Why Excuses For High Australian Movie Ticket Prices Don't Cut It

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?

Cinema picture from Shutterstock

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:

1) Higher labour costs involved in operating a cinema in Australia compared to other countries

2) The impact of illegal downloading

3) 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 $1.37 billion in revenue and that 6100 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 per cent 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 per cent 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 per cent 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.The Conversation

Bronwyn Coate is a Researcher Fellow (Cultural economics) at Deakin University. Deb Verhoeven is Professor and Chair of Media and Communication at Deakin University. 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.


    It's so expensive to go to the cinema. That's why revenue is down. I went last week: 2 tickets, popcorn, a drink and an ice cream cost a total of $60+. That's downright frickin' insane. Low attendance isn't solved by increasing ticket prices; it's solved by [i]lowering[/i] prices. Piracy has never had any negligible affect on either movie or music sales (and has been shown in multiple studies).

    Oh, and most Hollywood movies suck. That probably doesn't help either...

      Attendance drops are due largely to the high cost of going to the movies in Australia.
      My friends and I take advantage of offers from Telcos for $10 tickets for Event Cinemas (Telstra), Hoyts & Reading (Optus) to save money going.
      Thanks to $10 tickets my friends and I go to the movies 3-5 times a month.

      The drive in at Blacktown gets huge numbers of people going through the door because they only charge $10 per person and since it's refurbishment it's become something special to go to again. The food is good and it's a good option for families. This is probably the only saving grace from a Village brand cinema at the moment.

      Gold Class is quickly becoming a non event - I used to go to Gold Class for movies that I REALLY wanted to see. The menu is now way overpriced and they've abandoned 90% of the items from the menu that I was interested in and opted for things like the $57 seafood platter for 2 instead. Add that to the price of admission $42.50 per person then combine that with the overpriced meal and you've lost my patronage. Considering the MASSIVE profit margin on post mix drinks at the cinema. Those large drinks cost pennies and they charge like a wounded bull for them.

      I compared Gold Class with AMC's dine in cinemas in the USA while there on holidays. Their menu has nothing over $16 and they have something on there for everyone. The seats also have service buttons for additional ordering while in the cinema. The best thing was the price of admission doesn't include offering organs on the blackmarket or sacrificing your first born child. At $12.50 you don't need to take out a 2nd mortgage to enjoy a unique experience at the cinema.

      I'd hope that Village Roadshow and Co read these kinds of threads because the cinema experience in Australia is trash compared to their international counterparts. I'd love for someone like AMC to come here and give the locals a well needed shake up.

      Last edited 30/04/14 2:45 pm

      This. If attendance is low, look at how to grow attendance, not account for it. It's just good business sense.

        It's the same as saying "Do more with less". Eventually you don't have enough to do anything. But it's not managers that get in trouble, it's the staff for not towing the line.

        Accountants should begin doing their jobs and "make money" not try to just save it. That art form has been lost.

        Last edited 30/04/14 1:25 pm

      It's been awhile since I wanted to see a Hollywood blockbuster. Most of them seem so soulless. There's also how indistinguishable they seem, particularly with superhero movies.

      The only films I have been keen to see in the last 12 months are Philomena and Only Lovers Left Alive.

      Obviously, a lot of things become cheaper to those who wait. It just seems a much much better investment to wait until the DVD/BluRay comes out. It's something you can watch many times and lend out if you enjoy it; it's something you can take to Cash Converters if you hate.

    The cinema is one place where piracy is an extremely poor excuse (read: cop-out).
    If the appeal of a shitty camera rip is really so much greater than that of the "cinema experience", methinks the problem lies much closer to home...

    Of course they could never blame the distributors or studios for gouging them on the permissions to show the movies. Can't upset that apple-cart. How much truth is there to the theory that the cinema themselves make very little margin on the ticket price, and make the bulk of their profit on overpriced food?

