Christopher Nolan slams Netflix's movie policies

[captaincranky]

You're assuming a perfectly elastic demand curve. Barring that, you're assuming general linearity within the model to predict revenue. Both of which don't hold in this case. You're also assuming that the rate of consumption for concessions has a static multiplier (in this case, perfectly inelastic).

I*'m not assuming anything. I simply designed an arbitrary variable, based on the number of people who often state, "I'd go to the movies more, if tickets were less expensive". The other variables are so numerous, "Watson" probably couldn't predict them. In the end, this would need to be a real world, hands on experiment,.

Here's a potential variable which "favors the house". Perhaps the theater is stuck with a "bomb". Word of mouth accelerates the roll off of attendance much sooner than projected. In which case, the lower ticket prices harm the profitability over time, much more than an A title "blockbuster" would.

This paradigm, would obviously favor higher ticket prices, particularly in the face of diminishing sooner than anticipated ticket sales

The film can be seen largely as a fixed cost (I believe they pay a single fee and can run it as long as they like -- but it may be by the week).

Not that it attaches to this business model, but gas stations pay a portion of their rent, based on a percentage per gallons, of gallons sold.

So I'll just spitball a formula that makes sense to what I'm saying.

Well, if I may be so bold, I'd like to suggest your, "spitball algebra", isn't even mathematically sound.

Profit (P) = ticket (t) + concessions(Z) - cost of movie(dummy variable)

P = (10 tickets * $15) + (10 popcorn * $10) - 250 = $50

P = (20 tickets * $7.50) + (12 popcorn * $10) - 250 = $20

The simple fact of the matter is, 10 * $15.00 = $150.00

20 * $7.50 is a direct reciprocal (20 * $7.50 also equals $150.00)

Accordingly, 10 * $10.00 (fixed popcorn charges), = $100.00, and 12* $10.00 = $120.00.

Thus, this line: "P = (20 tickets * $7.50) + (12 popcorn * $10) - 250 = $20", should read, P = (20 tickets * $7.50) + (12 popcorn * $10) - 250 = $70.00

More ticket sales led to less money. That simple linear regression showed that even if ticket demand was perfectly elastic, the cinema would still make less money if the new people didn't have the same consumption habits of the previous people.

No, they wouldn't at least not necessarily. Besides dude, you can only get away with bandying terms like, "elastic" and "regression" about, after you have mastered determining the correct answer to 6th grade mathematics. (Note, "6th grade math", may even be a bit charitable ).

 

[kapital98]

I*'m not assuming anything. I simply designed an arbitrary variable, based on the number of people who often state, "I'd go to the movies more, if tickets were less expensive". The other variables are so numerous, "Watson" probably couldn't predict them. In the end, this would need to be a real world, hands on experiment,.

Here's a potential variable which "favors the house". Perhaps the theater is stuck with a "bomb". Word of mouth accelerates the roll off of attendance much sooner than projected. In which case, the lower ticket prices harm the profitability over time, much more than an A title "blockbuster" would.

This paradigm, would obviously favor higher ticket prices, particularly in the face of diminishing sooner than anticipated ticket sales
Not that it attaches to this business model, but gas stations pay a portion of their rent, based on a percentage per gallons, of gallons sold.
Well, if I may be so bold, I'd like to suggest your, "spitball algebra", isn't even mathematically sound.

The simple fact of the matter is, 10 * $15.00 = $150.00

20 * $7.50 is a direct reciprocal (20 * $7.50 also equals $150.00)

Accordingly, 10 * $10.00 (fixed popcorn charges), = $100.00, and 12* $10.00 = $120.00.

Thus, this line: "P = (20 tickets * $7.50) + (12 popcorn * $10) - 250 = $20", should read, P = (20 tickets * $7.50) + (12 popcorn * $10) - 250 = $70.00

No, they wouldn't at least not necessarily. Besides dude, you can only get away with bandying terms like, "elastic" and "regression" about, after you have mastered determining the correct answer to 6th grade mathematics. (Note, "6th grade math", may even be a bit charitable ).

That's what I get for doing this with microsoft's calculator rather than using Excel or Maple. I did this off the top of my head and changed the equations mid-way through.

The point is still sound though. This is the same type of analysis that theaters do. The purpose of regressions is to estimate future behavior based on past data. This is big business. People are not making these decisions with 'spitball algebra'.

As an aside: There are always assumptions within models. A prime example would be the assumption that in a competitive market the cinema industry would have already reached the most profitable solution (though this gets wonky with monopolistic competition).

