Cinemath: Movie Tickets Cost More Than They Used to, But How Much More?

by     Posted 357 days ago

movie ticket inflation

Movie tickets cost more than they used to, and audiences notice.  In a 2006 Gallup poll, cost was cited as the number one thing Americans disliked most about going to the movies—41% of those who had seen at least one movie in the past year said going to the movies is too expensive.  When the average ticket price rises, as it does just about every year, you see headlines that shout “Average Movie Ticket Price Is Highest Ever.”  But that doesn’t tell the whole story.

This week’s edition of Cinemath compares the rise of ticket prices to the rate of inflation over the last five decades to see just how expensive $8.16 (the estimated average cost of a movie ticket in 2013) really is.  More after the jump.

penniesFirst, a primer: Inflation is the economic power that rendered the penny obsolete—inflation describes the general rise in the price of goods over time. The rate of inflation fluctuates for various reasons related to the duties of the Federal Reserve, but mostly hovers around 2-5% per year in the U.S. (the high inflation of the 1970s are a recent exception).  However, currency remains fixed, so the money in your pocket loses worth if it stays in your pocket long enough.  A penny used to buy a loaf of bread.  Your grandparents used it to buy a piece of candy.  Now a penny buys nothing.

The Bureau of Labor Statistics uses the Consumer Price Index (CPI) as “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.”   In other words, the CPI measures how much consumers pay for the same “basket of goods” over time, making it simple to compare how far a dollar went in 1961 to its spending power in 2013.

The MPAA [via Box Office Mojo] recorded the average movie ticket price most years from 1910-2013.  There is consistent data for every year starting in 1961, so this analysis begins in 1961.  The graph below plots the increase in movie ticket prices from 1961-2013.  The green line shows the actual average ticket price.  The blue line adjusts the actual average price for inflation to 2013 dollars using the CPI.  The red line sets the $8.16 baseline of the average ticket price today for easy comparison.  (Note: Javascript must be enabled to view these Google charts.  Hover over a data point to see the exact average price for that year

 

Adjusting for inflation, the average ticket costs more now than it did from 1979-2009, but the cost of a movie ticket peaked in 1967-1978 after several years of 8-10% cost increases and one 21% increase in 1963.  The ticket cost in 2013 is also down a bit from 2010-2011.  That’s 13 years where the adjusted ticket price exceeds the cost of a ticket in 2013.

Still, the recent trend shows a steady and significant increase in adjusted price.  The average adjusted ticket price from 1961-2012 is $7.68 in 2013 dollars—the average adjusted ticket price from 1980-2012 is $7.43 in 2013 dollars.  That extra 50-70 cents is just a few dollars a year for the individual, but it’s worth almost a billion dollars when applied to the 1.36 billion ticket sales seen in 2012.

Here is a closer look at the yearly fluctuation for inflation vs. ticket price fluctuation.  The green line shows the average ticket price change.  The blue line covers CPI change.

 

Believe it or not, the average ticket price decreased in 1989, 1991, 1992, and 1993.

I expected to ticket prices and inflation to be related (ticket prices increase more with high inflation and stay flat with low inflation).  One could make a case for correlation in 1970s, but other than that, movie ticket prices appear independent from inflation.

Suppose ticket prices did follow inflation, though.  The graph below shows five hypothetical scenarios in which the average ticket price is indexed one year, then rises and falls exactly with inflation.  For instance, the 1961 scenario blue line pretends there is a policy that takes the average ticket price in 1961 and changes the price each year to match the CPI.  The other blue lines do the same with 1971, 1981, 1991, and 2001 as the index year.  The green line shows the actual fluctuation of average ticket price.

 

As expected, four of the five scenarios lead to a lower average ticket price than the actual fluctuation.  But it could be worse.  With the 1971 scenario, high inflation in the 1970s escalates the price until it reaches $9.50 in 2013.

Several factors contribute to this expense that goes beyond routine inflation.  Mostly, theaters set a price point that we are willing to pay based on supply and demand.  Total admissions rose steadily form 1.1 billion in 1987 to nearly 1.6 billion in 2002, then steadily declined to about 1.3 billion in 2011. The adjusted ticket price certainly tracks with the rise in admissions, and with allowance for sticky prices, flattens out and eventually decreases when admissions start to decline.

You can also blame 3D and IMAX surcharges, but those are recent phenomena.

movie theater lineI suspect the changing composition of theaters plays a role.  According to NATO, there were 7,744 theaters in 1995 and 5,697 in 2011 (26% decrease).  Over the same time period, the number of screens increased from 27,843 to 39,580 (42% increase).  A 2012 MPAA study found that 81% of all movie screens are housed at theaters with 8 or more screens compared to 75% in 2007.

The market is clearly shifting away from smaller theaters to bigger multiplexes, a trend that will only become more pronounced with the ongoing conversion to digital projection..  The economics of this evolution are a topic for another Cinemath, but I believe it possible we are phasing out the spread of cheaper theaters and transferring the market share to the AMCs and Regals of the world, who in turn charge higher prices.

I have seen a new movie at six different theaters in the last year in the Boston area, including fine establishments run by AMC and Regal, so I stop short of crying foul about the level of competition among movie theaters.  I just want to try to address some of the complexity in a changing industry.  The act of sitting down in a theater and watching a movie is pretty much the same experience it was in 1961, but the venue itself is changing and the price must follow.

