August 19, 2006

Can the markets do more for the moviegoer?

Mr. Arthur Spilling a socially conscientious moviegoer from Rochester, NY, commented that he felt a bit bad when watching a big-budget flick knowing he was paying the same price that those poor folks who were watching a cheap run-of the mill movies and so decided to ask Dear Economist August 19 in FT-Weekend, about why do not movie theaters have adjustable pricing.

Dear Economist answered with a set of very good arguments like that it was not really a question of movies being purchased but of screening time; multiplexes not wanting to sell cheap tickets that could be used to sneaking in on more expensive ones; no one wanting to be associated with discount movies (don’t know why? I would, if the pay is right); and the rumored possibility that the whole movie industry might in fact just be fronting for a much more profitable popcorn business.

I am no one to argue against such insightful comments but, nonetheless, especially since Dear Economist never really answered why more efforts were not made to get every seat in the house full, I felt that something went amiss. So let me try to deepen the discussion with humble comments.

First, if it really was screening time that was being sold, then of course the question would be how come Mr. Spilling who probably sat there with a partial view of screen and a totally stiff neck looking up could accept to subsidize a Mr. Poor Folk who most probably was enjoying something more close to a private screening. Then also Dear Economist, as an economist, should take us though the world of elasticity of demand in order to help us understand better how moviegoers would respond to differential pricing. One big issue is of course how markets could help? Is there room for a market in futures in-a-year-from-now-screenings-on-stage-4-at-7pm and, if so, could there be some derivatives through which you could cover bad movie risks and, if so, what critics might get a hold on the movie rating monopoly?

Honestly, I think we are just scratching the surface of issues that besides Mr. Spilling, must be concerning a lot movie producers and screen time or popcorn vendors in these times of confusing entertainment patterns, when movie industries are still able to sell an expensive experience based primarily on sharing it with others, in times when iPods are threatening with extinction such rock solid sharing concepts as “our song”.

Of course a more in-depth study could occupy Dear Economists a full year ahead and since we are aware there are many other economic anxieties out there in need of guidance, a good question would be how Dear Economist allocates his column space.