Monday, September 3, 2012

Saving private Ryanair

I once heard that a growing number of TV shows were very popular but still got axeable ratings. Everyone was talking about them and new series were eagerly awaited and well reviewed, but nobody watched. This was because their fans were the kind of people who won’t watch TV by appointment, and they all waited for the DVDs to come out. Eventually TV companies got wise to this and started putting them out in graveyard slots, avoiding the straight-to-video stigma for their flagship shows and embarrassing ratings for their flagship slots. Problem solved.

Anyway, one thing I’ve noticed lately is that whenever I go to watch a film at my local multiplex, there’s usually hardly anyone there. It doesn’t matter what evening I go or how blockbusting a Christopher Nolan movie I see, it’s always deserted, or at least empty enough that it looks like a failure on the managers’ part. You’d think they would lower the prices. Cinema tickets are pretty expensive these days, after all. That was one of the issues covered in a recent viral Facebook rant that some of you may have read and which 264,163 people liked. They could at least try lowering the prices and see if more people show up. It can’t cost them much more to screen a film to an empty auditorium than a full one. But prices remain high.

Lately I’ve thought that a sensible application for the easyJet/Ryanair price structure would be cinemas. We all know the drill: you can order in advance online, and tickets start cheap and then get more expensive as the place fills up. This way they’ll still be able to sell expensive tickets where the demand is there, and they won’t be showing films to empty seats when people would be willing to pay reasonable prices to sit in them. It'd also mean people who want to see the Dark Knight on a Friday evening might be able to get a seat if they're willing to pay through the nose. (Perhaps selling high-demand stuff to highest bidder isn't such a bad thing; I don't really know.) Cinema screenings are like flights in that they’re planned in advance, have a fixed number of seats and big variation in demand. We also know (I think) that people are willing to buy cinema tickets online.

So why don’t they try it? Well, this morning when I was researching this post (I don’t just make them up, you know) I was shocked to read that in 2003 they did try it, and it didn’t work! It seems that it didn’t work for a few reasons, but the main problems were that they didn’t sell popcorn and the distributors wouldn’t let them show the big movies for 20p. The first problem is easily fixed, unless you're a start-up without the infrastructure in place. I don’t know why the distributors are unwilling to try out the model again in a randomized trial and see if takings go up. It’s impossible to sit in a quarter-full cinema and be sure it wouldn’t work. Are the distributors mad, or just stupid?

Maybe they’re neither. Maybe they don’t want people seeing their movies in the cinema because if they do that they won’t buy the DVD. Or maybe people won’t watch something old on DVD if they could see something new in the cinema instead. They can’t protect the DVD trade from piracy, but at least they can protect it from cinemas. I suppose they’re within their rights. It’s their money and their film. And of course, my evidence is anecdotal and it’s possible that cinemas outside of Leeds are doing fine. The highest grossing movies of all time are almost all recent, and even when you adjust for inflation Avatar did pretty well. 20p cinema tickets would be pretty sweet, though.


  1. I'd call the model you've described the "Megabus model". A true Ryanair model would involve demand-sensitive (but cheap) pricing as you've described, plus lots of chargeable optional extras which most people would rather have but you could go without if you didn't want to shell out for them. I'm not sure what those would be for cinema, but there is some of this going on already -- when you go to see a 3D movie there's often a small extra cost for the 3D glasses on top of the inflated seat price.

  2. That sounds right. I suppose popcorn and drinks are also good candidates for extras. Perhaps if the seat were uncomfartable enough they could charge for cushions. I don't expect anyone likes ads enough to pay for priority boarding though.