Mr. Hlawitschka began by noting an important difference in the cost of delivering movies and plays. Once a film has been produced, the cost of each additional showing is relatively low — basically, just the theater rental and wages for the box office clerk, projectionist and ushers. For a play, there are not only those costs, but also the entire cost of staging the production — cast, crew and others — for each performance.
Charging the same price as for less popular plays would make it impossible to accommodate everyone who wants to see a big hit. Far better would be to ration scarce seating by charging a premium price. With a popular movie, by contrast, additional copies can be made at minimal cost, and large audiences can be accommodated by showing it many times a day on multiple screens. By keeping prices low, theater owners can fill many more seats and generate far more revenue than they could by charging premium prices at a more limited number of screenings.
Mr. Hlawitschka’s surmises would need to be empirically proved. But the thought behind them is just what this writing assignment was intended to elicit.