Bostonist looks at the proposed Loews-AMC film theatre merger and predicts the worst:
With a monopoly on 32 of Boston’s most popular screens not only with the new company be positioned to bargain with the movie studios but they will have little competition when showing feature films. Seeing a new release film in Boston could soon be priced the same as buying the DVD. As an always thrifty consumer Bostonist might start our own movie theatre.
Diana at the causeway concurs that monopoly will mean higher ticket prices and points to an NPR Marketplace assessment along those lines. (And she lists a number of smart-sounding books on recent industry economics, none of which I’ve read, I’m ashamed to say).
I wouldn’t be surprised if ticket prices went up a little, but one thing to remember is that, as this summer boxoffice returns show, demand for movies right now is highly elastic. Those in the exhibition business are keenly aware that cinema competes with other leisure activities and home-entertainment formats - I suspect that this larger competition rather more than local exhibition competition determines and constrains price today. The same, too, goes for pre-movie advertising, which may have reached its saturation point, at least in Boston (complaints are already being aired on the local TV news). Perhaps a monopoly could have more wiggle room to experiment in synergy ads and tie-ins, or implement variable pricing that Marginal Revolution has discussed.
So if it’s not higher pricing, then why the merger? There are other gains. An economy of scale will certainly apply, and the combined marketing costs that the NPR mentioned are real: Loews has built a brand around Fandango, and AMC can drop whatever online purchasing they have and piggyback. I just hope the combined entity can come up with an easier-to-remember URL than enjoytheshow.com (what’s wrong with loews.com, I always wondered). Finally, I imagine the combination will allow more cinema closings and better product differentiation across theatres - the relegation of art and prestige films to lower traffic locations, for instance.
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