Regal Entertainment Group to Test AR Programs and Dynamic Pricing in 2018

The theater chain is fast-tracking some innovative plans into its cinemas.

Regal Cinemas Logo

The theater chain is fast-tracking some innovative plans into its cinemas.

Movie chain Regal Entertainment Group has announced a couple of plans for 2018 in hopes of upping cinema attendance and revenue. First, Regal will be handing out augmented reality (AR) programs to ticket buyers at their multiplexes. Second, they plan to get into the dynamic pricing game.

2017 has kickstarted a giant conversation all across the film industry, and economics is no different. According to Deadline, lesser people have headed out to theaters this year, with a 5% decrease in year-to-date box office revenue with only 10 weeks left in 2017. Except for a better November-December turnout, there’s a further risk of decline in revenue that hasn’t happened since 2014. Given the competition from streaming websites and subscription-based ticketing services like MoviePass, it’s no wonder chains that like Regal are trying a bunch of fairly immediate changes to their business models.

Regal’s dive into AR comes as no surprise as digital lines blur with the filmgoing experience more and more when every big movie release has a bunch of teasers, trailers and featurettes accompanying them and a strong, invested fanbase continues to be paramount in selling most movies. Regal will hopefully be tapping into that info-hungry demographic with their AR programs. In conjunction with Moviebill, “an array of activations and digital content via smartphone” will be provided for free with ticket purchases, with physical AR experiences to enter Regal Cinemas next year. People want immersion and AR is a great in-between without the investment of virtual reality (VR) equipment. Regal’s CMO, Ken Thewes, stated, “We chose to incorporate Moviebill because it continues our goal of enhancing the moviegoing experience, giving movie fans more of what they want directly in their hands.”

Regal’s AR goodies will be individualized depending on each local theater and include a bunch of exclusive content, including cover art. All Hollywood studios will develop AR experiences for the chain, such as behind-the-scenes features, deleted scenes, games, and talent commentary.

Regal’s plans for dynamic pricing — which will be put into effect next year via the mobile ticketing app Atom Tickets — taps into the market in a different way. Specifically, hitting everyone where they hurt the most: their wallets. Regal will attempt to charge more for popular movies and less for theatrical flops. While a rather experimental business model, with Regal’s chief executive officer Amy Miles saying in a Bloomberg report,

“Changes to the historical pricing structure have often been discussed but rarely tested in our industry, and we’re excited to learn even more about how pricing changes impact customer behavior.”

Miles notes that the cinema chain will conduct enough tests for the data to be “statistically significant” before any decision to move forward. For the moment, analysts don’t feel that Regal’s integration of dynamic pricing into its catalog will be largely detrimental to the company, at least not when compared to a service like MoviePass. MKM Partners managing director, Eric Handler, posited, “Near-term, MoviePass could possibly provide an attendance lift for the industry. Ultimately though, we have yet to find a company succeed with a business model where it loses money on nearly every transaction and as a result, do not view MoviePass as a long-term threat to the cinema economic model.”

According to Tuna Amobi, an equity analyst at CFRA Research, because dynamic pricing has worked in airline, hotel and live entertainment sectors, Regal’s alternative approach to ticketing could work. Regal will begin testing out these new pricing strategies in early 2018 while integrating AR more fully into its cinemas. This makes for an aggressive alternative campaign that will hopefully increase not only audience attendance in theaters, but also up their engagement with the movie-going experience.

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