Only at the movies? Home truths about cinema ticket pricing



This article is by Bronwyn Coate, Researcher Fellow (Cultural economics) at Deakin University and Deb Verhoeven, Professor and Chair of Media and Communication at Deakin University. It originally appeared on The Conversation.

analysis In the last fortnight, senior executives from cinema operators in Australia, including Village Roadshow and Palace Cinemas, have come out defending their decision to raise movie ticket prices. But do their arguments hold water?

Already Australians pay a relatively high fee to see films on the big screen. A global analysis of the price of cinema tickets relative to GDP has found Australia’s most affordable city for seeing movies is Brisbane (ranked 31st in the world) with most other Australian cities hovering around the mid-50s (Melbourne, 52; Adelaide, 53; Perth, 54; Sydney, 55).

The justification put forward by the exhibition industry for ticket price increases essentially boils down to three key factors, the last two of which are connected: Higher labour costs involved in operating a cinema in Australia compared to other countries; The impact of illegal downloading; and lower attendance. Each of these arguments bears closer scrutiny.

Higher labour costs
The argument that Australia’s comparatively higher labour costs are influencing ticket prices is made by Graham Burke from Village Roadshow, who points out that: “In Australia we pay approximately $23 an hour for our people; in America, where we operate cinemas, it’s $8 an hour.”

But are we seriously to believe that the recent reduction to skeletal staffing at most mainstream movie theatres is somehow cause for increases in ticket prices? It’s true that in the US many people are paid very low wages; but these wage differentials are not new, so why are they now being mounted as a case for inflating movie ticket prices?

Illegal downloading
We then come to the vexed issue of piracy. Benjamin Zeccola of Palace Cinemas directly links downloading and file sharing to the need for increased ticket prices. Certainly the ease at which the latest titles can be downloaded and viewed online is bearing on the industry and contributing to diminished box office returns. But it’s not a straightforward equation.

In terms of quantifying the cost of piracy the industry cites figures from the commissioned report by Ipos and Oxford Economics that estimates piracy costs the Australian economy A$1.37 billion in revenue and that 6,100 jobs are lost from movie theft. But as Jordi McKenzie and W.D. Wallis found in their empirical investigation into the impact of file sharing on film revenues in Australia, over the course of 2010 and 2011, the effect illegal downloading had on revenues was actually far less than claimed.

Furthermore, as the ABC’s Nick Ross pointed out earlier this month, there is some evidence to suggest that illegal downloading often contributes positively to a film’s (or television series’) fortunes. Avatar (2009), which is one of the most successful films at the box office in recent years, also tops the list as the most pirated film of all time, with in excess of 21 million downloads according to Torrent Freak.

Low attendance
Certainly attendance figures from the most recent IBISWorld Report on Cinemas in Australia reveal that less people opt for a night out at the movies than previously. Between 2012 and 2013 cinema admissions in Australia fell by 0.7% to around 85.3 million.

Over this same time the Motion Picture Distributors Association of Australia (MPDAA) estimated that box office takings had fallen by 2.3% to $1.1 billion. Yet despite these falls, key operators have managed to return healthy profits through increased ticket pricing, especially in relation to “premium” screenings such as 3D movies, which are charged to consumers at a higher rate.

Simply blaming piracy for low cinema attendances ignores the multitude of factors that contribute to piracy as well as the multitude of reasons that prompt cinema attendance in the first place, and assumes that the sole motivation for going to the cinema is the film itself (content consumption).

But this is not borne out by the evidence which suggests instead that movie audience motivation is highly differentiated and is becoming increasingly so. A 2012 survey by Screen Australia found that, when asked to identify the single most important reason for attending a cinema, “socialising” topped the list, followed by “tagged along with others”.

And although “cinema ambience” was further down the list of factors it was mentioned by more than 60% of respondents. This also underscores the importance of food and beverage offerings (rather than just ticket sales) to cinema sustainability.

By elevating the impact that piracy has on cinema attendance, other factors that also contribute to lower attendance and diminishing revenues are being ignored at the industry’s longer-term peril.

As many insiders suggest, piracy is also a response to the consumer’s desire for immediate access, as well as a growing perception that much screen based content, including film, is more enjoyable when viewed in the comfort of one’s own home. As such, the increasing size and affordability of large television screens in the home can also help explain why less people are going to the cinema.

