Hollywood Continues to Dig Its Own Grave

September 28, 2011 — 1 Comment

In a brazen show of complete ineptitude, Sony Pictures Entertainment has decided that, beginning in 2012, theaters will have to front the cost of those disposable 3D glasses. The Hollywood Reporter picked up the story yesterday, and today the National Organization of Theater Owners (or, NATO for short, really) has responded, saying that Sony must reconsider this decision. If the cost of 3D glasses is offloaded onto exhibitors, it’s likely we’re in for either a full bump in ticket prices, or at the very least an increase in the current $3-5 surcharge for 3D presentations.

Apparently Hollywood just isn’t getting the hint. If the only way to make 3D a worthwhile, profitable venture is to charge as much extra for it as possible, then clearly it’s a waste of time. Conversely, if offloading the cost of glasses is not necessary for 3D to be profitable, then all they are doing to forcing the hand of the fine people who screen the films and causing ticket prices to be raised even further. In the short run, this idea may get Sony even higher profit margins from their successful 3D releases, but in the long run they are only contributing to the seemingly unstoppable erosion of theatrical audiences.

It has become quite clear over the last two years that 3D has not been pulling more people into cinemas. In fact, looking at the numbers, it can very easily be concluded that 3D is keeping audiences away. And if it’s not the 3D itself that’s causing the problem, then it’s certainly the price tag associated with 3D. In hard economic times, when the cost of living is getting higher and higher without corresponding wage increases, people just don’t have the ability to spend money on 3D movies.

I strongly suspect that audiences are being placed on the brink. They can no longer afford the prices being charged at the multiplex. Even the prices for regular old 2D showings is getting unreasonable. at $12 a pop, taking the family to a regular non-3D showing of the latest Alvin and the Chipmunks films can cost between $50 and $70. Add in the 3D surcharge and we’re talking costs of at least $60 or more.

On top of all this is the confusion over what we’re actually paying for. Most theater patron erroneously believe that the $3 surcharge is to cover the cost of the glasses. In truth, the surcharge is the product of an understanding between distributors and exhibitors that the cost of producing 3D is higher as well as the cost of upgrading theater equipment and presentation. That extra $3 is there to cover those costs as well as make that investment more profitable. Really, it’s not totally unreasonable, in theory, except that it is when you consider that every movie costs a different amount to produce. Just because Pirates 3 cost $300 million to make doesn’t mean that its ticket prices were higher than the $40 million True Grit. Similarly, on the exhibitor side of things, if they thing upgrading to digital 3D projectors is a good investment, that cost should not automatically fall on consumers.

There are cases where it’s reasonable to ask consumers to help out with costs. IMAX, for example. IMAX tickets have traditionally been slightly more expensive. The cost of shooting and exhibiting IMAX is nigh-prohibitive, and the number of screens is tiny. Consumers must seek out proper IMAX screens, and when they do, it’s understood that they are getting a “special” experience and so are willing to pay more to help make that experience possible. If 3D was similar in its specialness, if it was that cost-prohibitive, if it was that difficult to implement, if the experience was significantly more unique, if it was difficult to find, then it might make sense to charge more. Back when RealD was rolling out and there was maybe one digital 3D screen in any given city, to charge more for that unique experience was somewhat more palatable. At this point it just feels like gouging.

And through it all, people still believe they are just paying extra for the glasses. What happens when Sony stops covering the cost of glasses and theaters start charging a higher premium? I’d imagine a sort of customer revolt would occur. “You mean we have to pay even more for these stupid glasses?” It will not go over well, and it might just push people over that brink. It will take the value out of going to the movies.

As I discussed in my article about the success of The Lion King 3D, going to the movies has always been cheap enough to make the rewards of good entertainment outweigh the risks of a wasted two hours. That is very quickly becoming untrue. The more studios and distributors push theater owners, whether it be through demanding higher first weekend gross percentages, or offloading the cost of 3D glasses, the higher ticket prices will get, and the more the audience will turn away from the big screen experience altogether. Many people will tell you that the studios make enough off of DVD sales and rentals to offset this trend, but the fact is, theatrical exhibition is still the bread and butter of the industry, as well as the anchor of it all. Take away the cinemas and the entire industry model collapses.

One thing is very clear: this needs to stop. If it means the end of 3D, then so be it. But I think it goes beyond that. Hollywood needs to scale down. They need to make better investments. They need to create a more healthy partnership with theater owners, one that is more equitable, and that will also lead to a freeze in ticket prices, if not an even more welcome drop. If they don’t do this, and soon, the moviegoing public will turn its back on the industry. This is a self-inflicted wound, but, as evidenced by Sony’s mind-numbingly stupid actions, Hollywood simply does not know how to deal with it, and just keeps digging its own grave deeper and deeper.

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One response to Hollywood Continues to Dig Its Own Grave

  1. 

    Tsk, tsk, tsk, they never learn. Hollywood is just going to out of business soon with the way things are going.

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