Pictured above: The Dealflicks founding team
Movie theaters are hurting. For decades attending the movies was a cherished American past time, but that is changing. Within the last 10 years, content creators like HBO and Netflix have substantially raised the quality of television, and pulled American interest away from cinema. With great content available at home, consumers don’t want to spend as much money or time at the theaters. The effect has been slow growth in ticket sales and the closing of a number of theaters.
In response to slow sales, movie theaters have tried a number of new tactics, including increasing the number of 3D movie offerings, selling movie theater subscriptions and serving expensive restaurant quality food in-theater. None have substantially reversed the trend.
However, where most see problems, others see possibilities. Dealflicks, an LA-based startup, looked at empty movie theater seats and saw a sign pointing to the solution. While theaters were full when a movie premiered, “95 percent are empty after opening weekend,” said co-founder and CEO Sean Wycliffe. And on average, “88 percent of tickets in the movie theaters are empty.”
The problem was a lack of price discrimination: the need to charge two prices for the same product based on location or, in this case, time. Theaters should have been charging less for movie tickets as time progressed and demand weakened, but instead, they were selling tickets at one fixed price long after demand had slumped.
To explain the value in discounting tickets as time goes on, Wycliffe divides moviegoers into two groups. The opening weekend crowd, “Those people are going to opening weekend, no matter what,” said Wycliffe. “They’ve been anticipating the movie.”
“The second demographic is people who love going to the movies, but you know they’re not going to die over it,” said Wycliffe. This group may include young families or couples who would rather not spend a lot for multiple tickets. The second group is Dealflicks' target customer.
Dealflick’s solution was to build an online ticket discount platform, which sold marked-down tickets for movies that needed help selling off their excess ticket inventory. Tickets are discounted up to 60 percent and movie theaters sell marked-down admission days or even hours in advance of a showing.
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Already in a tough financial position it took some convincing for theaters to give it a try. “It took a little bit of us building the relationships with them for them to feel comfortable,” said Wycliffe.
Wycliffe said they proposed to the theaters: “Hey, try it out and see what the actual consumer behavior is.”
Apparently that pitch is working. Dealfick’s is partnered with nine of the top 50 theater chains in the country and is in over 400 locations total. The company has an annual revenue run rate of about $1.7 million.
And the data shows customers are not only buying tickets, but they are also buying concessions. The platform allows for bundled ticket and concession purchases. In June, Dealflicks sold over 55,000 tickets and concession purchases.
“What we’ve been able to show is most people buy concessions through our app,” said Wycliffe. “Through our platform over 70 percent of ticket purchases have concession purchased with them. In fact over 50 percent of people buy one item or more at full price at the theaters."
Investors see the value too. Recently, Dealflicks raised $1.7 million in seed capital. Enough, said Wycliffe, to take the company into next year, at which time he projects the company will be cash flow positive.
