Source: Marginal REVOLUTION
After decades of artificially suppressed pricing relative to other entertainment, theaters are raising ticket costs closer to market-clearing levels—a correction that studios have resisted because the cheap night-out narrative was essential to their theatrical distribution model. Theaters' actual negotiating power has shifted: with streaming cannibalizing casual audiences and inflation eroding margins, theaters can no longer afford to subsidize the moviegoing experience for studios' benefit. The test is whether audiences accept $18-20 tickets or whether volume collapse forces prices back down, determining whether theatrical exhibition survives as a premium product or returns to utility-player status.