    The prices are already ridiculously high (both on tickets and food), which is why attendance is so low. Movie watching has moved from a specialised product to a commodity, so it is so important to focus on the _real_ differentiators. Shoving me in a VMAX cinema with a larger number of potential noise making people is not something I want to pay extra for. Being able to book tickets online is fantastic, but oh wait, they slug me a surcharge on that too. Probably because I am more likely to skip lining up for overpriced food.

      I worked for greater union for 5 years back in the 90's

      They make nothing off the movie. All profit comes from the candy bar. That's why they had us ushers trying to police what food people brought in from 'outside' . Of course since we couldn't actually ban them or physically prevent people from bringing their $1.50 bag of 250g of Jaffas from Coles in, as opposed to buying the $4.00 100g bag from the candy bar, this wasn't very effective.

    I stopped going to the cinema for a number of reasons.

    1) Prices. Obviously
    2) Had kids and it's now harder to get away.
    3) I hate paying lots of money just to have some dick next me me texting the whole fucking time, or answering his bloody phone!
    4) Sticky floors and seats.

    So to simply state that piracy is responsible is so gob smackingly stupid and it's the DT's of a failing industry with outdated processes, expectations and narrow minded and backward thinking staff.

    Oh, and if you stopped paying actors upwards of $35M+, you might be able to sell the tickets for less. Just saying.

    Last edited 30/04/14 1:21 pm

    Went to Victoria Gardens with my wife to go to Ikea and see a movie. Spur of the moment decision since the little one was being taken care of by family.
    Saw the prices, and turned right around.
    I would be interested in what percentage of people plan to go to the moves and what go out of spontaneity (and then either go or decide its better value to go to the pub down the road).

    Plus people have large TVs and home theatre systems that they spent good money on and they want to use. There is no annoying chatting, popcorn throwing, risk of being shot ( http://lmgtfy.com/?q=movie+theater+gun ) or having your bladder explode because you don't want to miss a crucial part. You can start or stop as you please and you aren't restricted to availability or sessions times.

      That is pretty much spot on - Especially when you have kids and no one to watch them. You can't go to the movies and leave bub unattended at home.
      I love going to the movies, but the ticket prices can be a turn-off. If you want some snacks to go with it, you almost get the feeling of being robbed at gunpoint - legally!
      I'd be happy to pay for a movie $10 to stream to my TV at home, play/pause/stop whenever I feel like it or when I have to look after bub and eat even 4 ice creams for the price of $5 for a 4pack from Woolies.

      $1 blurays from Civic on Tuesday also helps. You literally can't beat that.

    Modern cinemas exist to try and capitalise on the "early adopter" phase in the marketing cycle, those people who are movie buffs or fans of a specific IP who are likely to pay more for the "privilege" of seeing it first, but then for some reason they seem to completely and utterly fail to realise this and capitalise on it. Gold class? Pfft.

    What if instead of pointless competitions to win crappy merch, useless buggy apps and websites, and whatever other rubbish they call marketing, they started creating proper fan experiences?

    I wish somebody made me cinema king for a year and let me have a crack at turning the industry around :-)

    What an absolute pile of rubbish. Why does it cost $20 per ticket at the the big chains, but half that at independent cinemas? I literally drive right past a Reading cinema complex (about $20 per ticket) on may way to Odeon Star ($9 per ticket). They've got to pay the same wages, so that can't be the cause for the price increase. And increasing prices will simply lead to even lower attendances, as more people stay home and download, further increasing piracy!
    These guys are just treating us like idiots, which is nothing new. After all, they do still try to charge us $10 for a small popcorn and coke.

    Why do I get charged a booking fee when I book online?
    Isnt the point of booking online suppose to be to do away with having to pay a ticket sales person at the cinema?
    And they dont need to print off my tickets.
    So why am I charged extra for each ticket?

    Its a rhetorical question. I do know why. Gouging.