Holding on to old business models and failing to recognise the needs and expectations of today’s content consumer is a fraught path. Digitalisation is here to stay. The technology that makes piracy possible equally represents part of the changed landscape in which the film industry now operates. Rather than bemoaning piracy and ramping up rhetoric in support of harsher penalties the industry needs to be more open to changing its distribution model.

In terms of exhibition it needs to take stock and look at how it can offer a superior or distinguishable experience to attract audiences, and particularly younger audiences back into the cinema. Raising ticket prices is certainly not the solution the industry, or its patrons, deserve.

Bronwyn Coate has received funding from the Australian Research Council (ARC) to investigate contemporary film distribution in Australia. Deb Verhoeven has received funding from the Australian Research Council (ARC) specifically to study contemporary film distribution in Australia. This article was originally published on The Conversation. Read the original article.

The Conversation


  1. > Brisbane (ranked 31st in the world)

    Cineplex, I bet. You’re awesome, Cineplex, don’t change.

  2. Let me put it this way when my closest cinema was a village cinema I went once or twice a year max. Now that my local cinema is the Sun in yarraville I go more like once a month would go more often if there were more films I wanted to see!

  3. I haven’t stepped foot in a cinema in almost a decade.
    Nothing to do with piracy.
    All to do with building a house with a dedicated home theatre – with projector and DVDs then Blurays and streaming.

    The savings I have made just in popcorn and movie tickets should have the house paid off soon!

  4. I haven’t been to a movie theater in years. Then, during my visit to Malaysia last month, I went to see 5 movies in 4 days. Movie prices were AUD $4, movie theaters were nice and modern, and the movies were either in English or subtitled to English.

    This made me realise that it is the high price of a ticket that has been keeping me away. I really enjoyed the experience of watching a movie on big screen. The price threshold for me is $10. At that price, I would maybe go once every month or two. At current price of $16-20, I will be going once in a decade.

  5. I would like to see the monthly spreadsheet of a cinema costs and income. If the cinema business is anything like the businesses around here in Melbourne i would bet that their rental/lease costs leave their wages bill in the dust.

    Local shops are closing because the increase in real estate costs are forcing up the rentals.

  6. My local cinema, until very recently was the Palace flagship at Balwyn. I loved Palace Cinemas (especially Balwyn and Kino) – they had an excellent membership program, smart pricing of tickets, fantastic quality screens, sound, seating and the staff were always fantastic. When I went there, I felt like I was getting true value for my money. Palace should be proud of their chain.

    Village however? They’re a horrorshow. Inevitably filthy, with many cinemas still being in dire need of re-fitting and priced to offend.

    In the rental world – all of the local rental outlets had shut down.

    So, with any luck I could see a movie at Palace, but if I missed it there, my options became very limited. I could buy the BluRay (because honestly, who wants non 1080p content nowadays when you’re paying for it and the equipment to watch it on?), but a lot of movies I don’t want to own, I just want to watch once.

    I won’t subscribe for Foxtel just on the offchance a movie I want to see might be on there that month, so that’s out. Quickflix has an absurd subscription PLUS PPV model for anything new or popular. So, that’s the Australian options out of the way.

    If I’m lucky it might be on the XBox Movies as an available rental, but often they’ll only rent the SD version, or offer no rental at all. Google Play might have it, but limits you to SD for non-Android devices, which is stupid, especially as we don’t officially have Chromecast yet. iTunes is often crippled by local market restrictions imposed by distributors.

    And so, what are the options left? I’m honestly curious to find out what I might be overlooking. [Besides the rational choices most of us make of VPN/Proxy]

  7. How much does Event Cinema’s pay to be able to show Captain America: The Winter Soldier?.
    Every company has to make a profit otherwise there will be no company, but if the cost to Aust Cinema’s to be allowed to play a movie is at the point where Cost_Of_Movie/Estimated_Number_Of_Viewers = $20 per ticket then I don’t see there being many options.

    The main reasons I don’t go to the movies as often is purely that I think $20 per ticket, $5 for a bottle of water/bag of malteasers, etc is ridiculous. Most of the time now my friends buy our snacks from the nearby supermarket for almost 1/2 the price, and for greater variety.

    When I do go to the movies its for the ones that have a big visual/audio impact that I cant recreate at home on my 47″ TV. Its also to spend time with friends and have dinner before/after.
    But then your also paying for petrol/public transport and even parking fee’s if you’re driving.
    So a night out costs $20 + $5 + $5 + $30 [moderate dinner] + $5 parking = $65 per person.

