So really, what was the deal with that Groupon vs Marcus skirmish? The group-discounting giant (Groupon is the second most visited site) had entered into a deal with Lionsgate Studios to show the Katherine Heigl-helmed One For the Money, based on the best-selling novel by Janet Evanovich. The goal was to sell thousands of tickets at the reduced price of $ 6 each, quite a boon for consumers as that represents a 50% markdown–not insignificant especially when you take that four-member family into account, where the cost of an outing to the theatre balloons out of proportion. The studios clear a lot of sales, maybe even meet expectations in some of the markets, the movie gets seen, people talk about it or not. And what about movie theaters? Do they make up the difference in concession money? I put a question mark because that’s a big “if.” We should turn to the consumer economists in the room and ask, if you reduce the price of admission, do people spend the difference on concessions (which represents higher margins for movie theatre owners)?
The room is empty, no economists.
It’s not simple anyway, and judging by the latest changes in some theaters (a now common trend among movie theatre owners is to expand their operation to include dining facilities–smoothies and brownies equal better margins).
Either way, some movie theatres are unhappy about grouponing of the theatre. They already have to pay hefty licensing fees to the studios and besides, chains like the Marcus Theatres–they operate 700 screens across 55 locations in the Midwest, mostly–can afford the big blockbuster licenses whose opening box office returns will keep them just north of the black year-round. So when the gleefully-discounted One for the Money’s Katherine Heigl came a-knockin, the Marcus theatres slammed their doors shut saying, ‘no can do, ma’am.” Then again, irony would have you think that maybe the film will do extra-well in neighboring counties due to people’s natural curiosity for the rejected movie and all.
Marcus and the rest of the mid- and majors- exhibitors (that’s movie theatre owners in trade parlance) have also completed retrofitting of their installations in 2011 in order to be able to boast digital picture and sound. And that cost an arm and a leg. I bet they’re in a rush to see their investment pay off. So how will that play out against their steadily raising ticket prices (to amortize all this new technology), group-discounting and a recurring trail of mediocre movies like One for the Money? Because low-scoring movies don’t bring people to the theatre.
And what about the mom-and-pop operations that still dot the continental U.S–from California desert towns to the classic cinema houses of New England–could they benefit from the group-discount model? They can’t afford to show all the blockbusters all the time, and, in a lot of cases, they don’t want to. They’re happy doing revivals and showing cult movies to a small crowd of die-hard fans on the weekends. Their middle of the week are killers, however. Have you, New Yorker, ever been to a 10 o’clock show on a Tuesday at a Clearview Cinema? You almost expect Will Smith and his dog Sam to stumble inside wide-eyed and stunned by the lack of humans.
So is Grouponing right? It’s not right for (most) movies. But it may be the right strategy for movie theaters. After all, movies are called ‘product’ by film producer (and I’ve always held that against them) so who’s to say you can’t slap a coupon on this? And besides, most, if not all major theatre chains already offer group-discount packages–only they want to be the ones to sell it, not a third party. Maybe in time these details will be forgotten about and a more symbiotic relationship can be developed between Groupon, or new competitor that’s bound to appear, and the movie theatre industry.