(List compiled by Becca Lipman)
Supply and demand is a pretty simple concept.
Apple's 64GB 3G iPad is priced at $829 because the people who want them (and can afford them) are willing to pay that amount. If they were $50 there would be significantly more people standing in line to buy. In such a ridiculous scenario Apple couldn't meet the demand. Similarly, if Apple priced their iPads at $2,000 a pop, they'd have a much harder time selling out their stock.
For iPads, supply and demand have more-or-less met at a price equilibrium. Economic theory has triumphed.
But there are niche markets where supply and demand just doesn't hold. Take movie tickets…
Being a resident of New York City I have a hard time recalling a time when I paid less than $12 for a movie. And if it's in 3D or Imax I'd be lucky to get away with a ticket and small popcorn for under $25. To that end, many concession stand workers have heard me mumble "thieves" under my breath.
Granted, the big city theaters are typically more expensive than in other areas, but the fact remains that the cost of movie tickets has risen across the board. In 2000 the average ticket price was $5.40, today it's $8.06, with $3 to $5 surcharges for add-ons like 3D and Imax. And while small town theaters may only experience marginal 3% price increases year by year, city dwellers like myself suffer more severe damage to our wallets at the ticket counter.
NY Times writer Michael Cieply sums up the inflation nicely: "In some markets, too, pricing changes have caused surprising distortions. In Santa Monica, for instance, the price of a regular adult ticket at AMC Loews Broadway 4 theater, also owned by AMC, has risen by 47 percent since 2001, to $11.75 from $8 — only a little more than the 41 percent increase in the average ticket price for the same years. But children’s tickets rose 67 percent for the period, to $8.75 from $5.25, while senior tickets are up 95 percent, to $10.75 from $5.50. Add 3-D, and a child’s ticket goes to $12.75, while a senior pays $14.75, two to three times the cost of a ticket 10 years ago."
Movie prices have been outpacing inflation rates by more than half since 1999, and the laws of supply and demand won't stand for it. Even Hollywood Execs have begun to take notice of the declining movie-going population.
Year to date (Jan 1 2011 - July 31, 2011), movie attendance is down -6.5% from last year. In fact, between 1999 and 2010 the number of domestic box office tickets sold were down in 8 of the 12 years. 2010 alone saw a -5.72% change in ticket sold. This translates into hundreds of millions, if not billions, of dollars lost.
The "solution" seems simple enough: While supply of movies and movie seats remain steady, the law of supply and demand says that if tickets were offered at a lower price, the theaters might be able to fill their empty seats with happy customers.
Until then, I'll wait for the DVD.
Overall, the pastime of movie going remains strong. And if you're a believer in the economic competence of movie executives, you may be interested in taking a look at the performance of the movie theater stocks on the market. We list them below.
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List sorted by market cap.
1. Cinemark Holdings Inc. (CNK): Movie Production, Theaters Industry. Market cap of $2.21B. Current price at $19.24. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 4.34%, current ratio at 2.24, and quick ratio at 2.19. The stock has gained 36.05% over the last year. Cinemark Holdings is a leader in the motion picture exhibition industry. Cinemark operates 408 theatres and 4,657 screens in 38 states in the United States and internationally in 12 countries, mainly in Mexico, South and Central America.
2. Regal Entertainment Group (RGC): Movie Production, Theaters Industry. Market cap of $1.98B. Current price at $13.09. The stock is a short squeeze candidate, with a short float at 18.69% (equivalent to 9.99 days of average volume). The stock has had a couple of great days, gaining 8.2% over the last week. Regal Entertainment Group is a leading motion picture exhibitor operating the largest theatre circuit in the United States. The Company's nationwide theatre circuit is comprised of Regal Cinemas Corporation, United Artists Theatre Company and Edwards Theatres, Inc.
3. DreamWorks Animation SKG Inc. (DWA): Movie Production, Theaters Industry. Market cap of $1.80B. Current price at $21.04. The stock is a short squeeze candidate, with a short float at 14.9% (equivalent to 6.73 days of average volume). The stock has lost 32.88% over the last year. Dream Works Animation SKG, Inc. develops and produces computer generated animated feature films for a broad movie-going audience.
4. Lions Gate Entertainment Corp. (LGF): Movie Production, Theaters Industry. Market cap of $974.07M. Current price at $7.05. The stock has gained 5.8% over the last year. Lions Gate Entertainment is a leading, diversified independent producer and distributor of motion pictures, home entertainment, television programming, animation and video-on-demand content.
5. Rentrak Corporation (RENT): Movie Production, Theaters Industry. Market cap of $180.83M. Current price at $16.08. The stock is a short squeeze candidate, with a short float at 6.23% (equivalent to 9.8 days of average volume). The stock is currently stuck in a downtrend, trading -11.21% below its SMA20, -13.28% below its SMA50, and -33.98% below its SMA200. It's been a rough couple of days for the stock, losing 12.13% over the last week. Rentrak Corporation's primary business is the distribution of videocassettes to home video specialty stores and other retailers using its Pay Per Transaction system. Under the company's system, home video specialty stores and other retailers that rent videocassettes to consumers, including grocery stores and convenience stores, lease videocassettes and other media from Rentrak for a low up-front fee and share a portion of each retail rental transaction with the company.
6. Carmike Cinemas Inc. (CKEC): Movie Production, Theaters Industry. Market cap of $80.80M. Current price at $6.19. This is a risky stock that is significantly more volatile than the overall market (beta = 2.96). The stock is a short squeeze candidate, with a short float at 15.56% (equivalent to 11.55 days of average volume). The stock is currently stuck in a downtrend, trading -7.15% below its SMA20, -8.69% below its SMA50, and -16.03% below its SMA200. It's been a rough couple of days for the stock, losing 6.32% over the last week. Carmike Cinemas is one of the largest motion picture exhibitors in the United States. Carmike targets small to mid-size non-urban markets.