You have probably heard that AMC is going to start charging for seat location at the movie theater. This deserves a big, “It’s about time!” They should have been doing this a long time ago. Their plan is to have three tiers of seats, Value, Standard, and Preferred. (Looks like good, better, best).
Let’s spend a few minutes thinking about this. First, why does this make sense? It should seem obvious that some seats are more valuable than other seats. I usually arrive at the theater early so I can get a middle seat right behind that railing so I can put my feet up. I go out of my way to get that seat. It’s more valuable to me. Would I pay more to ensure I get it? Of course.
There are times when I show up late and can’t find a seat except in the front section, close to the screen. Ugh. I have to look up. It makes the experience less enjoyable. Given there is such a big difference in experience based on the seat, it only makes sense for AMC to charge different prices for the different seats. Some seats are more valuable than others. Besides, they have seen this demonstrated in sports arenas, stadiums, and concert halls. They know it works.
Why didn’t they do this earlier? My guess is they regularly thought about doing this but decided that the logistics of implementing this policy was more hassle than it was worth. Up to now, theater seating was like getting a seat on a Southwest Airlines flight – choose any open seat. Southwest chose this model because they can turn planes faster at the gate. AMC probably stuck with this model because it saves a lot of extra effort.
It will be interesting to see how they implement it. I guess they will sell assigned seats, like American Airlines or any professional sporting event. There are plenty of technologies to manage this. They may need ushers to show people to their seats and to resolve disputes like “You’re in my seat.” They will incur more costs. However, their estimates must show the increase in profit from segmentation exceeds the increase in costs.
Whenever I teach price segmentation, I always emphasize the value of using one more technique. Add one more technique. If you add more than one, you complicate your internal processes and risk confusing your buyers. Here is AMC adding one more technique to an industry that already does a fantastic job at price segmentation. Matinee price anyone?
Now, go make an impact!
