What is a good refund for a bad movie

In my last post on “Why you should claim refund for a bad movie”  . I made an argument that a movie is like any other service and how bad movie translates into a service default . In continuation of above thought , the current post talks about the logic behind calculating a compensation and what the motion picture industry can do to enable this .

Compensating for the loss  :

To what extent are you paying for movie experience can be understood by looking at how a ticket is priced

When a consumer pays buys a movie ticket he broadly pays for 3 things

1) The money to the distributer who has brought rights in territory .  (Content)
2) The money to the theater where the movie is being played  (Hospitality)
3) The taxes to the government

While the percentage taxes would remain fixed for most of movies (Unless a movie is declared entertainment tax free by government)  , Percentage of distribution cost goes up with the likelihood of a movie being blockbuster .  Since the theater owner procures the content from the distributor and attaches the small sum of this cost goes into every ticket . He should be willing to compensate a customer for a bad movie .  How much to refund can come from understanding the consumption of the service .

a) If the customer walks out in 15 minutes of start . Then he has neither consumed the Hospitality nor the content . Hence he should be eligible for a Full refund . If the movie is really good then at first instance the customer will not walk out.  If he is part of a group of friends and everyone else is liking the movie then his personal preference will be overruled by the group’s liking of the product .  Thus even if he dislikes the product , He is likely to sit in for the full duration of movie to avoid peer ridicule .

At 15 minutes  and good product Even if a customer walks out there will be some audience willing to purchase the ticket at (Full movie minus 15 minutes) .  Hence the seat will not go empty and thus preventing any loss for the theater owner .

b) If the customer walks out in middle of movie , Then he seen half the product , However since there will be no other customer willing to pay for half the movie , The refunds should be  = (Ticket Cost – Hospitality Costs) .

c) If the customer walks out and the end of the movie and complains it was bad and he needs to be refunded . Then he should not be eligible for a refund as the movie was good enough for him to keep engaged him till the end .  The product might not have exceeded his expectations however has met the price of the ticket .

 The question at this stage is since the content is not owned by the theaters . So how to pass this claimed amount back to the distributor and hence producers . This should not be difficult and can be handled in 2 simple ways

a) Since all the claimants would be willing to fill a detailed claim submission form  . The theater can validate these and process the refund and later handover these forms to the distributor/producer as credit notes .

b) The theater can collect the claim forms validate them and pass it to the producer who can reach out to the unsatisfied customers , Validate their claims and mail the refunds much like a mail in rebate form.

The challenge today is that most of the producers and distributors believe that in absence of any defined claims process it is easy for them to get away .  While we do not have a formal process to do that today .  There is enough technology available to set up a backend claims processing unit . What is required is commitment from the Motion Picture Industry !!

Is anyone listening !!

One Response to “What is a good refund for a bad movie”

  1. MovieLover says:

    The problem with this idea is who would arbitrate the final decision?
    How to compute hospitality cost?
    I could have walked out after 15 minutes, because my tummy aches, after eating bad samosas.

    Let us think about this as an entrepreneur.
    Let us say, we start a “bad movie” insurance company – MIC like a LIC.
    Consumer buys ‘Bad movie insurance’,
    Let them can sit through the bad movie, if he wants to, even if they do not like it.

    However based on a formula, which is published & agreed upon earlier, by MIC,
    MIC would pay 15% to 100% of the insured sum, based on parameters such as
    # Total tickets sold of $ amount collections (If betting is legal, BIC can run bets on it)

    This way, the theater owners are kept out of the loop,
    BIC would benefit through reverse betting,
    even theater owners movie producers movie distributors can bet too,
    with BIC, that the movie would really be good.
    Every one is happy. BIC profits from arbitrage.

    If this model works,
    BIC can expand further into insurance for bad marriage, bad mother in law, bad haircuts, bad school, ..

    The possibilities are amazing.