Monday, January 01, 2007

Ridiculous, The Price Regulations

At the first read, I thought it was great news for cinema goers! The Government of Tamil Nadu had announced that cinema theaters in the State cannot charge beyond a certain price. So, the prices of a premium ticket could not exceed Rs. 50 and the minimum had to be Rs. 10. The prices in theaters beyond the city limits were designed to be so low that one would not mind traveling distances to watch flicks.

Well, this was another pro-poor people step by the DMK Government.

Isn't it the best gift that a movie-crazy Tamilians could get, close to Pongal?

Suddenly, my practical soul woke up. I prefer going to only a couple of theaters in town. This would limit my choices to Satyam and Mayajaal. Whenever I would want to do a full family outing that means with my pets, I preferred Prarthana Drive Inn. Now prices at Satyam and Mayajaal are definitely on the higher side. But so is the quality of experience. There is ample parking, good AC, ease of booking, the interiors of the theater, the promotions they run, well maintained utilities, snack bars, seats, audio, screens...the list doesn't end.

Satyam is a case study by itself. A couple of years back, all theaters in Chennai were more similar to each other. One could buy tickets only in black. The theaters by themselves would be very, very, very dirty. Satyam has really changed the rules of the game.

Back to price regulation. I strongly believe that no Government has a role to play in price regulations. And that too regulating the price in theaters is ridiculous and absolute nonsense. In a free economy, firms compete and excel based on understanding of its customers, offering services and charging accordingly. The consumer has the final say on whether he wants to accept products or services at a desired price. In such a case, there is enough opportunity for all players. So, is the choice for customers.

It is bewildering as to why the Government is keen on regulating the price?

Some of news report suggest that the prices at theaters have sky rocketed and have become unacceptable or inaccessible for cinema-goers. Then another group claimed that the move will make piracy unattractive. That could be true!

But why cinema tickets? Is there anything better that it can do? Maybe like, give DVD players, mobile phones, cable connections and many more things free of cost to poor people.

As if regulating petrol prices is not enough.

A little birdie informed me that the kith-and-kin of someone very close the Power in TN has forayed into Film Production and Distribution. So, the person wanted the distribution rights of flicks of top actors due to released shortly. It was denied to them. And thus, to teach a lesson to the people who denied them the business, the Government brought down the prices at cinema theaters.

Not sure if that is true.

Anyways, so what happens if the prices are reduced?

It's a chain reaction. If the prices are brought down, the profits of cinema theater owners goes down. Since their profits go down, they bargain with distributors. Since it takes longer to make profit from a flick now, the distributors take longer to make profits. So, where do the producers go? To the actors. Why? Because, the cost of stars is the biggest component of film making.

Got it?

What a vicious cycle? Scary isn't it? Wonder if that happens to you.

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