AMC Theatres Ticket Pricing Increase: Good or Bad for Movie Business?

Elijah Wood is not a fan.

Shortly after AMC Theatres announced that it would be charging moviegoers more money for a better view of the screen, the “Lord of the Rings” star unloaded on the cinema chain. “The movie theater is and always has been a sacred democratic space for all,” Wood wrote on Twitter. “This new initiative by AMC Theatres would essentially penalize people for lower income and reward for higher income.”

But whether or not movie theaters have historically lived up to the kind of lofty egalitarian ideal Wood espoused, the fact remains that in recent years, the hard-hit exhibition industry has been experimenting with different types of ticket prices as a way to reinvigorate sales. And no company in the sector has been more aggressive with trying new strategies to revive its balance sheet in the wake of COVID than AMC.

In 2022, for instance, AMC charged $1 to $2 more for comic book fans looking to snag a ticket to the opening weekend of “The Batman.” And last weekend, encouraged by Paramount, AMC offered discounted matinee prices to every screening of “80 for Brady,” a comedy starring Lily Tomlin, Jane Fonda, Rita Moreno and Sally Field. For good measure, AMC is also selling its popcorn in malls, has partnered with Zoom to facilitate business conference calls at the local multiplex, and bought a stake in a Nevada-based gold and silver mining company.

Now, AMC is rolling out one of its boldest bets yet: Sightline at AMC, a ticket pricing initiative based on seat location within the auditorium. It kicks off in select New York, Chicago and Kansas City locations before expanding to all domestic AMC theaters by the end of the year. The three options will include the traditionally priced Standard Sightline (for the “most common” seats in auditoriums), the less expensive Value Sightline (front-row seats) and the pricier Preferred Sightline (seats in the middle of the auditorium).

“This is an example of an antiquated industry trying to little by little catch up to everything else,” says Eric Wold, an analyst with B. Riley Securities, Inc. “Most people took a negative view that this was an example of a company trying to gouge people. But people are used to paying more money for better seats at sports events and concerts.”

Indeed, almost every other form of popular entertainment, from Broadway to baseball, offers a range of prices depending on proximity to the action. But this particular approach to pricing hasn’t been as widely discussed in the movie business. In the past, some members of the exhibition industry pushed to charge more money depending on the type of movie being released, instead of the seat itself. In that scenario, a cinemas would tack a surcharge on high-profile franchise films, such as the latest Marvel sequel or spinoff, and give people people a break on an indie release or adult drama. But that model could be more perilous, analysts like Wold argue.

“You don’t want to make it seem like a movie is being discounted because it stinks,” Wold says.

It also isn’t too popular with studios themselves, who don’t always want to admit that their films should be discounted. Because of anti-trust rules, studios aren’t able to dictate the costs that theaters charge for a ticket, but they can change the terms when it comes to the percentage of box office revenues that they will receive for their movies.

Privately, some studio insiders applaud AMC for attempting to shake up a notoriously change-averse business, even if it’s too soon to tell how audiences will react to the change or if the initiative will even stick. Others fear the move could further discourage some already-hesitant patrons from returning to theaters. The box office has started to rebound from the pandemic in earnest, generating $7.5 billion in 2022, but those returns remain down 33% from pre-pandemic times. Older audiences have been particularly wary about returning to the big screen at a time when the virus may have subsided, but hasn’t vanished entirely.

There may be some logistical challenges. It’s unclear how AMC will enforce the new pricing, particularly in screenings where there are empty seats.

“People always try to game the system,” says Eric Handler, an analyst with MKM Partners. “What’s to prevent people from jumping around or buying seats for a few bucks less and then moving over to better seats that aren’t filled after the movie starts?”

So will this be a game changer? Will customers embrace a model that leaves them paying a few dollars more for a middle seat with an unobstructed view of the screen? And will this new world order be catnip to price-conscious moviegoers willing to strain their necks in the front row in order to save a couple bucks? Or will audiences reject the plan and fail to show up, forcing the end credits roll on this experiment in record time? The answer may lie somewhere in the middle.

“It could have an incremental impact on revenue,” says James Goss, an analyst with Barrington Research. “It could broaden the audience around the edges.”

Movie fans may not be used to paying extra to snag a good seat, but they have become inured to extra fees for 3D or Imax screens. Even outside ticketing services like Fandango add convenience charges to buy online. Some analysts believe the situation with Sightline is different, however.

“People are accustomed to paying more for a premium experience,” says Handler. “I’m not sure that means they’re ready to pay more to sit in a particular row.”

The prospect of generating more money at a time when AMC is still struggling to fill seats may be enough to justify the seating bet. Plus, the exhibitor hopes the initiative will drive attention to its AMC Stubs A-List loyalty program — which runs between $19.95 and $24.95 per month — because members won’t have to pay upcharges for a Preferred Sightline seat.

Because of its marketshare (AMC is the largest chain in the world), circuits big and small, like Cinemark or Alamo Drafthouse, may be forced to follow suit. Regal, once the second-biggest chain, is attempting to emerge from bankruptcy protection, a sign of how perilous the recovery has been for the movie theater industry.

Whether or not the tiered pricing model becomes industry norm, there’s a reason that Sightline at AMC is particularly appealing to the company’s CEO Adam Aron, who previously oversaw Norwegian Cruise Lines and co-owned and ran the Philadelphia 76ers. Both of those businesses charge their customers more for better suites or seats.

“Nearly every industry that Adam Aron has worked in has had variable pricing,” says Goss. “It’s new to the movie business, but it’s not new to Adam Aron.”

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