Movie tickets, the mafia, and economics …

Sometimes there are obvious things that for some reason I never get around to thinking about until someone poses  an interesting question … then I wonder why I never thought about it before.

As most of you know, I do enjoy film.  Yet here is posited the question:  if the law of supply and demand is in full tilt mode, why do tickets to see popular movies cost the same as less popular films.

This article from The Atlantic posits that the same thing doesn’t happen in sports, though in fact this has been spreading to sports more and more … the cost of a seat to see the White Sox play on a weekend is more expensive than on a weekday … it is more expensive to buy that seat for a game vs. the Cubs, Yankees, or Red Sawx than to see them play the Mariners, Athletics, or Indians … and the opponents who get labeled with premium pricing can change from year-to-year.

But that takes us back to cinemas … why does it cost the same to get into The Lion King as it does to see the latest indie film that no one is going to see?

This article details some interesting research that notes that this in fact was the rule in the interesting relationship between studios and theaters throughout history … that from the 1910s through the 1940s, films were given a grade, and the ticket price was based on that grade (the grade itself was based on length, the stars involved, and the projected popularity of the film).  This all makes sense.

However this whole grading system evaporated when the Supreme Court (US v. Paramount) barred studios from owning theaters.  This meant that studios were not in direct control of the money their product brought in and needed to bargain more with theater owners.  In the end, theaters still had the right to charge premium prices on a few select “blockbusters” each year.  This ended in 1972 when (cue the music) The Godfather was released, and Paramount pressured studios into not raising prices on the film.  Since 1972, American theaters have used uniform pricing.


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