    Every Village I've been to has been a mediocre or worse experience (gold class included).
    If I do see something now, it's at a Hoyts in Melbourne, and the movie has to be pretty damned awesome to even consider it. They're actually a little more expensive but I don't mind anywhere near as much because the experience has that premium feel to it and in the end, for me, that's what it's about. The experience.

    Village wants to charge premium but deliver the opposite. No one wants to pay top dollar for a mediocre service. I'm sure things would be a lot different if their cinemas (and customer service) reflected the prices they charge.

    As for the pirating issue.. you want to raise ticket prices? That's fine if it's being put toward something that benefits customers. But doing so to "raise" profits and blaming it on the digital age? Jesus.

    Last edited 30/04/14 2:30 pm

    Pretty well all as above, and the discontinuing of the movie Double Feature started the downward slope of my enthusiasm factor for the Big Screen experience...

    A nice quote from Graham Burke in their latest financial report (avaliable here http://www.villageroadshow.com.au/Annual-Report-2013.htm)

    "In Australia, Village Cinemas generated operating profit before tax, discontinued operations and material items for the year ended 30 June 2013 of $36.1 million, an increase of 14.6% compared to $31.5 million in the previous year and EBITDA increased by 11.7% on the prior year. The outstanding performance was driven by higher average ticket prices as a result of converting more patrons to premium offerings, and growth in other revenue streams, including screen advertising revenue and online sales. There was also a 5% growth in patrons’ spend on food and beverage items accompanied by improvements in food and beverage and payroll costs."

    So, profits increased in FY13 in part due to "higher average ticket prices" and "improvements in payroll costs" knocking out two of their key points. I guess the executive labour costs were high with Graham himself taking home $3.9m last year...

    Gotta say there's a QLD chain (Cineplex) which is perhaps the sole reason I'm still going to see movies at the cinema. On the weekend went to go see The Grand Budapest Hotel. 2x adult tickets, 2 drinks and large popcorn. $25.

    If the rest of the cinema chains could take notice maybe I'd consider going to them.

    I don't think $20 for around 2 hours of entertainment is outrageous to be honest. Their justifications may not be right, but looking at the ticket price in isolation I don't think there's much to complain about.

    Being silly enough to pay the stupid prices for popcorn and drinks can't really be blamed on the cinemas...

    Last edited 30/04/14 3:23 pm

    Dear Village Roadshow:


    You're welcome, dummies.

    Last edited 30/04/14 3:29 pm

    I used to go to the cinema pretty much every other weekend, with a group of 3-4 friends. On top of tickets we'd buy drinks, popcorn and lollies. These days each year I see maybe a handful of films at the movies, and wait for the rest to come out on DVD (so that I can download a copy that isn't shaky-cam).
    Why? We all finished uni and stopped getting concessional (ie, not outrageous) ticket prices. This is an elastic market: drop the prices and more people will go. Raise them, and more will decide it isn't worth it. Also, screw paying extra for the pleasure of a headache. I go to the local indie, which doesn't have a 3D screen.

    Higher labour costs
    This is just an excuse to charge more as the market in a high wage country will bear it, sure maybe the wages are doubled but in the cinema industry wages are not a huge expense compared to exhibition fee's,rent and electricity.
    In reality they only employ a very small number of staff per screen and most of the staff is dedicated to making money selling overpriced food and drink which is generating income and is not an expense.

    Illegal downloading
    Last time I checked the internet was a global phenomenon and in Australia you don't get street stalls selling pirate cam jobs on every street comer.

    Low attendance
    Self fulfilling profercy here, I think they are confusing effect with cause.

    My parents and son went to a movie last week and they have concession cards all up it was $63 although my son did get a bit greedy with wanting a particular drink and pack of chips but even still how the hell should it cost that much?

    Wow. Ok. I could write a whole damn novel on this topic, but I'll try to keep it short.

