Monday, October 31, 2011

Ticket Prices and the Risk of Film Making

Philip Drake discusses 5 peculiarities of Hollywood films that make them riskier to produce than a typical consumer good. Ticket prices at a given theater are not variable for each film, but instead they are constant and each film costs the same amount. This has a great affect on each film because no two films cost the exact same amount of money to produce. Producers put the amount of money into a film they feel they can get back from revenue, and when a theater charges the same price for a movie that cost $30 million to produce and a movie that cost $5 million to produce it leads to a great deal of risk for expensive movies. If they do not bring in revenue at the box office, the producers of and investors in the film will lose a lot of money.

Marketing is one strategy that can help ease the risk of level ticket prices. As stated earlier this is a lot more important for expensive movies, but a tactic used by all movies. First of all, marketing can show the future movie-goers what makes the movie so great; and how the millions of dollars spent producing it went to good use. For example, if a movie is shot in 3D, marketing can show the consumers how great 3D is and create a buzz for the uniqueness of the movie. Also, marketing can show audiences that may not plan on going to the movies that there is a movie in theaters they might be interested in. Advertisements do just that, and the more people that know about a certain movie, the more people it has the opportunity to appeal to, which lessens the large amount of risk inherently built into film making. In the end, the more people are talking about a certain film, the less risk there is that people will not go to see it. More viewers makes the non-variable ticket prices less of an issue.

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