Business insights: bringing the best innovations from other industries to cinema

    Cinema often finds itself poised between both the entertainment and hospitality industries. Does this blend offer it the chance to borrow breakthroughs from these other industries?

    In part one of our ongoing series, we look at how some members of the hospitality industry have overcome some of their biggest challenges and how their solutions might be applied to cinema.


    Pricing in hotels and airlines

    Although the advent of online booking might be the downfall of traditional travel agencies, airlines and hotels quickly saw its potential. Their pricing models evolved alongside the technology so that today they can sell their inventory at the right price. They do this by employing dynamic pricing; where instead of a fixed cost, their prices are adjusted based on real-time changing market demands. It benefits airlines and hotels by providing better customer data and visibility over demand, while also giving customers a choice over what they’re willing to pay, but can dynamic pricing work for cinema too?


    Why did these sectors choose dynamic pricing?

    They cannot simply introduce a blanket price increase
    Airlines face stiff competition from low-cost carriers, who have fewer overheads and can offer attractive discounts without incurring losses. So, instead of raising all their prices and losing customers, they used advanced analytics to find out what their customers were willing to pay and adapted their ticket prices according to demand.

    Similarly, the hotel industry now has to compete with sharing economy sites like AirBnB, who often offer travellers more flexible choices of location, quality, and price. Short of renovating or relocating, a hotel cannot change its fundamental offering, and has more costs to cover, so figuring out what their customers expect at every price level was imperative.

    And cinemas? The changing landscape of on-demand video through Netflix and similar services is a constant threat to ticket sales. Striking the right balance between ticket prices and sales with dynamic pricing will help cinema raise revenues without alienating audiences.

    They have a strong incentive to drive online sales
    If their customers book earlier and online, airlines have a much better view of what capacity they need, and can reduce the resources needed in call centres and airports.

    When hotels can capture customer details online they benefit from better customer insight for CRM and personalisation. And in this post-digital world, the traditional businesses that continue to grow are often those that offer their customers tailor-made experiences.

    And cinemas? Online bookings provide incredibly valuable audience data for marketing purposes. Preventing queues at the box office will improve the customer experience, and access to customers’ viewing history will make suggestions for what they should see next much more effective.


    Are audiences ready?

    Cinema-goers are used to some differentiation in pricing; they might expect to pay more for tickets at the weekend than Wednesday morning, and they know a VIP seat in the middle will be more than one at the front. By comparison, look at the hotel industry- everyone knows that the price of their room depends on the way it was booked, how far in advance they booked it, and how many rooms the hotel had left. Customers have embraced dynamic pricing in other industries because it gives them the power of choice.


    What can cinemas learn from these industries?

    Other businesses around the world know that adapting to change is key to survival, and responding to market demand instantly is part of that. Dynamic pricing can be the answer to some of cinema’s oldest questions.

    How many people will come to this show? How do I drive up revenue without driving away customers?

    Approaching these age-old challenges with cutting-edge software solutions like those provided by our partner, Smart Pricer, will mean cinemas can get a better understanding of what their audiences want, and how to give it to them. Smart Pricer can forecast the demand for every show by analysing real-time factors like the weather, local holidays, and booking information, and then dynamically change the amount of seats available at each price level (Saver and Regular for example) based on the actual demand. Not only can this increase revenues by over 5%, but it also allows customers to choose their tickets based on what’s important to them – price sensitivity or the convenience of buying last minute.

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