Movie Mystery: Yield Management
This get’s it right, I’m still wondering why yield or revenue management has not yet made more inroads in business domains that should be ideally suited … it can’t be tradition after all?
If you wanted to see paramount Pictures’ Dreamgirls during the first ten days of its release in December, you had to fork over $25 for a ticket. Some moviegoers gagged at the price. “My friends and I thought it was so appalling we vowed to never see the film,” says Suzuya Bobo, a 22-year-old Los Angeles video producer. Yet enough fans of the Motown-themed musical lined up in L.A., New York and San Francisco to snatch almost all the available seats. The momentum from this extravaganza of an opening probably helped sell tickets at ordinary prices afterward. So far the movie has grossed $54.3 million.
This is good old American-style price discrimination at work. Book publishers charge extra for readers who are either rich or impatient by releasing the hardcover first, the paperback later. Broadway producers charge full price in the early days of a hot show and then, when the excitement has receded, let discounters like TKTS try to fill the empty seats. Why is time-sensitive pricing so uncommon in Hollywood?
