What do “The Exorcist,” “American Graffiti” and “Live and Let Die” have in common? Film history buffs will know that they were the films that American cinema audiences flocked to in 1973. This was the last time we saw an energy shock and price inflation comparable to today’s global situation. The timeless quality of the many great films of that year puts the then struggles of the cinema operators – not to mention the challenge of just filling up the tank of your car to drive to the cinema – in the shade. Cinema survived this challenge too.
Half a century later cinema operators face wage inflation related to staff recruitment and retention, shortage of spare parts, wait times for just about any type of equipment, food price rises for a now significantly expanded concessions menu, plus higher energy costs just to keep the (projector) lights on. COVID-induced loans, unpaid landlords and government assistance will also need to be paid off. Meanwhile households are facing unprecedented pressures on disposable income. Did we mention that there is also a war raging? Or as some still call it, a “special military operation.” The only blessing is that Hollywood studios are not demanding a more favourable rental split, so at least films are not “costing” exhibitors any more, at least for now.
Given all of these financial obstacles, it would be understandable if cinema operators were to raise prices in line with other industries. Will anyone even notice fifty cents extra on popcorn or a soda, not least when petrol prices are far dearer? AMC had no problem hiking ticket prices last year by 50 cents and increasing concession prices in tandem. CEO Adam Aron even went against the grain by touting the increases to investors during the company’s second-quarter earnings call in August of last year.
While it is tempting to adjust prices across the board as a short term fix, it will not tackle root problems. There are still large sectors of the public that remain to be tempted back to the big screen. The success of Bond, Spider-Man and lately Sonic should not lull anyone into the complacency that if you program it they will come. Cinemas need to grow revenue primarily by growing attendance. This does not preclude the better deployment of dynamic pricing, premium experiences and selective price increases.
Exhibitors already control the tools for ensuring that cinema attendance does not just recover but exceed pre-pandemic figures, they are just not utilising them widely enough. Better use of data, redeployment of staff to front-line customer focus, creating a perception of value for money (particularly with premium offerings) and constant messaging that cinema is a safe and fun form of escapism for every age bracket; this is what cinema needs most.
This year will create its own crop of timeless film classics that will be looked back on in years to come without any association to the economic and geopolitical turmoil that was talking place in the world outside. While cinema creates escapist magic, it cannot escape the reality of profit and loss. It is important not to let short term thinking and pressures shape long term strategy. “You mustn’t be afraid to dream a little bigger darling,” as Tom Hardy’s character put it so memorably in “Inception.” Exhibitors need to dream big and plan accordingly.
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