango-led points of sale, it’s also seeking to enhance the advertising revenues of its cable and broadcast assets by talking to other movie studios about it.

Certainly, in making that pitch to rival studios, offering an additional 3,000 screens to its point-of-sale offering will not only help consumers, but Comcast, too.

One Response to “Stub Rub: Does Exclusivity Hinder Sales Of Movie Tickets Online?”

  1. Sinclair_paul

    Without a doubt, this is a hindrance. I’m a fairly savvy online shopper, but as someone who doesn’t work in the film business, I didn’t know that fandango and movietickets each have different theaters until now. So, I check one, whichever is top of mind, and if I can’t buy tickets for a given theater, I always assume that theater isn’t pre-pay enabled. I’m sure that most average consumers aren’t aware of this either.

    We all tend to live in our own industry bubbles and make assumptions about what average people do…and many/most of those assumptions are incorrect.