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– 11 hours ago

Al Roker’s Fundamental Misunderstanding of Business and Economics

Watching a segment on the Today Show about the number of trailers you’re asked to sit though before a movie, the jovial weatherman turned dark.  In a brief rant he sad, essentially:

What really bugs me is buying a full-price ticket to a movie, and then being forced to watch commercials. If you want to give me a discount on the ticket or sell me reasonably priced snacks, that’s one thing. But I bought a full-priced ticket, so I shouldn’t be made to watch commercials.

To anyone unfamiliar with the economics of a particular industry, that might seem to be a perfectly reasonable gripe. But that’s exactly the problem – Roker is obviously unfamiliar with economics and works in an industry that gives its product away in exchange for dwindling ad dollars.

Looking at one piece of a business and saying that you can change it substantially without affecting everything else is ridiculous. Nothing exists in a vacuum. If they were to get rid of that forced commercial time, the cost of the ticket would increase substantially because you have just significantly reduced their revenue.  The cost of concessions may also rise.

In other words, Al, you’re not actually buying a full-priced ticket. You’re getting a discounted ticket and the advertisers that ran those previews subsidized it for you.  The $14 you’re complaining about paying might well be $20 or $25 if they couldn’t generate revenue from making a captive audience watch 15 minutes of trailers.

When I was a teen, I recall being outraged that the cost of a movie broke the $4. According to a study by Ernst & Young for the National Association of Theater Owners, the average ticket price in 2011 (last year available) was just under $8.  Granted the big blockbuster, 3D, Imax, Smellovision versions cost more, but the fact that prices have barely doubled in almost 25 years is a pretty good deal.  What else were you buying in the 1980s that has barely doubled in cost since?

The reality in movies, and this is true in other areas we love to complain about, is that advertising subsidizes our entertainment.  Do we like being forced to watch it? No.  But does it make the stuff we buy cheaper? Yes, it does.

So, Al, before we go off on another rant about an industry or an economic model you don’t understand, pause, take a breath, and just stick to getting the weather forecast wrong.

Written by Michael Turk