by Ian Jolly

Fancy a night at the cinema for 20p?

Sounds too good to be true, but if you book early enough, you could get a bargain.

The idea comes from the company behind Easyjet, one of the pioneers of no-frills flights.

The first Easycinema opened on Friday in Milton Keynes, and the no-frills approach is designed to keep ticket prices down.

For a start, there's no box office. You book online or by phone, and the earlier you reserve your seats the less you pay.

There's no popcorn or drinks. Customers can bring their own as long as they take their litter home.

Problem

But at the moment, there's one big problem.

The film distributors don't want to provide the latest blockbusters.

They make their money by getting a percentage of the ticket price paid by each moviegoer.

If Easycinema customers pay as little as 20p, the distributors say there's nothing in it for them, especially as punters are likely to be poached from other cinemas.

It's proving a big challenge for entrepreneur Stelios Haji-Ioannou, the man behind the Easy brand.

For Friday's opening shows, Easycinema agreed to pay Sony, one of the main suppliers, �1.30 for each customer, though the films weren't exactly earth-shattering.

Monopoly

It still charged only 20p entrance, but Stelios and his team asked people to donate to a fund to challenge what it sees as a Hollywood monopoly.

"I decided to take the plunge and get the business going to prove to them we are capable of attracting people," explains Stelios.

"Then we can go back to either negotiate or take them to court."

Despite these teething problems, Stelios believes the cinemas will be successful.

"There is a genuine demand for people to see these films at low prices," he says, but concedes: "It would have been much better and more profitable perhaps if we had blockbusters."

First night

All the 600 seats for the opening night were sold, all at 20p.

Of course, watching a decent film on a Saturday night will cost more - maybe �4 or �5.

Stelios thinks that by offering different prices for screenings at different times of the day and week more people will be persuaded to go to the pictures.

That's a perfect example of Stelios' philosophy.

Like his other Easygroup businesses, Easycinema is high volume, low margin.

He points out that the average cinema is only 20% full, but customers are still charged high prices.

Critics

However, critics argue that running cinemas is very different from a car hire business or even an airline.

The main product - the film itself - has to be hired rather than bought.

And while Stelios is certainly willing to take on the big boys, he could be getting out of his depth. He admits he's in uncharted waters.

"The Hollywood studios and the media conglomerates which own them make British Airways look like a midget, so I am taking on far bigger companies."

Change of plan

The original plan was for scores of Easycinemas aross Europe within five years.

That's now been scaled down. Unusually for him, Stelios is waiting to see how the Milton Keynes pilot performs before rolling the proeject out to other area.

But his confidence in his pricing strategy is unshakeable.

He still plans new businesses offering accommodation, pizzas and cruises, all on the same basis of book early, buy cheap.

Easyjet, Easycar - now it's Easycinema.

Stelios Haji-Iaonnou, the man behind all the Easy ventures has moved into the movies. It hasn't been an easy move because movie moguls aren't laid back when it comes to selling seats for their products at just 20p.

The plan is to set up a cinema which only takes online or phone bookings. It won't sell popcorn, soft drinks or ice-cream. You can bring your own if you want to - but you must take your rubbish home with you.

Just think...

Why do you think that the seat at an Easycinema can be sold for just 20p?

Have a look at the Easyjet website.
Choose somewhere to fly and have a look at the prices that you will be charged.
What is the highest price?

What is the lowest price?

Explain why there is so much variation.

Do you think all the seats will be 10p? Explain your answer.

Keeping the costs down

Booking or collecting tickets at the cinema has its costs.

Selling popcorn makes a cinema lots of money. It also causes lots of costs.

Just think...

What costs are involved in selling popcorn, soft drinks and ice-cream?

What costs are involved in running a booking office?

How does Easycinema keep costs down?

Can you think of any problems that might arise when running a cinema on the "Easy" model?

Getting the price right

Many cinemas run on a 20% occupancy rate - so 80% of seats are often empty. Stelios is hoping to increase the occupancy rate so the price everyone pays can be lower.

Just think...

What happens to the costs per customer if the occupancy rate rises?

When are cinemas most likely to be full?

When are cinemas most likely to be empty?

If you had to set prices, when would you set them high? When would you set them low? Why?

If you could change the price as a cinema performance came closer, how would you change it? Why?

Look at the films that are on at your local cinema. Which would you charge the highest price for?

Rank the films and their showing times in order of ticket price. Look at the films and times from the point of view of the whole audience - not just young people.

What about the competitors?

Film distributors and cinema chains aren't very happy with Stelios! Airlines on short haul routes are not very happy with Stelios.

British Airways used to charge very high prices for flights in Europe but things have changed. You had to book your flight through a travel agent or on the phone with BA itself.

Just think...

Have a look at the British Airways website. Find out how you book a flight.

Compare the price for a particular flight with Easyjet.

Do you think BA has had to change because of competition? Explain how and why.

Do you think that cinemas have things to learn from Easycinema?

Would you prefer to go to a "no frills" cinema: always sometimes never

Look at the box on the right and answer the question, then explain your choice.

If you only wanted all the frills sometimes, what effect would it have on the price of tickets?