The National Association of Theater Owners last week reported the average movie ticket price now stood at $9.38. As the story states, NATO is quick to point out that price is more or less in line with inflation, conveniently citing the $2.77 average price from 1977. Much of the recent increase is being driven by increased demand for prestige formats such as IMAX, which carry higher prices.

Makes sense, right? When you account for the inflation adjustment, that $9.38 seems pretty reasonable. You might grouse about it on Saturday night, but it’s basically what your parents paid to take you to see Star Wars in theaters when you were four years old, so [shrug emoji].

Oh but there’s a catch: Axios recently shared a series of charts capturing a few economic data points about those age 24-35 over the last 30 years. One of those shows that median income for those in that group has remained steady at about $34,000/year since 1977. Put another way:

  • 1977 pre-tax income: $2,833. Movie ticket = $2.77 (.001% of income)
  • 2018 pre-tax income: $2,833. Movie ticket = $9.33 (.003% of income)

So while ticket prices have remained consistent with inflation, wages haven’t (and are actually falling), meaning that in real dollars a movie admission costs roughly 3.4X more as a percentage of income.

https://twitter.com/ohwatson/status/1021431335590563840

Three thoughts come to mind:

First, this is surely part of the reason why actual tickets sold – not revenue, which keeps rising thanks to higher prices, but tickets printed and scanned – in 2017 were the lowest they’d been since 1992.

Second, it’s another instance where those under 35 aren’t intentionally killing an industry, it’s just that their economic reality means they have to make different choices. That’s why services like MoviePass (for all its many faults) are so popular. It’s also why young people in particular would rather just stay at home and watch Netflix, where they’re no incremental cost for what they watch, than take a chance something at the theater is going to stink or be a waste of time.

Third, the theatrical industry’s reliance on more expensive premium formats to prop up revenues from falling ticket sales isn’t sustainable. If incomes aren’t rising but inflation is, big chunks of the population are going to have fewer entertainment dollars available. We’re already seeing personal debt grow once more and the housing market is looking increasingly shaky. A bubble is coming, helped along by tariffs, deregulation of the banking industry and other self-inflicted wounds. When fewer people can afford IMAX or 3D showings it’s going to get ugly for theater owners, who aren’t at all prepared for that.

This is a big reason why, I think, AMC Theaters launched their own ticket subscription service that includes those premium showings. The company knows that younger audiences don’t have the money to spend like previous generations and so have to make their dollars stretch further. If they don’t, they’re going to continue to lose people to Netflix and other streaming services just like what’s happening to pay TV providers.

Chris Thilk is a freelance writer and content strategist who lives in the Chicago suburbs.

Written by Chris Thilk

Chris Thilk is a freelance writer and content strategist with over 15 years of experience in online strategy and content marketing. He lives in the Chicago suburbs.

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