Movie showings are a lot like airplane flights– revenue comes from putting people in seats, and if you don’t have someone in a seat for the movie, you’ve missed out on that revenue opportunity forever. In other words, it’s a perfect scenario for yield management. Movie theaters do this already with cheaper matinee tickets. Some theaters even have a “before noon” price, a matinee price, and regular price. As a pricing person, it’s hard not to consider some other possibilities, like eliminating matinee prices on weekends, differential pricing for hot new releases vs. shows that will only have 10 people in the audience, price segmentation by seating section, and even offering discounts for significant advance purchase (a week or more in advance) to build buzz and measure demand. I’m not saying that theaters necessarily should do these things, but the possibilities are there.
Against this backdrop, Cinemark and AMC have offered a money-back guarantee for the Russell Crowe movie Cinderella Man. If people don’t like it, they can get their money back. This is an attempt to bring people into a movie the the critics love but audiences have not flocked to see. And while it doesn’t seem like yield management, that’s essentially what it is. The theaters are hardly offering this promotion on every movie (that would change the dynamics of movie making and promotion pretty quickly). They only offer it on a film that they think people will like, that they are already showing, and that plays to a lot of empty seats. Ads have touted the guarantee in an attempt to boost traffic. The promotion itself has generated tremendous press. They even got a friendly AP wire story about how few people had asked for refunds.
I think it’s an interesting promotion, which so far has not resulted in a lot of refunds, but also has not significantly boosted attendence.
Stay posted, if there is good info to support whether the promotion worked, I’ll post a follow-up.