Cheaper Movie Tickets at Bengaluru Multiplexes

The Karnataka state budget 2017-18 was presented on 15^th March by Chief Minister Siddaramaiah. It was an election budget and was loaded with populist measures. Among them the move to cap movie ticket price at multiplexes to ₹200 was also announced. Karnataka is the third south Indian state after Tamil Nadu and Andhra Pradesh to cap movie ticket prices in the state.

The decision of the government to cap ticket prices has both winners and losers. At the outset it looks like consumers who are the winners but economic reasoning paints a different picture. The current system of flexi pricing of movie tickets was based on the demand. This meant movie tickets would be expensive on weekends due to higher demand and they would be cheaper on weekdays and morning shows owing to weak demand. People who wanted to watch the movie and valued it higher than the price prevailing on weekends would buy the ticket. So on a weekend it wouldn’t be surprising to find people paying as much as ₹600 per ticket for a famous Bollywood or Hollywood movie. On the flipside I have seen multiplexes screening movies on Saturday and Sunday mornings at ₹120 to ₹150 per ticket. The high ticket prices of prime time shows balanced weak demand in morning shows. With the introduction of the price cap, I will not be able to catch a movie below ₹200 in any of the multiplexes on a Saturday or Sunday morning. Now that ticket prices are cheaper, the demand is bound to outstrip the supply. So don’t be surprised if you cannot buy a ticket for your favorite movie. This would also encourage the black marketing of movie tickets as people who couldn’t buy a ticket would pay a price higher than ₹200 to get it from a person who paid ₹200 to obtain it.

Secondly, the multiplex owners have invested crores of rupees to create world class infrastructure for their customers. Since there has been an investment it is natural that return is expected. The price cap hits the margins of multiplexes and this means they have less money to invest in the upkeep of infrastructure. So the next time you watch a movie at a multiplex and find yourself in a creaky, worn out chair you know whom to blame. They would cut down their costs by trimming the number of people employed, like the people who man the popcorn and snacks counters. It is natural that you would find popcorn and snacks pricier than the tickets as the owners will have to look at different ways to meet the shortfall.

The movie producers are set to lose as their revenues will be dependent on volumes rather than popularity of the movies. It means they will have to run their movies for a longer duration than before to earn their revenues. There is also a fair chance of piracy raising its hood as the whole activity moves underground.

Lastly, watching movies is not an essential need that the government has to intervene. If the person cannot afford it he might have to find an alternative i.e. morning shows /weekday shows/ other recreational activities. To sum up, capping of movie ticket prices is a bad move and hope the government realizes it before too much damage is done.