Bright Lights, Big Ticket Prices

The success of premium Avatar and Alice in Wonderland screenings are finally factoring into multiplex ticket prices.

This morning's Wall Street Journal reveals that many of the country's top exhibitors -- including AMC, Regal (NYSE: RGC  ) , and Carmike (Nasdaq: CKEC  ) -- are quietly jacking up ticket prices for IMAX (Nasdaq: IMAX  ) and 3-D screenings starting tomorrow.

I checked the online ticketing prices for my local AMC and the article is spot on. Disney's (NYSE: DIS  ) 3-D version of Alice in Wonderland is going from $13 on Thursday to $15 on Friday. The conventional version remains a $10 ticket. This isn't just a weekend markup, either. Today's $3 difference continues as a $5 difference into next week.

The article checks into a few theaters, pointing out that IMAX prices will also be going up between $2 and $3 per person.

Will movie buffs pay? This remains to be seen, though shares of Regal, Carmike, and IMAX all opened nicely higher today.

There is at least one piece of anecdotal evidence that suggests that consumers will pay up. During Avatar's opening weekend, IMAX accounted for 13% of the country's box office receipts. It's an impressive sum when one considers that IMAX accounts for just 2% to 3% of screens showing James Cameron's sci-fi blockbuster.

The bigger number makes sense, since IMAX theaters tend to be larger and exhibitors are charging more. However, by the 10th weekend, News Corp.'s (Nasdaq: NWS  ) Avatar took in 27% of that weekend's take. In other words, once crowds began to thin out at the traditional screenings, IMAX was still a hotbed of Pandora loving.

If audiences take to the new prices this would be huge for IMAX. It now has a greater stake in the ticket sales as a result of its joint-venture arrangements with exhibitors including AMC and Regal. Success will also likely generate even more orders for IMAX installations.

The timing of the hike isn't perfect for IMAX. Many screens will be switching out Alice in Wonderland for the DreamWorks Animation's (NYSE: DWA  ) How to Train Your Dragon. Higher prices won't be popular, and many of the seats will be filled with cheaper children admissions. However, there is also symbolism in the timing.

After topping $10 billion in ticket sales for the first time ever last year -- and padded by a 5.5% spike in actual attendance before considering the impact of higher prices -- movie theaters are hot again. It's about time that exhibitors learn to train their dragons.

Are ticket prices getting out of control? Share your perspective in the comments box below.

Walt Disney is a Motley Fool Inside Value choice. IMAX is a Motley Fool Rule Breakers selection. Walt Disney and DreamWorks Animation SKG are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz doesn't like the way he'd look blown up on an IMAX screen. He owns shares in Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, and it looks smoking hot on one of those eight-story IMAX screens.


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  • Report this Comment On March 26, 2010, at 11:11 AM, caltex1nomad wrote:

    The last time I went to the movies it was because I had received a gift card. I can do without these special effects extravaganzas that have no plot, no storyline and bad acting (Live and CGI). They can take their $15 and shove it in their popcorn container.

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