Challenges for Online Movie Tickets

12 Julio 2006

THE Web has helped make concert ticket lines all but obsolete. Why, then, were people still waiting around the block during the weekend to watch Johnny Depp swashbuckle his way across the big screen?


Because of user fees and a confusing tangle of theater alliances, online ticket sellers like MovieTickets.com and Fandango.com, whose purpose is to save people from long waits at the ticket counter, have yet to win the hearts of mainstream theatergoers. But surging revenues from advertising and a possible shift in business philosophy could change that, perhaps in time for "Pirates of the Caribbean 3."


Industry executives say the business has an image problem: most consumers see no reason to pay an average of $1 a ticket extra to buy online when they can simply walk up to the ticket counter on most nights, without a wait, and save the buck.


"The convenience of online ticketing is fantastic, especially knowing you won't have to wait for hours to get into a blockbuster in the summertime," said Robert Bucksbaum, president of ReelSource, a film industry consulting firm. That said, Mr. Bucksbaum projected that just 8 percent of the first-week sales of the "Pirates" sequel would be online. For other films, he said, online sales reach "5 percent, maybe a little less."


Several executives suggested that new features, like variable pricing or the ability to reserve specific seats, might make a service fee more palatable. The sites say they have no specific plans at the moment, but they are rethinking the need to charge for every ticket sold.


"We'll be taking a good look at that, and we are open to new models, including eliminating or lessening surcharges on movies," said Chuck Davis, Fandango's chairman and new chief executive.


Mr. Davis, who guided the online shopping comparison site Shopzilla through its growth and sale last year to E. W. Scripps for $569 million, would not add specifics, but he hinted that consumers might be charged less, if at all, for tickets to shows that have no possibility of selling out.


"There are differences between peak and off-peak times of the year and week," he said.


Mitchell Rubenstein, co-chief executive of Fandango's main competitor, MovieTickets.com, agreed. "At off-peak times of the week or with nonblockbuster movies, variable pricing could be a very big factor in helping drive sales," he said. "Not having a service fee, or just a modest service fee for limited-demand movies, would be at least a good first step."


Mr. Rubenstein said he has not yet planned tests for this approach, but he added: "It's certainly something we're looking into. As advertising revenues go up and up, it makes the economics possible to start doing tests like that."


There might also be relief for the other longstanding complaint against these services: their confusing alliances with theaters. The category's pioneer, MovieFone, which was bought by AOL — and which now relies on MovieTickets.com to sell tickets — was among the first to sign up theaters to exclusive contracts.


That approach worked for Ticketmaster in the concert industry because it has contracts with most of the nation's big venues. But Fandango and MovieTickets split the market more evenly, with each having thousands of theaters. As a result, consumers often have no idea which online ticketing service sells tickets for their nearby theater.


Mr. Rubenstein said he had repeatedly and unsuccessfully lobbied Fandango's executives to enter into a so-called interchange agreement, in which the sites would essentially share listings. Such an agreement would make the sites equally useful to consumers.


Mr. Davis indicated that he, too, was open to the idea. "The more we can make the site more consumer-centric, the happier our customers will be, and the better our P.& L. will be in the long run," he said, referring to a profit-and-loss statement.


The companies are building an audience despite the market confusion, although the extent of that growth depends on whom you ask.


According to comScore Networks, an Internet consultancy, Fandango's audience in May, the last month for which statistics are available, was nearly unchanged from the previous year, at 4.7 million visitors. Movie- Tickets, meanwhile, edged past Fandango, going from 3.7 million visitors in May 2005 to 4.9 million this year.


Nielsen/NetRatings, which also tracks visitors, shows Fandango's audience growing by 16 percent from last year, to four million visitors in May, and shows MovieTickets growing by 13 percent, to 2.9 million.


Mr. Davis has many plans for the site, among them relying on users to rate movies en masse, the way consumers rated online businesses at Shopzilla. Using such feedback and other factors, Mr. Davis said the site would also in the future be able to make customized recommendations of movies and offline videos.


In the meantime, the growing audiences for these sites seem to have grabbed the attention of movie studios and other advertisers. Mr. Davis and Mr. Rubenstein said advertising revenue was up significantly from previous years, although they declined to discuss specifics.


Mr. Rubenstein said the last of the major movie studios — he would not identify which — signed on to advertise on his site in recent months. While Hollywood ad spending has declined in newspapers, for example, online ad budgets continue to grow. "It's an indication to us." he said, "that MovieTickets, and Fandango for that matter, have reached pretty wide acceptance."


It helps that the Internet audience itself has become video-obsessed in the last year, as dial-up modems head for the scrap heap to be replaced by cable modems, D.S.L. lines and other high-speed connections.


That trend has also helped speed new advertising approaches, like one Fandango planned to announce today with the online advertising company PointRoll, owned by Gannett. The ads, which contain movie trailers and other content, will tell users the show times at local theaters and allow them to click through to Fandango to buy the tickets directly.



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