Just this past weekend, my wife and I went to a movie. We got to the theater (no, despite what marketers would have us think, in the U.S. it is spelled theater, not theatre) about 5 minutes before show time, only to confront four serpentine lines at the box office. This was not unexpected -- one of the casualties of Hurricane Katrina around New Orleans has been a shortage of hourly workers. The storm flooded out 200,000 homes, and greatly tightened the rental housing market. It is hard to live in New Orleans on an hourly wage these days. Even though employers have kicked up pay scales considerably, many service businesses are chronically short.
We decided to bypass the ticket booth and go to a self-serve kiosk inside the theater door. This kiosk, whose likeness I imagine appears in movie theaters across the country, is a new contraption that involves sliding in a credit card, picking the movie from a touch screen, and waiting for the tickets to print out. There was no line at the kiosk, and the automated process took 30 seconds at the most. We were able to cut in front of about 200 people by doing this.
As I went through the touch screens, I noticed that the ticket prices were higher than they were at the ticket booth, $1 per ticket more, to be precise. This seemed strange. If I use the kiosk and bypass the ticket booth, I am saving the theater money because I am not taking up the precious time of the booth workers. If more people use the kiosk, the theater needs fewer ticket clerks. Thus it would seem logical that the theater would want to encourage this process, or at least not discourage it by charging a premium for the service.
A price structure that penalizes patrons for buying tickets through an automated system is especially perplexing given the cost structure of the movie business. Having worked in a movie theater many years ago, I know that theaters make no money on ticket sales. Theaters sign rental contracts with the big movie studios, and have to pay a considerable percentage of the gate money in royalties. For a blockbuster film like the James Bond show we saw, the studio can easily collect two-thirds of the gate, or even more. With the cost of operating the projectors, the projectionists' pay, and the pay of the clerks at the box office, there is almost no profit at all in ticket sales. Theaters make their money at the concession stand, which explains why they charge $4 for a pack of M&Ms.
If I ran a movie theater, I would want as many seats as possible sold. I wouldn't care if I did make a dime on the tickets -- in fact, I would sell tickets at wholesale. The more people who come in, the more $5.50 megabuckets of popcorn sell. An unsold ticket means two more cubic feet of popcorn settle down to the bottom of the warming bin, only to get staler and staler.
Part of selling lots of tickets is efficiently moving bodies through the queues. A long wait at the door is bad for business. (As a doctor I should be an expert in wait times!) There is no telling how many customers pulled up at that theater, saw the huge lines, and drove off. A very short line at the ticket booth offers what real estate agents like to call "curb appeal." Towards that end I would make the kiosk ticket price cheaper than the ticket booth price and put the kiosks in a more conspicuous place so everyone will use them. Move 'em in.
But the theater was not using the kiosks to move bodies. Probably on the advice of the pinheads who sold them the kiosks, they were playing the Techie Sucker's Game. This is a strategy designed to milk elitist technocrats like me of their money through the snob appeal of computer automation. Marketers of high tech products know that there are people like me who will pay more for perceived high tech convenience. We congratulate ourselves on ease-of-use and look down on the sorry souls who continue to do things the old way. We like anything that is bigger, faster, and better, and we don't realize we are paying more for the privilege.
I revel in the pleasures of digital photography, but the high costs of printer cartridges and photo paper means that a typical digital photo costs three times what an old film print did. I think how smart I am to download a music album from iTunes for only $10 , forgetting that I also paid $400 for the iPod I use to store the music files. Who is the sucker? The guy who buys CDs off the shelf may pay $14 for the disc, but his CD player costs him $50 at Kmart. He would have to buy a lot of CDs to make up for the difference in cost between my iPod and his CD player, and by the time he catches up to me I am out shopping again for the latest and coolest iPod.
The kiosk sucker's game is charging an extra dollar a ticket in exchange for the advantage of a shorter wait plus the whiz-bang of the computer interface. It worked in my case, but remember what I said before -- I walked right up to the machine because no one else was using it. In other words, there weren't enough suckers. I were the theater owner, I would abandon the techie sucker's game for a better paying one -- selling more tickets. Rather than looking to the iPod or digital photography as a business model, theater owners should look at banks. Banks have nothing but money to sell, so their strategies are unpolluted by the distractions of most other businesses. For a bank, whatever makes money goes to the top of the business plan.
Banks have automated teller machines everywhere. They send you cards to use the ATMs in the mail for free. They push you to use them, love you when you use them, and sometimes even charge you when you try to talk to a live teller. They know what theaters do not. The more people you have doing business with you over a touch-screen, the richer you are going to be.
I think I'll install a touch-screen prescription dispenser in my office tomorrow.