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AESerm
AESerm
12/5/2012 | 4:51:35 PM
re: Netflix Kills Qwikster


So looks like Cinemark finds the idea of a neighborhood home movie theatre--however few people take the early windowed $60 offer--too competitively close for comfort. As for NFLX, Quik indeed. Someone must be writing this up as a business school case even as we type.

DCITDave
DCITDave
12/5/2012 | 4:51:34 PM
re: Netflix Kills Qwikster


Yes, exactly. And though the $60 price point is insane, a slightly lower price point for VoD that was still more expensive than going to the movies would SEEM like the right way to get more eyeballs. Weird that Cinemark would have an issue with that.

AESerm
AESerm
12/5/2012 | 4:51:34 PM
re: Netflix Kills Qwikster


It's also about maximing revenues, right? So the right number of people viewing the title across the various windows.

DCITDave
DCITDave
12/5/2012 | 4:51:34 PM
re: Netflix Kills Qwikster


Good point -- At $60, it's hard to argue that Cinemark had anything to fear from the VoD offer. And isn't the whole point of making a movie to try and get as many to see it as possible? How does shutting down potential distribution help that cause?


 

shygye75
shygye75
12/5/2012 | 4:51:34 PM
re: Netflix Kills Qwikster


Cinemark runs movie houses and has no interest in expanding the number of eyeballs beyond the ones paying their way into its theaters. Companies like Cinemark are threatened with disintermediation or at least even further erosion of revenues, and their real-estate overhead is substantial.

BigBro
BigBro
12/5/2012 | 4:51:33 PM
re: Netflix Kills Qwikster


The theaters don't make much money on ticket sales, especially in the early weeks. They make most of their money selling pop corn and soda. (See link below.)


So shortening the window during which people might go to the theater to see the movie is an existential threat to theater operators.


$60 is just the studio's initial guess at pricing, and they're obviously starting high, looking to titrate in the right price by gradually lowering it to the point where people go for it.


If/when they figure out the right price, and they manage to get viewers in later weeks to not go to the theater, the studios cut off what little ticket revenues the theaters have. This is why the theaters are fighting back so hard: they've got to nip this in the bud.


http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much



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