    I'd like to offer a somewhat different perspective, as someone that has worked for well over a decade in the cinema industry, because things aren't quite as black and white as people like to think. I actually started out as a guy in a shirt ripping tickets, and worked my way up to management through the technical path as a projectionist (back before digital was introduced and they all got sacked). I work in a completely different field now, but I still have several friends and family in the cinema industry, so I apologise if some of the details are vague.

    Firstly, almost everyone I meet grossly overestimates the amount of money cinema chains take home from tickets sales. It's easy to point to the box office takings of the summer blockbusters, making hundreds of millions a piece, and assume the cinemas make a killing on all those tickets.

    Pro-tip: They don't. The bulk of that money is going to the film industry. Almost all profit the cinema generates is from Coke and popcorn. If you only buy a ticket, chances are they aren't making money on you. More often they are making a loss, and that's before you even account for all the running costs of the venue.

    Cinemas pay a rental fee on every copy of a film in their possession. The earlier in the films release cycle it is, the higher the fee. If you own a cinema and want to show the new Avengers movie during the first week, you will pay through the nose for it. If you want to screen a film that is late in (or has finished) its commercial run that fee is much, much, much lower. This is the reason rural/independent cinemas often screen films that have finished in the major city chains. It's also why drive-ins like to offer cheap tickets to older films in addition to your main feature. It's also the reason cinemas love to run screenings of the previous year's Harry Potter/Twilight/Star Wars on the new film's opening night. We used to make more on cheap ticket sales for the old film than we would on a full house for the new one.

    The other part most patrons completely fail to take into account when they complain about high ticket prices is the running costs and maintenance of the complex itself. For a large cinema, these costs are absolutely insane. I worked in a cinema for over a year and still had no idea until I moved up to technical. I used to have a full list of contractors that would be in on a weekly basis, and I assure you, they are not cheap. A lot of this was simple maintenance, but there is also significant amounts of vandalism that needs to be repaired.

    In a typical week we would have plumbers (people love cramming things down cinema toilets for some reason), plasterers (for all the holes people punch in walls), carpet guys (steam cleaners and carpet repair), painters, upholsterers, tilers, escalator/elevator repair, fridge mechanics, signage electricians, sound technicians, projection system mechanics, CCTV and security systems....seriously I could go on all day.

    Let's just say all that money has to come from somewhere, and this all gets factored into the cost of tickets and food.

    As for online booking fees? As fun as it is to chalk this one up to gouging, when online ticket sales first opened back in the day, we didn't have an associated extra cost. Sadly this "fee" was added as a necessity due to constant abuse by patrons. We had no end of customers booking whole cinemas (or large portions of them) during peak sessions via credit card (often by teenagers with their parents then reversing the charges), and then demanding large numbers of refunds due to friends failing to attend and so on. It was a constant nightmare for every major release. We tried a number of different options to try and deal with the issue such as restricting numbers of tickets per person to 10, refusing refunds within a certain period before films commenced, etc. but these just led to more problems and complaints. In the end, a non-refundable fee was added to act as a deterrent, and overnight the issue disappeared. Go figure.

    Last edited 30/04/14 5:22 pm

      I worked in the industry for 4-5 years. You're bang on about the tickets but that still doesn't excuse them of using piracy as a scapegoat considering how much they make from food + drink sales. They could lower ticket prices and still make a killing.

      As for contractors.. Ha. What they lose in keeping their best cinemas in top shape they gain back by neglecting their smaller ones.

      I worked for cinemas on/off for about eight years in front of house. I can certainly vouch for the fact that the public do insanely disgusting things in cinema toilets all the time (faeces across the mirror anyone?) and all the rest, but then again the cinemas also saved by expecting us to be cleaners and security staff despite those being a completely different award.

      One of the major cinemas I worked at in the Sydney CBD was too cheap to buy a vacuum cleaner or even carpet sweeper and expected us to use a tatty straw broom to clean popcorn crumbs off the foyer carpet. Our uniforms were disgusting hand-me-downs with armpit sweat-stains practically etched into the fabric. If they got cleaned once a year it was a miracle - and yet we were expected to maintain a much higher standard of service than the largely incompetent management who rarely had any interest in what was going on.