 

[captaincranky]

That's what I get for doing this with microsoft's calculator rather than using Excel or Maple. I did this off the top of my head and changed the equations mid-way through.

Stand your ground, and above all, don't admit to needing one. To wit, "Yo no nessicito cualquier steenking calculadora".

The point is still sound though. This is the same type of analysis that theaters do. The purpose of regressions is to estimate future behavior based on past data. This is big business. People are not making these decisions with 'spitball algebra'.

Given the rapid pace of change in what is available and affordable in home entertainment kit, the current reliability of regressions is almost certainly not what it once was.

,As an aside: There are always assumptions within models.

Very true, and what was once fabled in "Dune", as, "plans within plans", is now analogous to, "variables within variables", for the cinema industry.

A prime example would be the assumption that in a competitive market the cinema industry would have already reached the most profitable solution (though this gets wonky with monopolistic competition).

Well, perhaps it already has, but it's also very likely that home electronics manufacturers have come up with solutions which patently trump it.

In any case, I'll leave you with an irony and a really good laugh.

The Irony: It was Sony who filed suit in US Federal Court to permit the use of video tape recorders in the home, and was opposed by copyright holders. Sony won! Now, they can't control the genie they let out of the bottle buy winning said lawsuit... In fact, sometime back about a decade ago, they had rootkit malware put into their CDs, designed to infect anyone's computer who dared to try and copy them!

I believe advertisers have also filed suit against TV manufacturers, for putting "mute" buttons on remote controls. The claim was, they, (the viewing public) can effectively block our advertisements. (That's a dim and distant memory, you might wanna fact check it).

And now the belly laugh. This was pulled from an article on, "Looper" website, about actors who have been badly injured while filming, allegedly to the point of almost being killed.......

"Being an action hero can be difficult and dangerous work—just ask Sylvester Stallone. Sly required surgeries after filming two of The Expendables movies, and broke multiple ribs during a jumping stunt as Rambo in First Blood. Most seriously, Stallone insisted on actually sparring with Dolph Lundgren in Rocky IV, and Lundgren hit him so hard that his heart swelled, resulting in a hospital stay (and an actual IV)".

Read More: http://www.looper.com/264/8-actors-seriously-injured-set/s/sylvester-stallone-17/?utm_campaign=clip

Hey, both of those are about movies, so I'm not too far off topic......, er, am I?

 

[dob_1]

So I'll just spitball a formula that makes sense to what I'm saying.

Profit (P) = ticket (t) + concessions(Z) - cost of movie(dummy variable)

P = (10 tickets * $15) + (10 popcorn * $10) - 250 = $50

P = (20 tickets * $7.50) + (12 popcorn * $10) - 250 = $20

More ticket sales led to less money.

Haven't you made a mistake?
P1=(10*15)+(10*10)-250 = $0 not $50! In your formula lower tickets do bring a profit!

 

[captaincranky]

Haven't you made a mistake?
P1=(10*15)+(10*10)-250 = $0 not $50! In your formula lower tickets do bring a profit!

Actually, he made 2 mistakes, I only caught one, and went along with the other., then compounded it by adding the extra $50.00 back into the second equation. So you're correct, the second answer is $20.00, but his first answer of $50.00, was wrong.

 

[NatalieEGH]

Well at least on the local level, things have changed the owners of the biggest local chain, Wehrenberg, have sold out to Marcus theaters. Marcus is remodeling all the viewing rooms to about 1/2 the number of seats, making them big and wide, simulated or real leather, with power reclining and foot rests.

There will apparently be no attempt to increase the number of people attending the cinemas. Several of the theaters are going to having 5 Star Lounges (age 21+)/Big Screen Bistros. You have a table at your seat for food and drinks with a call button for a waitress/waiter during movie the bill is presented after the movie. Previously that only existed at a couple of cinemas. I and a friend went to one a couple of years ago, I think first weekend for Hunger Games part II, 7pm showing, just to check it out. I think the seats costs like $25 each, and the concessions about $100 (I think we both had 2 mixed drinks, a burger and fries). There was only two other people in the viewing room. We have not returned. If that happens to the rest of the theaters and viewing rooms, I will just wait for the movies to come out on video, Netflix, Pureflix, or Hulu. At $25 a seat that is more than most Blu-Ray videos cost, even Disney Blu-Ray videos. It will also pay for my monthly cost for Netflix, Pureflix, and Hulu combined at the cost of one movie without hitting the concession stand.

There are rich people in the St Louis area but I do not think they will be packing them into the cinema. And depending on what they finish with the prices after the remodel they may lose most of the middle income people, the low income are a foregone conclusion they will stop going.