The Rising Cost of Movie Tickets

Photo Credit: Walt Disney Pictures
April 14th, 2012

The cost of movie tickets across the country continues to rise. Many believe the rise in cost is due to the high salaries of actors and actresses who star in the films. If a salary cap was imposed on actors and actresses, would this lead to a reduction in the price of a movie ticket?

One would assume this would be the case; however, the answer to this question has to do with the law of supply and demand. When a production company decides to produce a film and begins looking for an actor or actress to play the part, they examine their budget first. A high-profile film, such as "Star Wars," will have a larger budget than an independent film, such as "Zombie Apocalypse." High-profile films call for high-profile actors with larger salaries. These films also tend to draw more viewers at the box office.

Movie viewers look for movies with their favorite actors and actresses. The basic law of supply and demand tells us that when the demand increases but the supply remains the same, the costs will increase. If viewers are willing to pay a certain amount for movie tickets, those involved in the films are entitled to their fair share of the proceeds. Actors and actresses are the most affected personally when a film does well or fails. Their reputation is on the line with each movie they agree to star in. The more popular or more in demand a film star is, the more money he or she can demand for his or her efforts.

In 2008, the "Hannah Montana/Miley Cyrus: Best of Both Worlds Concert Tour" 3D movie was released at the box office. The movie was filmed during the sold out 2007 Hannah Montana tour. The cost of admission to the film was $15 per ticket. At the time, these ticket prices were approximately twice the cost of a regular admission ticket across the country. Because Miley Cyrus was in such a great demand by little girls across the globe, movie executives decided to name their own price for tickets. The movie ran for only a week and shattered all box office records. The film made over $60 million in sales in just one week. This film proved to movie executives everywhere that when an actor or actress is in high demand, movie goers are willing to pay whatever price is set. This film was geared towards a demographic of pre-teen girls. This age group gives little thought to the cost of a movie ticket and attaches more emotion to seeing the film. Therefore, young fans will find a way to pay the ticket cost.

According to a study by Barak Orbach, a professor at the James E. Rogers College of Law, theaters will begin adopting a more variable cost method for tickets. The higher the salary of the starring actor or actress, the higher the ticket price will be.

This still leaves the issue of salary caps for actresses and actors. As long as films continue to draw in $60 million in sales within one week, actors and actresses will continue to ask for large salaries. Most of these individuals opt out of residual incomes and take a flat payment. What this means is once they get paid, they will not get paid each time the film is shown or watched. The 1997 film "Titanic" has made over $600 million in sales. Leonardo De Caprio made $20 million for his part in the film. He received a flat payment, while the film company continues to make money.

High-profile actors like De Caprio usually ask for a minimum salary. Movie executives know in advance what salary expectations are. Actors and actresses can also ask for a minimum salary to prevent being asked to do low-budget films. The majority of all actors and actresses in the industry do not make millions for each film they act in. They get paid according to the Screen Actors Guild Scale. The higher end paychecks go to those with the most fans and the most experience. The cost for admission to these films is the same as the cost for a less popular film.

Therefore, salary caps may drive the costs of movie tickets down, but it may also result in more popular actors refraining from making films. These actors will probably resort to other areas of acting, such as made-for-TV movies or TV series. Movie executives will not risk capping the salaries of popular actors and actresses due to the supply and demand that they bring to the industry. As long as individuals are willing to pay for the tickets, the costs will continue to rise, and the salaries of actors and actresses will rise along with the ticket prices.