Will you stop going to the movies?
Major U.S. movie-theater chains, seeking to accelerate the surge in revenues fueled by such 3-D hits as "Avatar" and "Alice in Wonderland," are imposing some of the steepest increases in ticket prices in at least a decade.
The new prices take effect Friday in many markets across the country in theaters owned by such major exhibitors as Regal Entertainment Group, Cinemark Holdings Inc. and AMC Entertainment Inc.
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The increases, in one case as much as 26%, vary from theater to theater, but many cinemas are raising prices most—or even solely—for 3-D showings, which accounted for the vast majority of last year's 10% jump in domestic box-office sales. 3-D movies generated 11% of domestic ticket sales in 2009, up from just 2% in 2008.
At an AMC theater in Danvers, Mass., a Boston suburb, 3-D ticket prices are jumping more than 20% to $17.50 from $14.50, while the adult admission price for a conventional film will remain at $10.50. At one Seattle multiplex, adult admission is rising to $11 from $10 for a conventional film, to $15 from $13.50 for a regular 3-D showing and to $17 from $15 for Imax 3-D.
A 3-D Imax movie at New York City's AMC Loews Kips Bay will cost $19.50, up from $16.50.
The increases weren't announced by the theater operators, but were reflected in prices posted Wednesday on movie-ticketing Web sites, such as Fandango.com.
AMC and Cinemark declined to comment. Comment from Regal wasn't immediately available.
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The industry's move comes on the heels of a record-setting year at the domestic box office, with revenue surpassing $10 billion for the first time. Movie attendance in the U.S. and Canada grew 5.5% in 2009, with 1.42 billion tickets sold, the most since 2004. Ticket sales so far this year are running 10% higher.
Movie theaters typically charged $2 to $3 extra for 3-D movies. But the brisk demand for the premium-priced tickets led many exhibitors to conclude they were still underpriced. About 83% of the record $2.6 billion in ticket sales for "Avatar" came from 3-D and Imax screens. And Walt Disney Co.'s "Alice in Wonderland" also set records when it hit 3-D screens earlier this month.
While the new prices could boost theater owners' already buoyant revenues, some industry watchers think they could also spark a consumer backlash. Studios, theater operators, and trade groups have long touted films as a bargain, compared with other forms of entertainment. A decade ago, the average ticket at a multiplex was $5.39, but prices have edged up between 2.7% and 6.1% a year since then, according to the Motion Picture Association of America.
"The U.S. economy isn't in the greatest shape, and there is definitely risk here in pushing price too far in a weak economy," said Richard Greenfield, a media analyst at BTIG LLC, who issued a research report Wednesday on the price hikes.
Mr. Greenfield said the next month will serve as a test of the strategy. "We'll have a sense if there is any pushback" from moviegoers, he said.
Some movie-studio executives expressed concern that the price increases might be too much too soon. "The risk we run is that we will no longer be the value proposition that we as an industry have prided ourselves on," said a distribution executive at one major studio.
Other studio executives agreed that the move was risky, but some, like Dan Fellman, president of domestic distribution for Time Warner Inc.'s Warner Bros., expressed support. "The exhibitors are trying to push the needle on ticket prices and see where it ends up," Mr. Fellman said. "So far charging a $3 or $4 premium has had no effect on consumers whatsoever, so I'm in favor of this experiment to raise prices even more. There may be additional revenue to earn here."
Studios are also in a bind. While many are wary of appearing to gouge consumers, they are also facing higher costs as they produce more movies in the technology-heavy 3-D format. Though ticket prices are set by theater operators, the proceeds are split roughly 50-50 with movie studios.
Five major 3-D films are opening in theaters over the next three months, starting this weekend with DreamWorks Animation SKG Inc.'s "How to Train Your Dragon." That rich selection is one reason theater owners chose to raise 3-D ticket prices now. It may also help set consumers' expectations for future 3- films.
Imax 3-D tickets to "Dragon" are expected to cost an average $1, or 7%, more than Imax tickets to Disney's "A Christmas C