Cineplex Tests Two-Tier 3D Ticket Pricing; Extra for Imax

Canada's Cineplex Entertainment is following in the footsteps of its U.S. counterparts and introducing two-tier pricing for 3D movies. Starting with Friday's release of Monsters vs. Aliens, Cineplex, Canada's largest movie exhibitor, will charge a premium for 3D showings in Imax Corp.'s theaters over competitor RealD.

Cineplex, which is 97%-owned by Cineplex Galaxy Income Fund, previously charged one price for all 3D presentations. That practice was contrary to U.S. exhibitors, namely Regal Entertainment Group and AMC Entertainment, who charge customers up to $2 more for Imax. At Cineplex's flagship multiplex in downtown Toronto, the company is charging a C$3 premium for Monsters vs. Aliens in RealD and a C$5 premium for Imax 3D.

Cineplex spokeswoman Pat Marshall said the new pricing regime is a test, and the company will monitor how the audience responds. She noted that Imax technology is more costly to add to theaters than RealD, and is also more expensive to maintain. For instance, exhibitors send 3D glasses back to RealD for recycling, but more expensive Imax 3D glasses are cleaned. She also cited higher minimum wage rates in Ontario as a general factor hitting the bottom line.

A source at a large U.S. exhibitor said Imax 3D is a better experience than digital 3D, and so the "up-charge" is warranted. In addition, Imax requires the largest auditorium in a multiplex due to its screen size, but exhibitors are reluctant to put digital 3D systems in their biggest auditoriums because they don't have the flexibility to move films to smaller theaters if box office is weak, the source said.

Imax, RealD To Share More Films
In the past, Imax and RealD have only shown the same 3D film on two occasions: Beowulf in 2007 and the Jonas Brothers: The 3D Concert Experience last month. But with Imax having multi-film deals with DreamWorks Animation SKG and Walt Disney Co., the two formats are expected to share a lot more content in the future.

Richard Gelfond, co-chief executive of Imax, said the company doesn't get involved in exhibitor pricing, but he welcomed Cineplex's decision. "When people see (the film) in Imax versus digital 3D, they'll be happy to pay the premium," he said. With respect to the Imax 3D glasses, he said a high-quality glass is required for a premium entertainment experience, and "throwaway" glasses don't cut it.

A RealD spokeswoman declined to comment on exhibitor pricing. On the subject of glasses, she said RealD works with a recycling company "to melt the glasses down for alternate use," but moviegoers are encouraged to reuse them.

Monsters vs. Aliens opened solidly in Russia and the Ukraine last weekend, where it was number one in both markets. According to the Hollywood Reporter, the 115 3D screens in Russia averaged $17,000, and the three Imax venues sold out. Andrew Cripps, president of International Theatrical Distribution and Marketing at Paramount, said the three Imax theaters in Russia plus one in the Ukraine grossed "a phenomenal" $232,000, an average of $58,000 a screen.

By Andy Georgiades, The Wall Street Journal