Ars Technica has a juicy little report that many in Hollywood loves to hear yet hates to see happen.
In a free market competition of film would determines the price. In part this is already done. Movie theaters sale tickets at a set price for a fixed number of seats at given times. If anyone went and saw Batman: Dark Knight (Great movie by the way) within the past couple of weeks then you would most likely have run into the problem of their not being enough tickets for you to see the movie at the time you wanted. However if there was a scalper who acquired tickets before the show by waiting in line then wishes to sale his tickets at 50% to 200% of the original price many would think that is unfair. To which I say then don't buy them. Wait for another time or till it's on DVD. The scalper is the one who takes on risk for those tickets. If he cannot sale them then he is forced to swallow the lose of money. If he can sale them all then he makes a profit which makes it worth his to stand in line. The problem for many people is they feel intitled to see the movie at the time they choose.
Now look at the reverse of this. What about Hollywood/movie theaters? They set a price on a per ticket bases. The idea being that they have a reasonable guess as to what a person is willing to pay to see the movie and then they charge that price. My 500 seat theater sales $10 tickets and a good movie sales them out so I make $5000. But wait ther is more. What happens when I don't fill the theater? Bad movie X comes out and doesn't do well in my market. The Theater cannot get people in the theater at $10 a seat, yet the movie is pirated. Maybe the ticket per seat is to high? What about the high end movies that do sale out they are pirated as well aren't they? Well yes but you also have limited availability.
If I have 500 seats but 2000 people wanting to see the movie at 19:00 . then the swing between demand and supply has obviously shifted. I have 2000 people who are will pay $10 to see my movie at 19:00 but I don't have enough seats. Yes' I'll make $5000 from my 19:00 show, but I know have 1500 mad because they have the $10 but cannot see the movie. What happened if I charged $12-$15. Maybe the demand drops a little but I now make more money for that time period and there is less people upset because they are not willing to pay $15 for the movie. Some of those customers will wait till the price drops.
Now lets put in the piracy piece. ALPA used the French film Bienvenue chez les Ch’tis had 682,000 downloads and 20 million box office tickets. Lets just say the 20 million was about $10 a ticket. So the movie made $200 million in ticket sales. Now lets add in the pirated viewers into our equation and see what the real ticket price was. 200,000,000 / 20,682,000 = $9.67. So the real price per ticket was slightly lower. And that is really more along the lines of people who were willing to download a crappy camcorder copy of the movie. What would have happened if the movie was $9 instead? Maybe the theater would have made more money overall because more people may have been willing to see the movie at a lower price?
That is a hypothetical question but it is also the risk of business. Hollywood should consider that they may be asking more of the market then the market is willing to pay. Instead of crying about piracy why not look at making better pricy. To me I would say the market is doing making the change for them and they just don't like that they are not the ones setting the price.
"Piracy could put film industry out of business, warns group"The thought is that with the huge number of movies being downloaded that it cuts into Hollywood's profits. My question is what is a proper profit for Hollywood and who determines it? Is it Hollywood?
Illegal downloads of popular films are nearly as numerous as box office visits, a French antipiracy association claims. The Association Against Audiovisual Piracy (ALPA) analyzed P2P traffic in France between November 2007 and June 2008 and concluded that a number of popular films had been downloaded so many times that the phenomenon could endanger the entire film industry.
In a free market competition of film would determines the price. In part this is already done. Movie theaters sale tickets at a set price for a fixed number of seats at given times. If anyone went and saw Batman: Dark Knight (Great movie by the way) within the past couple of weeks then you would most likely have run into the problem of their not being enough tickets for you to see the movie at the time you wanted. However if there was a scalper who acquired tickets before the show by waiting in line then wishes to sale his tickets at 50% to 200% of the original price many would think that is unfair. To which I say then don't buy them. Wait for another time or till it's on DVD. The scalper is the one who takes on risk for those tickets. If he cannot sale them then he is forced to swallow the lose of money. If he can sale them all then he makes a profit which makes it worth his to stand in line. The problem for many people is they feel intitled to see the movie at the time they choose.
Now look at the reverse of this. What about Hollywood/movie theaters? They set a price on a per ticket bases. The idea being that they have a reasonable guess as to what a person is willing to pay to see the movie and then they charge that price. My 500 seat theater sales $10 tickets and a good movie sales them out so I make $5000. But wait ther is more. What happens when I don't fill the theater? Bad movie X comes out and doesn't do well in my market. The Theater cannot get people in the theater at $10 a seat, yet the movie is pirated. Maybe the ticket per seat is to high? What about the high end movies that do sale out they are pirated as well aren't they? Well yes but you also have limited availability.
If I have 500 seats but 2000 people wanting to see the movie at 19:00 . then the swing between demand and supply has obviously shifted. I have 2000 people who are will pay $10 to see my movie at 19:00 but I don't have enough seats. Yes' I'll make $5000 from my 19:00 show, but I know have 1500 mad because they have the $10 but cannot see the movie. What happened if I charged $12-$15. Maybe the demand drops a little but I now make more money for that time period and there is less people upset because they are not willing to pay $15 for the movie. Some of those customers will wait till the price drops.
Now lets put in the piracy piece. ALPA used the French film Bienvenue chez les Ch’tis had 682,000 downloads and 20 million box office tickets. Lets just say the 20 million was about $10 a ticket. So the movie made $200 million in ticket sales. Now lets add in the pirated viewers into our equation and see what the real ticket price was. 200,000,000 / 20,682,000 = $9.67. So the real price per ticket was slightly lower. And that is really more along the lines of people who were willing to download a crappy camcorder copy of the movie. What would have happened if the movie was $9 instead? Maybe the theater would have made more money overall because more people may have been willing to see the movie at a lower price?
That is a hypothetical question but it is also the risk of business. Hollywood should consider that they may be asking more of the market then the market is willing to pay. Instead of crying about piracy why not look at making better pricy. To me I would say the market is doing making the change for them and they just don't like that they are not the ones setting the price.
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