“We are in inflationary times, and inflationary times cause costs to rise,” he said. “Under the pre-Sightline structure of the industry, if we wanted to raise the price in a theater, the only choice we had was to raise the price on all the seats.” With Sightline, “if we felt the need to raise prices, we might only do it in the most popular seats in an auditorium and actually hold the line and not raise prices on other seats. So, it is a way of increasing the price now, but preventing a price increase later on.”
“I am looking at ‘heat maps’ [meaning] what seats are booked for a particular movie, and nobody sits in row one. It could be opening night for Star Wars, rows three to 18 are booked solid, row one is empty. There is a possibility here that by discounting the price up-front, we may be able to expand the moviegoing market to more price-sensitive consumers,” he said during a call following AMC’s fourth-quarter financial report.
The company announced earlier this month — to an enormous among of flak — that seats in its auditorium would be classified as Value Sightline (lower price), Standard Sightline (traditional price) and Preferred Sightline (higher price). It’s testing in in New York and Chicago as well as Kansas City, where AMC is headquartered, ahead of a possible national rollout later this year of the initiative that actor Elijah Wood said is messing around with what has always been “a sacred democratic space for all.”
Aron noted the strategy is in line with how other sellers price their seats for live theater, concerts and sporting events, and how AMC has been pricing movie theater tickets in Europe for years.
“We do understand, however, that this is a substantial change to the status quo for U.S. moviegoers. So we will be watching [their reaction] very closely [and] report back to you in future calls what we are seeing in the test. We’re looking forward to this thing working well for our moviegoing public, and for AMC,” he said.
The benefits to AMC are clear – it hopes to fill up less desirable seats, get more for more desirable ones and channel people into its AMC Stubs loyalty program whose A-list members are not charged extra for “premium” seats.
Everything helps. The box office is in the midst of a recovery expected to finally pick up steam this year but it’s been a slog and AMC is looking to raise cash to pay down debt or to pick up some more theaters. Without the ability to raise cash, newfound success could “vaporize” in the future, Aron warned. The company faces a key shareholder vote March 14 to start the process as well as several lawsuits that are trying to block it.