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Saturday, July 16, 2011

Great failure AMC – keep ‘em coming!

I’ve written about the service innovation going on at AMC Theatres – both the introduction of Fork & Screen and the rollout of reserved theatre seating.

So I was surprised when, taking in a movie with my children, I noticed this sign stating that AMC is discontinuing the reserved seating process later this month.

AMC says that the while theatres were intending to improve the viewing experience by introducing assigned seating, customers were not receptive to the $2 additional charge above the standard movie ticket required to cover the cost of the additional technology to guarantee a seat and an usher to guide you to it.

It has been positioned as the kind of value that a customer appreciates but isn’t willing to pay extra for. This kind of decision happens all the time, when would-be innovations are doomed because customers aren’t willing to pay for them. If this were a hyper-competitive local market where little things made the difference in brand selection, I might suggest that the “sunk costs” of the technology were just that, and that any additional value perceived by the reservation system would help bunker them from the ever-present competition. But it’s not. AMC is almost the only choice in local cinema, and if the variable cost of the ushers isn’t offset by people willing to pay for the experience, the sunsetting of the offering (or storing it in a closet until a more appropriate time) is likely best.

But beyond the immediate decision, I’m hoping more that someone at AMC isn’t fretting over the result and hoping that they never make a mistake like that again.

Whatever the strategic decision, I appreciate that the theatre was willing to take the chance that ultimately made the mistake. I wish that more service companies I deal with did the same. Many service encounters could use a fresh perspective and the benefit of a new take on their old models. Movie experiences are high among them, having not changed much since the 50’s.

Companies like AMC aren’t letting nostalgia for one format get in the way of creating a better model. Many other service businesses – those stuck in the “this is how it has always been done” mode, should take note.

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