One Studio Exec Knows How To Save The Movies, And You're Going To Love It

It's not that theaters are in danger of going away in the immediate future, but the movie business is in a bit of a crisis. Thanks to the pandemic, the box office has struggled to get back to the level of ticket sales the industry had become accustomed to. The SAG and WGA strikes last year have put us in a situation where the 2024 box office is in rough shape thus far, with the summer now burdened by unreasonable expectations. So, what can be done? One Hollywood executive believes he has the answer: Make the experience of going to the movies cheaper.

Sony Motion Pictures Group chairman Tom Rothman recently sat down to speak with Deadline. As the head of one of Hollywood's biggest studios — one that doesn't have a streaming service and is very reliant on box office — he has a good vantage point to comment on these matters. "We need for ticket prices to come down," Rothman said plainly in discussing the challenges the industry is facing. In explaining why, the executive had some pretty solid reasoning:

"I think it's not healthy. I understand why it happened, and that exhibition went through a terrible near-death experience with Covid. I get the instinct to raise prices. But I think overall, if you look for example at how every Tuesday in America, every single Tuesday is the biggest day of the week. Why? Because of the half-price tickets. It's fundamental consumer economics: just lower the prices and you'll sell more. You'll make it up in volume, and concessions."

As Rothman sees it, it's about all but the long term and volume, not the short term and squeezing every penny from those who do still go to the movies. "I wish exhibition could see its way towards doing more pricing experiments, not taking them up, but taking them down," he added.

Ticket sales are down more than 20% for the year so far compared to 2023, when the domestic box office topped $9 billion. That was still far below pre-pandemic levels, which ticket sales regularly totaled $10 billion or more. Meanwhile, Regal's parent company Cineworld is going through bankruptcy, and AMC Theatres is saddled with a mountain of debt. It would be hard to argue that we're in excellent shape. Something has to change.

Rothman's argument is that, for the average person, making something more expensive is going to make them far less likely to do it. Speaking further, the executive used young people and families as prime examples when it comes to moviegoing:

"Kids are trying to make rent, they don't have a lot of disposable income. And the second very significant pricing-sensitive segment is the family audience. It's too dang expensive to take your whole family to the movies right now, even if the kids get in half price or whatever. I sound like I'm arguing against my own business, but I'm not. I'm lobbying that I think we would endear ourselves much more, particularly to that family audience, if the price is moderated some. Exhibition will argue, fair enough, moviegoing is still great value. It's still a fraction of the cost of a Broadway show or a football game. But for a lot of people bringing a family of four or six to the movies, that can be an expensive undertaking."

We've seen time and time again that value leads to an increase in moviegoing. That's what made MoviePass so successful before the service's epic downfall several years ago. But the value proposition worked, and it has led to other programs such as AMC Stubs A-List; theater chains make it cheaper to see movies while relying on concession sales and volume to make up the difference.

Certain moviegoers are indeed willing to pay more for the right experience. Just look at the success IMAX and other premium format screens are enjoying with films like "Oppenheimer." That's all good and well, but it can't all be expensive, ridiculous popcorn buckets. It can't just be about squeezing every last dollar from the patrons who still love the theatrical experience. Rothman understands that the movies should be an accessible activity, and something people do more regularly again.

He wasn't just picking on theater chains, though. The executive also had a lot to say about Hollywood. In particular, he argues that studios need to get their movie budgets down. Budgets have been spiraling out of control for years. Rothman knows this and he knows it can't continue:

"I should also say in fairness, the production side of the business needs to get its own cost house in order, too. Streamers, who don't have an individual film-profit-based model, inflated the cost of making films and all the studios, who do have such a model, succumbed to varying degrees. Mega-negatives became Giga-negatives, and budgets are up across the board. This is not just bad for us studios, it's bad for the audience. High negative costs decrease creative risk taking, which decreases the ability to push for the kind of originality I spoke of before. Instead, it leads to repeating the tried and true, and the tyranny of IP."

Some of this is easier said than done, but something must be done. Budgets do need to come down. As for ticket prices? Yeah, it's probably a tough sell to have AMC and Regal make things cheaper. But discount Tuesdays work. Loyalty programs work. Isn't it worth seeing if affordability can work on a larger scale?