Wednesday, May 27, 2009

Pricing puzzle : some explanation about Why movies are priced all the same ?

As we've previously
seen, it's not sure that economic rules have an explanation of the unique pricing for all movies. The prediction of the future success seems to be nearly impossible to get in advance. Studies made by Arthur de Vany, professor of economics, University of California, show that close to 78 % of the released movies are losing money (but the 22% are very profitable !). Such prediction could help in defining a tailor made pricing for each movie.

In the mid XXth century, movies were classified A, B or C depending on the (expected) quality which favoured a different pricing for each class of movie. That classification has gone...

One of the possible answer to that puzzle may be found in the fact that movies have a very short time of life expectancy : 25% of chance to last 7 or more weeks and only 15% chance to last more than 10 weeks. This rule apply whatever the kind of movie and, more important, whatever the budget spend. Implementing a differentiated pricing would give insights to customers about the expected life length and would therefore put in risk the public's judgement...

That's the best explanation I could find about this pricing puzzle !
Any other idea ?

Here are some examples of similar pricing between movies:

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