What happens to the money when two friends decide to go to the movies? But for almost all movies, the money starts down a well-worn path. Theatefs, if any, come later. How the Money Is Divided. Dl manner in which income is distributed maake from week to week. During the first two weeks, generally, the theater owner’s expenses — the cost of labor, the electricity to run the popcorn machine, taxes, mortgage, depreciation, new carpets — are deducted from the box-office receipts, then the distributing studio gets 90 percent of the remainder and the theater keeps 10 percent. However large the expenses, the distributor is guaranteed at tgeaters 70 percent of the box-office receipts. The ticket money that is returned to the distributor is called film rental. The percentage returned drops each week a movie plays, and the average major-studio movie ends up earning about 45 percent of the box-office gross in film rentals. Since smaller studios have less clout with theater owners, their movies will earn less than 40 percent of the box-office gross.
So how do theaters make their money? Concession Margins. Theaters can stay in business because the profit margins on drinks and food is so high. Popcorn is likewise really cheap, and they also charge a huge markup for it. Their fixed costs with employees also leads to zero marginal costs for movie theaters in regards to selling concessions. Looking at the price discrimination graph below, Movie theaters markups in their concessions are reflective of second degree price discrimination, meaning that the theaters charge a different price for different quantities. Price discrimination is the action of selling the same product at different prices to different buyers, in order to maximize sales and profits. The tickets are a form of price discrimination as well for their are different ticket prices for certain age demographics. In the case above, the seller charges a higher per-unit price for fewer units sold and a lower per-unit price for larger quantities purchased hence why theaters still implement family deals to attract customer initiatives. Thus, high margins under a movie theater framework. Usually towards the end of the movies lease, the audience number starts to really decrease and the higher percentage allocation towards theater at that time means really little.
Different films make different deals with theaters, so the exact percentage is different from film to film, but it always involves theaters agreeing to a small cut at the start and an ever growing percentage over time. Ultimately, the real money for theaters comes from their concession stands, despite their actions to generate revenue from ticket sales. Categories: Uncategorized. As I read your blog post, I was very much reminded of my hometown movie theater. After buying a ticket, customers walk into a large room, most of which is occupied by a concession stand. Two small hallways on either side of the concession stand lead to the actual theaters. When customers walk into the area with the concession stand, they are met with large, colorful displays and no easily accessible exit. In this way, the theater is almost forcing customers to contemplate the process of buying a snack or two to accompany their film, which reinforces the information you give above explaining how theaters make the majority of their profit. It is interesting to me how many movie theaters are willing to operate at a loss to increase ticket sales, in order to make as much of a profit as they can on solely their concessions. As the theaters continue to raise their prices on concessions, I am curious on what will be the highest price consumers are willing to pay for concessions before they forgo the process of buying concessions completely. I have never seriously thought about the process of how individual movie theaters gained the ability to show certain movies.
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Narrator: So, I just saw the new «Spider-Man. Movie theaters are like theme parks or carnivals. Once inside, you play by their rules. And if you’re like me, you spend way more than you expect to. AMC isn’t really selling you a movie ticket. They’re selling you this food. You can’t get in here without spending money. It all starts with the ticket. Going to see a movie means you have to spend at least the cost of admission. But if you think that money is going to the theater, you’re wrong. The bulk of that ticket price goes back to the distributor. And if you want to see a higher-quality format, you have to pay a huge premium. But it doesn’t really matter how much your ticket costs, because if you’re going to a movie theater, chances are you’re buying some food. Narrator: That’s Kim Moon.
And theater owners have to weigh the benefits of certain cost-reduction strategies. Sure, I guess you could say that. September 13, at am. Once the start time passes, we are given minutes of commercials from various companies, then another minutes of movie trailers from the studios. In fact, I hate all the crinkling and munching and slurping that goes on. December 14, at am. During the film’s opening week, the studio might take 70 to 80 percent of gross box office sales. Mutual Fund Definition A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, which is overseen by a professional money manager. Yep, but we rarely go to the theater, and when we do we like to live it up a bit. Not really. You can see the securities filings for large theater chains to see how much of their ticket revenue goes back to the studios. Most of the money from ticket sales goes back to the movie studio. Politics is Big Business. July 6, at am.
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Have you ever wondered how theaters make money? By the fifth or sixth week, the percentage the studio takes will likely shrink to about 35 percent. Of course, studios also pay theaters to run trailers generally on a per head basisand the ads that are shown on the screen before the movie or mixed in with the trailers are another source of income.
But according to Howard Edelman, owner of Movieland Cinemas:. We have movies just to get people in to buy popcorn and candy, where we make our money. In fact, concessions are so profitable that outside companies will sometimes pay an up-front fee for the privilege of running the concession stand and splitting the profits with the theater owner.
So does this change my view of sneaking snacks into the theater? Not really. The day we went to see P3, the theater was well over half. Am I rationalizing? Sure, I guess you could say.
Could we have simply skipped the snack? Yep, but we rarely go to the theater, and when we do we like to live it up a bit. In the end, I view it as a win-win situation. So…… The brand new 20 plex that was just built in my backyard, a Movie Tavern, was built on stale candy and microwaved Artichoke dip? If you do not have a Kindle device, you can get the Kindle app for free and then download books to that app.
My beef is not with the local theatres who hire your friends and family and bring a little income to your neighborhood. It is the absurd amounts of money paid to movie stars and top film execs. Their only concern is feeding their greed. If all movie goers and theatres stood together and demanded fees be more reasonable Hollywood would have to see that without local theatres they would die. Hard times areonly hitting the average Joe, not the film industry that makes obsene profits off of all movie goers.
