This story first appeared in a special CineEurope 2016 issue of BoxOffice magazine. To subscribe to the magazine click here.

Name: Franz Blechschmidt and Christian Kluge
Company: Smart Pricer
Title: Chief Commercial Officer and Chief Executive Officer
Country: Germany

Franz Blechschmidt and Christian Kluge both grew up in what was then East Germany, so their first cinema experiences date back to the 1990s when fancy, western-style multiplexes opened in their hometowns. These new cinemas featured movies like “The Lion King” and “Free Willy”. Between the movies and the fancy new theatres, it was all something neither had experienced before.

Blechschmidt and Kluge are now the founders and, respectively, the Chief Commercial Officer and Chief Executive Officer of Smart Pricer, a company aiming to increase the profitability of cinemas through its dynamic pricing software which allows theatre operators to adjust ticket prices based on demand. The executives spend a majority of their time speaking with exhibitors to better understand their needs and concerns. “Our product strategy revolves around asking ourselves which of our clients’ problems we are able to solve,” says Kluge. “These conversations, along with ongoing performance reviews, are crucial to ensure that our product is constantly improving and remains in demand.”

Blechschmidt and Kluge are fascinated with the digitization of the industry and the opportunity to understand customer behavior through data. “We have for instance applied data science to develop an algorithm that predicts each show’s demand, which is crucial to achieve the right price-mix,” Kluge explains.

It should come as no surprise that both executives have previously worked in the airline industry. They duo believe perfecting the pricing of movie tickets can help cinemas with what they see as one of the market’s biggest challenges; a declining interest in moviegoing among young people. “Cinemas risk that the younger generation is not as accustomed to regularly attending to the movies anymore,” say Kluge. “One way that cinemas can react to this trend is by further differentiating their product and pricing. Cinema is about both the movie and the exceptional experience for moviegoers. Focusing on the experience with things such as alternative content, new seating concepts, and other innovations can help improve this experience.”

He continues, “On top of that, differentiated ticket prices incentivize price sensitive customers to come to the cinema, while skimming willingness to pay from those with deeper pockets. The key is to offer the right price to the right customer at the right time.”

Currently Smart Pricer is developing a new feature that will forecast the willingness of patrons to pay per show. “By understanding the willingness to pay, we can ensure that cinemas generate more revenue from every customer,” he states. “The customer gets the incredible experience we talked about earlier, and the exhibitors increase their revenue. It’s a win win.”

As Blechschmidt and Kluge have built Smart Pricer over the past two years, they have found the guidance offered by Ralf Schilling to be particularly useful. “He helps us understand our customers better, as he’s been in charge of a cinema himself,” says Kluge of Schilling, the former longtime Managing Director of United Cinemas International, adding “We are currently setting-up an official advisory board and are looking for one or two experienced industry professionals to join.”

Blechschmidt and Kluge will both be in Barcelona for CineEurope 2016 and are excited to be attending the show for the second time. “In the perfect world, in 10 years time, Smart Pricer would be known for revolutionizing how cinemas price,” Kluge muses. “We believe in the power of data to maximize revenue while keeping customers happy. In speaking with exhibitors, the key problem is stagnating demand and revenue. We would love to be leading a company that helps solve this problem by unlocking the answers found in their existing data.”