      The last time I went to a major cinema, the candybar staff quoted one price for drinks and charged quite another. We barely got an apology from the management when we complained.

      Finally I'd like to cite the case of Hoyts Broadway who, on the first night screening of Return of the King with a full house that had been waiting for hours at the door, instead screened Love Actually instead. The centre manager went into hiding and sent out some junior to deal with a thousand irate customers who had not only paid for tickets, but parking, dinner etc. It's this complete lack of service mentality from cinema management that makes me a very reluctant cinema-goer now.

    Plus now, with my big tv, sound system and the fact that it's only a few weeks before the DVD cones out after it's run in the cinemas, why bother with the cinemas now? I can watch it cheaper, at my leisure in my own home, for almost the same experience.

    Cinema management is just stupid serious. My cinema has raised the price of combos by $2 and they've also change the session times to force people to go 3D. I don't know about you but I don't give a shit about 3D so I prefer the 2D session. I work 9-5 so the only real time I can see a movie is after 6 or 7pm. My local cinemas timetable for opening week of Captain America 2 was 2D: 9:00, 10:30,2:30 3:30,5:00. The 3D sessions only occurred at 5:30,7:30,8:45,9:30. So I was forced to go see the 3D version and pay the bullshit premium price. They do shit like this all the time. Also they charge premiums for VMAX audio and bigger screens. its bullshit

    To fix this cinemas really need to do the following things:
    > Smaller cinema sizes - cheaper projectors and screens, plus quicker cleaning times (lower labour prices)
    > Pricing - they need to lower ticket prices to increase attendance. Quantity OVER Quality simple as that!
    >Release times for movies to stop illegal downloading - They have to stop holding back the release dates of movies to coincide with Australian School Holidays or Public Holidays. The US has different holidays and as soon as the movie is out in the US the clock is already ticking to beat illegal downloaders to the the punch.

    All this shit is simple logic but I guess they don't really have that.

    No joke my local cinema now has roughly 15 minutes of Local paid ads displayed prior to the movies in order to make money. You watch 15 mins of these ads and then you are lucky to see 2 movie trailers before the film , I remember when you used to see 5+ movie trailers and they got you excited to come back and watch films there !
    Now I deliberately am late so I don't have to sit through the same crap ads which are the reason I barely watch free to air TV.

    My girlfriend used to work there and there is never any talk of improving customer experience , Its just how can we make more money by delivering the same shitty service we always do.
    Oh yeah we will deep fry and microwave cheap food then bump up the price by %50 percent and serve it in gold class.

    Either these morons running the cinemas come up with better business strategies to get bums in seats or they will kill the cinema business slowly over the next decade.
    The one thing I cannot emulate at home is the cinema popcorn but that isn't enough to make me throw my money at them for a cramped seat to watch a movie.

      Emulate cinema popcorn: leave it under a heat lamp for a couple days?

        Haha nah I'm talking when you walk in and they are cooking it fresh. Its all in the salt but I cant find popcorn salt at any of my local supermarkets.

    I get $11 tickets as a student (not valid in public school holidays though, so I buy new rewards cards for $12.50 rather than paying $16.50), and buy food from the closest supermarket. Only way I can afford to go to the cinema as often as I do (at least once a fortnight, usually more often).

    I have friends who work at a cinema (Hoyts, don't know how true this is for other cinemas), and they've said that all ticket profits go back to the film's distributor, with the cinema itself making money off food/drinks/arcade games. Don't know how true that is though.

    They use the excuse of high wages however from what I saw on the weekend there are less staff. They now have self serve ticket machines and there was no usher at the door so if I was dodgy I could have seen the flick for free. This is a Hoyts Multiplex at a large Westfield.

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