Capping price of movie tickets in multiplexes…a good idea?

There is little doubt that movie going has become a thing for the haves. There was a time that most people could afford going to cinema halls. There was just one screen and tickets were priced across income levels. There was dress circle for the lower income groups and balcony for the higher income ones. Dress circle seats were pretty much at level with the screen. Balcony seats like its name were much higher than dress circle seats and you actually had an ascending stair case with seats at the top being most preferred just like today as well. Some had box too appealing to even higher income groups than balcony ones.

Due to just one screen there were several seats and there was space for everybody. Then came this multiplex idea where one movie hall was broken into several ones and multiple screens were introduced. These screens were much smaller and so were number of seats in one hall. Unfortunately, the earlier policy of pricing tickets for all was done away with. The pricing was done keeping interests only of balcony and box goers. The prices were kept way too high and the dress circle audience has been mostly ignored. The older version of cinema is barely functional now and multiplexes run the show.

Infact, the prices continued to increase despite being already on the high side and it is now difficult for even balcony goers. This has caused resentment. Now there is little doubt that experiencing movies in today’s halls is much better than the past. But there is still a market for people which just want to see the movie and do not want to pay for the experience.

Ideally cinema industry should have figured this bit and tried to have cinemas for other income groups as well. This is especially true for the student community who just don’t have enough money to pay for movies but is a huge market. After all one tries to release movies after board exams knowing students will miss movies during this time. Likewise there are other low income groups as well.

But as industry has not figured this bit, govt is intervening and capping prices. First Tamil Nadu capped prices to 120 and now Karnataka is thinking of the same:

The cost of tickets at multiplex screens in Karnataka could be capped at Rs. 120, on the lines of the one in Tamil Nadu, if the draft film policy submitted to the government on Tuesday is implemented. The draft policy also makes it mandatory for multiplexes to have two prime-time shows of Kannada films on two screens every day. A similar system exists in Maharashtra.

The draft policy was submitted by a 14-member committee, headed by S.V. Rajendra Singh Babu, Chairperson, Karnataka Chalanachitra Academy, to Chief Minister Siddaramaiah.

“These two recommendations are also based on a survey report — Kannada Film Industry: Challenges and the Way Forward — by T.A. Pai Management Institute. The Kannada film industry recently launched an online campaign over both these demands,” Mr. Babu told The Hindu. The committee, which was constituted on August 20, 2015 has been holding consultations with various sections of the film fraternity.

Economics tells you such caps are usually inefficient. Demand and supply factors themselves should ease these pricing pressures. Ideally supply should have picked up to ease this pricing pressure and offer cinema to all people. But due to oligopoly/collusive nature of cinema hall industry, it seems neither supply is expanding nor any attempts are being made to keep prices low. This is leading to government intervention and capping of prices.

Ideally govt should have encouraged more competition than fixing prices. How does one even decide whether Rs 120 is the right level of cap? It might be still high for watchers and low for the industry. What could be other options?

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