    In terms of Piracy, Ive downloaded a movie that was still at the cinema’s and the quality was CRAP! I did it a few times for the same movie from different uploaders and all were CRAP!
    However content distributers do need to be looking at alternatives. Why buy a newspaper when I can get information online that is not 5 hrs old?
    Why doesn’t Hoyts create an Online Viewing model so I can watch the movie at home for $10? Ill have to wait for it to download (thanks Mr Turnbull/Abbott for that) and wont get the huge 50′ screen with ear-shattering audio (which is often too loud anyway but that’s another topic :)) If I have 5 friends over to watch it on my 47″ TV they are loosing money? Maybe but if my 5 friends and I wouldn’t go see that movie anyway due to the high costs then they have MADE $10. Or charge home viewers $20 for “Unlimited Attendee’s”.

    Obviously there are other issues with this, such as how to stop those home viewers from recording the movie via a PVR but that’s exactly the same issue as watching Game Of Thrones legally from Foxtel. Or by renting a movie from Civic Video and ripping it.

    Consumers are unwilling to spend that much money on a movie experience. Consumers are unwilling to wait 6 months for a movie to come out on DVD/Blu-Ray. So this means they need to lower their prices all around as well as bring them out faster. If they don’t then expect more people to download to movies, which will according to them increase their prices which will force less people to go to the movies which will force them to increase their prices which will mean less people going to the movies …

  8. Instead of blaming everyone else maybe its the high cost of tickets that result in lower attendances. $20 a ticket is expensive a night out can easily cost $60+. Personally I only go when I really need to see the special effects in 3D. Try lowering the price of tickets you may be surprised.

  9. They (Village and even TV broadcasters) need to realise there are other things competing for the dollar they are after now days as well.

    For example, I’m usually online gaming (MMO) with friends these days, we hang out and chat on TeamSpeak (TS). A 15 seat TS server costs me $50 a year and even if I play an MMO with a subscription price, that will only be ~$15 a month. So $230 a year, where I can “go” every single day ($0.63 daily). If I’m playing a FTP (Free to Play) MMO (pretty common these days, Planetside 2 by Sony, and Guild Wars 2 by NC Soft are great examples of good solid and fun FTP MMOS), it’s far less.

    If I go to the movies, I usually make an event of it and go to Gold Class (a Village company I think) where a bottle of wine will now cost you $40 odd and 3 tiny burgers are close to $20. All up, if I take my wife, it’ll cost over $150, so it’s been reduced to special occasions only.

    If there is a movie I really do want to see, but it’s not a “Star Wars” level release, I usually wait till it’s out on Bigpond movies ($6), buy a couple of bottles of wine ($20), cook my own nibbles ($10) and save well over $100.

    Many Australian corporate executives these days are just too damned greedy and too damned lazy. They expect their greedy little models to last forever and blow millions lobbying politicians to maintain the status quo so they don’t have to come up with a new model where they may have to actually…you know, work for their living and coming up with innovative new models.

  10. I personally avoid the cinema because my home theater offers a much more enjoyable experience. I can watch what I want, when I want, comfortable seating (No gum stuck on it and just in general a seat that hasn’t had 3000 arses on it before mine), privacy (pants optional), far better audio quality (at the volume of my choosing) and the list really can go on. Services like netflix let you watch 15 minutes of a movie and if you really just don’t feel like watching it, you can pick something else. I can pause the movie to get food or a drink (without spending excessive amounts of money). I also find it more social when watching movies with others, you can have people around and you can actually make comments on the movie without disturbing people outside your group.

    My thoughts.

  11. Not sure why nobody gone the path of automating cinemas experience. Where humans are not required

  12. Given that I almost always only go to the cinema on “half-price Tuesday” I think its safe to conclude that its the ticket price that’s the problem (for me). $60-80 for the family to see a movie in the cinema?? I can think of better ways to spend that money!

  13. We have a small chain that has cheap prices $4.5 for kids and $8.5 for adults. It’s often packed. That’s probably why Brisbane was lower. Without cinelpex we’d be the same as the other capitals.

  14. I’d hazard a guess even if you could stop piracy it wouldn’t improve cinema attendance numbers. Once of the problems for me is there is very little quality content being produced which is why many people don’t go to the cinema.

  15. Went to the Astor St Kilda recently for the 2001 Space Odyssey event and the people around me were scrunching plastic and crunching food noisily with no allowance at all for the silence around them. My neighbors wandered off for a smoke and returned reeking of stale cigarette smoke.

    I paid $29 to watch a 70MM version where the the sound quality was often poor.

    Won’t rush back to repeat that experience.

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