AMC plans to charge more for the best seats. Is it a game changer?
Professional sports does it. Broadway does it. Now AMC will ask movie viewers to pay a premium for the best seats in the house.
The movie theater chain, which runs some 950 theaters, announced this week that it will price tickets based on a seat’s location, charging less for seats in the front row and more for those coveted center seats. Prices won’t change from current standards for the remaining seats, AMC said.
The initiative was swiftly criticized on social media. Lord of the Rings star Elijah Wood described it as undemocratic — a move that “would essentially penalize people for lower income and reward for higher income.” Others said the tiered seating option would further deter consumers as the industry competes with at-home streaming.
But industry analysts cast the initiative as a worthwhile experiment as the movie theater business tries to limp back to its pre-pandemic glory days.
“It makes sense,” Wedbush Securities analyst Alicia Reese said. “I don’t see a reason not to do it now.”
She said that big movies are ahead this year — including Marvel movies like “Ant-Man and The Wasp: Quantumania” — and the new pricing structure could play to the company’s advantage.
Here’s what we know so far about AMC’s pricing plan.
HOW DOES IT WORK?
Tickets will be priced in three tiers — value, standard and preferred. “Value” seats will be offered in the front row, cheaper than standard pricing priced at a discount and available to the members of the theater’s rewards program, including its free membership. Seats in the middle of the theater will be priced at a “slight premium” to standard prices unless a customer has a “Stubs A-List” membership, which can be used to book the preferred seats without an additional cost. The rest of the seats in a theater can be purchased at what AMC described as a “traditional” rate.
The pricing has already been introduced at several AMC locations, and the theater company said it will be rolled out at all of its U.S. locations by year’s end.
WHY IS AMC DOING THIS?
Box offices brought in more than $11 billion from 2015 through 2019, largely fueled by blockbuster films, including Marvel and Star Wars movies. But that revenue plummeted as movie theaters closed amid pandemic restrictions, and empty seats meant AMC and other theaters faced an existential crisis.
Now, the theater industry is in a mode of reinvention as it attempts to bounce back, Jim Goss, an analyst with Barrington Research, said.
“If covid has done anything,” he said, “it’s given opportunities to experiment.”
While a full return to pre-pandemic sales won’t be immediate, analysts say a rebound is underway. Multiple analysts predict box office revenue of at least $8 billion in 2023.
Analysts also pointed to AMC chief executive Adam Aron’s background. Before joining AMC, Aron held leadership roles in the airline, sports and hotel industries — all sectors where dynamic pricing and rewards programs are common.
“He’s been involved in these marketing schemes,” Goss said. “It’s a lesser leap for him because that’s where he comes from.”
Chad Beynon, analyst with Macquarie Research, said that Aron “has been instrumental in bringing best practices in other industries into the theater industry.”
COULD OTHER THEATERS FOLLOW SUIT?
Analysts who follow the industry say that other big players such as Cinemark, Regal and Marcus could adopt a similar program — if it increases AMC’s profits.
“If it turns out to be a net neutral, maybe there’ll be less of it,” Goss said. “We’ll see how it works — it’s an experimentation.”
Reese, the Wedbush analyst, said other theaters probably won’t rush to tiered pricing as quickly as they adopted reclining chairs, alcoholic beverages and membership programs.
“I wouldn’t classify [the new AMC pricing] as one of those cases,” she said. “It’s not really a game changer.”