Sure, a movie ticket is more expensive than it used to be even when adjusting for inflation, but it is still relatively cheap entertainment.  If you read Collider, I imagine you understand the value of seeing a movie in the theater.  You may have to see a matinee to get that $8 movie ticket where you live, but for my money, the theater experience is always worth an $8 bet.




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  • Collider

    Except the average ticket price of $8.16 is complete BS. It cost $15 to see MOS in standard, non-imax.

    • http://buzzabit.com/aaron/ Aaron Sullivan

      Where do you live? What time did you see it? It’s not as if prices are the same everywhere and there aren’t matinee prices in most places. There’s also bargain theaters and events that show movies already on DVD in theaters for much lower costs.

      • http://twitter.com/colliderbrendan Brendan Bettinger

        Yes, thank you. This covers the reasons behind the surprisingly low $8.16 average ticket, even if movies seem more expensive where all commenters live.

        I wish I could account for geographical variation, but the data only covers domestic average. I imagine the percentage increases (graph 2) are similar across cities, but can’t be certain.

    • Harry Palm

      You need to look up the definition of the word “average”.

  • TrekBeatTK

    I think the ridiculous surcharges for 3D and IMAX 3D are skewing the averages and creating that phony $8 figure. Up here in the greater Boston area, prices have risen steadily the past 10 years and have never slowed or dropped. For almost a decade I could see a matinee for 5 dollars. Now it’s almost 8 just for a matinee. I’m paying twelve dollars for standard movies, sometimes 15 for events and that’s a definite increase in 2-5 dollars over just the last few years. Just what are we paying for at this point? I get crappy digital projection so now all movies look like TV, and I’m still paying more for it. Not to mention prices of candy shot up even as the candy itself got smaller! I worry about this trend, because it’s what killed live theater as an affordable evening out decades ago.

  • Wayne Marshall

    If they could enforce cell phone restrictions during the show, I would go more often. The last 5 times I’ve gone, I had to endure lit screens popping up in my line of vision every few minutes.

  • Nick

    I can’t imagine 8.16 is correct… Maybe 10 years ago. Where do these people live? Average movie tickets in the east coast are around $12… $9 at best for kids or seniors. Are matinees that popular?

    • Nerdgasm

      It’s a collective price. Remember there’s a bigger world than just an inch at the tip of your goddamn nose.

  • zac

    if tix in new york were 9 bucks id go every wknd! but theyre 14.50! and yes i get some midlle of nowhere woop woop is 6 bucks but why cant we even it out across the board for everyone?

  • Mixed Race rich kid NYC

    That’s why nowadays, I only watch movies that have good word of mouth and above 80% rotten tomatoes score…
    6 years ago, I used to watch at least a movie weekly

    Where I live martinees are 9$, afternoons are 11$, soirée are 12$
    3d martinees are 11$, afternoons are 13, soirée are 15$
    Imax are 14 no matter what time you see the movie
    Imax 3d are 16 $ no matter what time you see the movie

  • Mixed Race rich kid NYC

    I just don’t understand why they can’t even out the prices across the board

    (I can’t wait for real d 3d to go bankrupt so that 3d trend can finally end)
    Imax is the future

    • kilar

      An Imax on every corner sound doable

      • Nerdgasm

        And It’s Imax taht back in the late 90′s was pioneering 3D… and Imax is a huge supporter of 3D… yeah good argument.. “Imax is the future” so is 3D with that attitude fuck tard.

    • doug r

      Real d has better 3d. Imax 3d has ghost images if you tilt your head even a tiny bit.

  • Kevin

    I think it is cheap to see a movie (around $10). The people complaining it is expensive are probably the ones stupid enough to buy concessions.

  • Lizard King

    $8.16 seems totally legit. It costs me $11 for a new-release matinee in Chicago, but I can also go see an older movie at a cheap theatre for $2. Price doesn’t bother me, but rude patrons who use their phones and talk loudly ruin the experience for me, which drives me away from the theatres. God, I have missed your Cinemath articles, Brendan. Keep ‘em coming, I have enjoyed every one of ‘em so far.

  • Ben

    This is why I love living minutes away from three separate chain theaters: a NCG, a Regal, and an AMC. All have different discount days, matinee times, rewards programs, and coupon options.

  • Daniel Chhuy

    If only tickets in Australia were this cheap, $20 for movie tickets, $30+ for IMAX viewing.

  • Tony Gastel

    I guess it is nice for once to love cinema in Mexico, it costs 5 to 6 bucks on a normal day.

  • Harry Palm

    ” but for my money, the theater experience is always worth an $8 bet.”

    Not for my money. That’s just too much to watch a movie one time and that’s really all you are getting. You are paying $8 to watch a movie one time and that’s it. You don’t get a poster or a T-shirt or a DVD or anything. You don’t get to watch the movie multiple times. If you’re on a date, you’re paying $16 to watch a movie one time (and you’re probably paying for dinner later, too) and if you have a spouse and kids, you could be paying as much as $30 to watch a movie one time. It’s really absurd. It’s much cheaper to buy a DVD and you can watch that movie as many times as you like and you don’t have to put up with sticky floors and crying babies and cell phones and lines and all that other stupid crap, plus you can pause to go to the bathroom and the start time is whenever you feel like. There’s also the problem that if you watch a movie that you don’t like, you don’t get your money back. Going to the theater is just a waste of money and I haven’t done it in almost a decade and I don’t miss it at all.

  • kid zero

    NYC is like 11.50 – 15.00.depending on the theater

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