Its a necessary evil. They should be bargaining with the price of how much they pay to show the movie. If the movie theater declined the movie, then what? You could also dumpster dive, if you are so inclined…. This is a great boon if you have time to run down to the dollar store at the other end of the mall to pick up the candy before the.
Also, once we got pizza from the food court and brought it in. I forgot about this post, but found this on howstuffworks. I have been working as an accountant for movie theaters for years and I can assure you that there is not a lot of money being made by running all those trailer and ads before the show starts and that The experience is not for the faint hearted or the light of wallet. Everyone just remember, that movie theater is providing jobs in the community, to people who spend their money in the community.
Support your local movie theaters!!! I worked as a Projectionist for a 8-screen cinema for a couple years. When I was hired, during orientation they told us that the actual cost for a cup of pop or a bag of popcorn was only pennies just factoring in the actual cost of the product. I never learned about the actual figures but from conversations with my managers I would guess the splittage to be pretty close.
What is even more fun is when your booking agent likes his other clients more than you and give you only movies that will bomb in your market. Reid is exactly right. To clarify that last sentence, the adds that are running before the film trailers are shown are the local ones that the theater makes its money on.
That determines the deals they can swing with the film companies. I can vouch that Amy is correct. On the trailers: The film companies usually specify 3 that are shipped with the movie that you have to play. They money the theatre makes is the LCD projector running a dvd of local adds. It sounds right on the money based on what I know, and helps explains why huge cineplexes barely survive and smaller theaters are dwindling, as well as why there has been massive consolidation in the industry over the last years.
I carefully take the bag out of the trash and get the free refill. When I was younger they would refill the same bag, which was kinda gross.
Amy, do you have a source for that information? Also, to show the trailers, theres no payment made to the theatre, the only payment they can get is in the way of advertising for a local business or running product commercials. In fact, I hate all the crinkling and munching and slurping that goes on.
So why sneak? I think when you do you are doing something wrong. Plus, you are teaching your children that some rules are for breaking, depending on how you feel about. Pay the price for the snacks or just watch the movie. In addition to the above commentary, your waistline will also thank you. I usually wait weeks before seeing a movie in the theater.
We take food to the movies all the time. Well, not all the time but. We get a lot more movies from the library these days. Although I love the taste of movie popcorn, Target sells an air-popped popcorn that is to die. The concessions people still bought but most people walked in with ice cream. It was like so what? No one hide it, we just walked in and sat with ice cream and coffee branded from stores next door. I understand that theaters owners have to make money, but do they really have to put 25 minutes of ads before the preview?
Worst than that, when I saw Spidey 3, they put a boring music clip of some French signer. This is also true at the Circus.
In they bought back the circus for 8 million dollars. It turns out that the circus ticket sales barely pay for the costs of running the circus. The money is all in the concessions. In fact, when you are too old to be a tiger tamer, they reward you by giving you a piece of the concession, and you end up making more selling cotton candy than you do taming tigers! If they provided healthy options, I would probably consider buying food from the concessions.
Where I live, you can bring food into the theare, and it is a large AMC 20! I have seen people walk in with Starbucks, Pizzas, and Ruby Tuesday takeout bags! Actually, Charles, you are neither lying nor stealing in those cases. The best you could argue under such circumstances would be trespassing. One thing I refuse to buy is soda. If the theater owner knew that you were going to bring in your own candy, would they still sell you the ticket?
I bet they make most of their money from selling concessions, but those pre-movie things have to be profitable. Once the start time passes, we are given minutes of commercials from various companies, then another minutes of movie trailers from the studios. Given a seating capacity ofwith all eyes focused on these ads, it has to be generating some good revenue!
Another thing I noticed was the theaters are starting to rent out their screens to companies to put on presentations. I wonder if the get-rich-quick and pyramid scheme folks use this quite a bit? Click here to cancel reply. Name required. Email will not be published required. Politics is Big Business. March 30, at pm. April 23, at pm. December 14, at am. August 3, at pm.
December 2, at pm. July 17, at pm. July 2, at am. September 13, at am. July 6, at am. July 5, at pm. June 18, at pm. June 14, at pm.
June 14, at am. June 12, at pm. June 11, at pm.
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The company had been under a cloud of skepticism amid tepid box-office results to startalong with nervousness surrounding its new subscription service, AMC Stubs A-List. However, some of that skepticism may have vanished after the report, which sent shares skyrocketing as much as Movvie particular bright spot for AMC was the U. So what’s causing these eye-popping profits and U. After all, movie subscription service MoviePass is barely clinging to life. Could a subscription service really work without cannibalizing existing full-priced patrons? That’s good, but the real money is made on those egregiously makw buckets of popcorn.
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Last quarter, AMC earned a whopping While AMC may be taking a hit on its admissions profit per A-List subscriber, higher frequency means more sales of high-margin food and beverages. Check out the latest earnings call transcript for AMC Entertainment. Aron was also excited about A-List’s «bring-along rate. On the conference call with analystsAron said A-list subscribers doubled their «bring-along revenue» of friends and family, who, unlike A-Listers, pay full-price. That helps mitigate the theatera admissions margins from core A-Listers. Management also revealed that the number of A-List members surpassedshortly before earnings, after crossing themark near the end of December and themark around the time of the November earnings. At this rate, it’s possible that A-List could have 1 million subscribers by its one-year anniversary in June: double management’s initial expectations for the service’s first year. In addition, Aron said that usage trends remain similar to what management described in November: heavy upon initial sign-up, at 3.
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