If you’re one of the millions of Americans who saw The Batman in theaters this March, there’s a good chance your ticket was more expensive than if you’d opted to go to any other movie playing at the same time. You might not have even been aware of this so-called tentpole tax, unless you read about AMC Theatres CEO Adam Aron touting his chain’s experiments with “variable pricing,” in which tickets for high-demand films cost more than the competition.
According to Deadline, the average ticket price for The Batman, which brought in $134 million in North American theaters on its opening weekend, was $14.50 at AMC theaters, compared to $13.22 for all other showings. (As of this week, The Batman has raked in close to $600 million at the box office globally.)
AMC wasn’t the first to do this in the movie-exhibition world. Both Regal and Cinemark hiked the cost of admission for Spider-Man: No Way Home when it opened in late 2021, respectively adding an average of 82 and 67 cents per ticket over movies during its first few days in theaters, while AMC tacked on 71 cents. And audiences certainly didn’t shy away from seeing that superhero flick, as it opened domestically at just over $260 million.
It’s a clear sign that this strategy—referred to interchangeably as a “price surge,” “variable pricing,” or “dynamic pricing”—is here to stay as theaters look to rebound from their pandemic woes. After two almost-lost years, every dollar counts as moviegoers return, bolstered by the vaccine and fewer restrictions on masking, not to mention less fear surrounding COVID-19 in general. Plus, a slightly higher price for what’s deemed a premium product isn’t all that foreign to consumers.
“Dynamic pricing has always happened in theaters, with regard to matinees or Tuesday bargain days, or different prices for children and adults and seniors,” says Paul Dergarabedian, Senior Media Analyst at Comscore. “We see this in every aspect of life, especially now with Lyft and Uber. You pretty much name the business and there’s some sort of upcharge being applied to many different goods and services. But it hasn’t been until now that this is something that is actually happening in terms of movies based on the perceived value of that movie and the demand for it driving up the price.”
“It’s something I think should have been in place long ago,” adds B. Riley Financial senior analyst Eric Wold. “The only thing that’s of concern is, for a lot of people, the timing. We’re coming out of a pandemic, we’re in an environment of inflation and concerns around the economy—is it the right time to introduce premium pricing for specific films?”
Theater owners certainly seem to think so. “The theaters really had a tough go of it during the pandemic, 2020 to 2021 and they’re very much in recovery mode as we open up,” says John Harrison, EY’s Americas Leader for the Media & Entertainment. “They’re trying to drive attendance but also really trying to drive financial performance as well, so every incremental dollar helps. Introducing a surge element to some of the biggest blockbusters, given the conditions of the theater owners, makes sense.”
The big question stemming from this blockbuster surcharge is what happens to the lower-budget indie fare? Will theaters offer a discount on lower-demand films in order to get people in the door, especially when there’s only a 45-day theatrical window before they hit streaming services?
So far, major and independent studios have yet to comment on variable pricing, and AMC declined to say what kind of special revenue split, if any, it had worked out with Warner Bros. for The Batman. As it stands, AMC and other exhibitors set their ticket prices, but there’s no template for the amount they can keep when tacking on a surcharge.
Warner and other studios are probably fine with the higher price as long as it doesn’t deter audiences from seeing their films and the box-office returns are high. But the experts Fortune spoke with are all interested to see how these deals play out. Will studios be in favor of even higher prices for movies with the kind of IP that guarantees big audiences? Will they allow the discounting of tickets in order to boost the reach and box-office returns of lower-demand titles, or will they view any price reduction as implying that their title is of lesser quality than the competition?
“I would hope that by ‘variable’ we’re playing in a two-way street,” says Jeff Bock, senior media analyst at Exhibitor Relations. “For films that bomb out right at opening weekend, having a variable window would be great. The advertising has already been spent. It would behoove theaters to at least get people to come check these films out. Of course, that’s going to be a discussion between theater owners and studios. Theater owners set the price but I think if you set it too low, you’re going to field a lot of calls from studios themselves. So, these are discussions that need to be had if we’re really going for variable pricing.”
Deragarabedian disagrees. “On a basic level, how do you tell one filmmaker ‘your movie is worth $10 a ticket and this other movie is worth $15’? Applying this to a big blockbuster, I don’t see that being an existential problem for the industry. ‘This movie has a huge budget, it has a massive demand, and therefore we upcharge.’ But going in the other direction would not be good for the industry if suddenly independent film was perceived as having a lesser value and thus commands a lower ticket price. That’d be a slippery slope that I think wouldn’t serve the industry well.”
Another area for variable pricing that’s likely coming to theaters is charging different amounts based on seat location and quality. AMC CEO Adam Aron hinted at introducing that on a March 1 earnings call, when he talked about the ways his company is willing to take risks and be “imaginative.” “In Europe, we charge a premium for the best seats in the house, as do just about all other sellers of tickets in other industries—think sports events, concerts, and live theater,” he said.
Wold believes it’s something audiences would accept, just like they will for higher blockbuster prices. “Have a base-level ticket price for the core seats, then discount the ones that are maybe not desirable—the front row, side of the theater. Getting more people coming in and more concessions being sold is something that would make sense.”
Bock, meanwhile, thinks that variable seating prices aren’t likely to be introduced so soon after surge pricing for tickets. “That would be tough to do. We are so used to standing in line to get the seats that you want. And now that you can get on an app and choose your seat, if you plan ahead, you can get a good seat and not have to pay more. I’d be surprised, honestly, if theaters went down that road this year. It’s something that maybe, in the not too distant future, could happen.”
For now, he and his fellow movie-industry experts simply expect dynamic pricing to stick, especially as theaters fine-tune their costs and implementation strategies.
“This was the warning signal sent by AMC—and other theaters, but not so bluntly,” he says. “This is letting us know this is going to continue all summer, and likely beyond, until theaters and the industry in general get back to pre-pandemic levels. All movies are not created equal—you can just look at the budget to know that—so there’s going to be a different price sticker on some. We’re all going to feel a little bit of sticker shock. But again, at $1 to $2, I think most people would agree that for certain films, that’s worth the price of admission.”
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