3-D Movies: How to Kill the Golden Goose Before It’s Time… Coming Soon to a Theater Near You!

I want to preface this posting to say I don’t like to look at movies as a horse race or the “who wins the weekend box office $’s derby.” I realize this is one way to measure popularity and success… and if movies are a popularity contest, don’t we like to invest, ooops, I mean spend our hard earned cash on the winners, the ones we know we will enjoy? But is volume the real measurement of goodness? In the herd mentality, of the if everyone else likes it, it must be good, kind of thinking, yes. But of actual goodness, perhaps not.

Earlier in the week, I was reading Lauren Shuker’s article in the Wall Street Journal entitled ‘Dragon’ Movie Fails to Tip Scales as Price Increases go Into Effect (March 29, 2010), which has gotten some great reviews, and am once again struck by the apparent marketing incompetence that seems all too inherent in the entertainment industry.

Here’s why.

It appears that there is no doubt that audiences very much enjoy today’s 3-D film experience. Huge 3-D successes such as Avatar and Alice in Wonderland, and the IMAX sales of each testify to this.

Now of course, in the sequel style, copy-cat mania that seems to be Hollywood these days, everyone and his brother wants in the bonanza. I gather that How to Train Your Dragon was filmed in 3-D, but for example, but Clash of the Titans, which will be released next week, was enhanced after filming was concluded and is not a native 3-D film, as Avatar and Alice were.

I have no problem with the studios tripping over themselves to milk the 3-D train for all its worth. But the operative word here is CARE. In the drive for revenue (greed?), it is becoming clear that if studios and exhibitors over reach, sales will be diminished and the technology reduced once again to fad status.

When looked at through our marketing lens, there are a couple of things to remember to prevent the latter while maximizing the revenue generating opportunity 3-D presents:

1. It is and I think always will be the story. James Cameron and Tim Burton are at their core master story-tellers which, love them or not, informs all of their work. 3-D is an enabler to the story, not the driver of it.  In other words, if you are going to charge a premium, it probably won’t work for lesser fare, at least until the film has built a core audience.

2. The last few years haven’t been all that kind to the movie industry. And we are still living through a recession. The market is price sensitive. The new price for 3-D movies under the new structure is approaching $20 a ticket! This can easily add up to  $100 per outing for a family of four, which makes a night at the movies a very pricey, special purchase, not a casual and affordable date night type of event.

3. Seeing a movie in a theater has some communal benefits and people love to go out.  However, part of the audience dip these last few years has been a convergence of sorts… where home movie systems with surround sound offer a near multiplex movie experience at a lower cost. And if that isn’t enough, 3-D capabilities are coming to a flat screen TV in your home, very soon!

So considering these elements, what should the exhibitors do to maximize this technology in a manner that makes marketing sense?

Make Sure That 3-D Adds Value to the Communal Theater Experience!

Central to the exhibitor point of view has to be exploiting the positive elements of the communal viewing experience and doing everything possible to add value to it.

I live in the Boston area, and one of the pioneers of the multiplex phenomenon is a locally based company called National Amusements.

Multiplexes were great for revenue generation, but with ever smaller screens and smaller auditoriums that result, the exhibitors themselves over time have diluted the big screen viewing experience thus opening the door for home theater to be a competitive threat today.

So much so, perhaps, that National Amusements itself is now leading the charge of such innovations as stadium style seating to enhance the comfort and viewing pleasure of their guests in such a way that is very hared to duplicate at home. They also created Cinema De-Lux, a first-class section in selected theaters offering food & beverage service and plush seating that audiences happily pay a handsome premium for.

The dilemma for 3-D is to add value without adding price resistance. The way to do that is to understand and then compress the product adoption lifecycle.

How can we do this successfully — Grow the audience for films and exploit the revenue generation potential?

There are a couple of ways this can happen.

The Simple Method

  • Keep prices low and raise them gradually for general screens.
  • Raise prices and focus marketing activities on IMAX and De-Lux venues, where movie goers expect to pay more.

The trick to remember is that 3-D is a positioning “ace up the sleeve”, something that can be compelling and different that makes the communal movie-going experience special versus the home theater and other options available today.

This in essence creates a tiered pricing structure. And of course prices can also be adjusted should say another Avatar-style blockbuster come along. The key then is not raise prices prematurely until the audience demand is established.

The Complex Method
Don’t raise prices for 3-D films shown on “standard” screens for an initial period, say the first week or so.

This offers a couple of extra powerful benefits:

  • The Power of Choice & A Sense of Urgency
    By setting up “Popular Pricing” now with a higher price later, an incentive, is applied to drive business for that first critical weekend that offers the audience a choice—go now pay less, or wait and pay more.
  • Audience Empowerment
    In this way the public can literally join the critics and other influencers to help decide the fate of the film, especially by getting the word out through social networks to their “friends” and support films they love.

Option #1 focusing price increases on the self-selecting premium segment piece is easier to adjust with the already high priced options such as IMAX and De-Lux in place. In other words raise the first class price and gradually raise coach fares over time.

Option #2, however, offers a variety of counter-intuitive tools that can help launch new films, stimulate choice and create a great reason for the public to join with others to get the word out that can also serve as the basis for a whole variety of promotional activities.

In either case, once the public is used to a staggered pricing schedule it will be easier for prices across the board to rise over time.

Care however, must be taken to matter what directions are taken (or not) to exploit 3-D as a value added tool to support the movie theater experience first. This is the golden goose that must be nurtured and protected at all cost.

Otherwise audiences will turn in other directions, which will negatively impact each new film’s success as we have just seen with Dragon, a worthy effort where it seems great notices are not enough to overcome resistance to new, steep and sudden price increases.

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2 Responses to “3-D Movies: How to Kill the Golden Goose Before It’s Time… Coming Soon to a Theater Near You!”

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