Economics Of The Movie Theater – Where The Money Goes And Why It Costs Us So Much

Boxoffice-LineThe attention and interest generated by the article I put up the other day on Why Commercials Before Movies Is Worse Than Piracy continues to generate a lot of discussion (and so the topic should). One of the recurring emails I’ve been getting from a lot of people is the question about why it costs so much to go to the movie theater(in light of the commercials and ad revenue the industry is making for itself), where does the money go and how do we make this stop?
Much of what I’m writing here now is a lot of paraphrasing from a chapter in my abandoned book project from a few years ago. But here’s the gist:

1) Who Gets What From Your $10 Ticket?
Ok, so you walk up to the box office and drop down your $10 to buy your ticket. Who gets that money? A lot of people assume (as did I at one point) that the movie theater keeps 50% of it, and the rest goes off to the studios. That’s not really true.

Most of the money that a theatre takes in from ticket sales goes back to the movie studio. The studio leases a movie to your local theater for a set period of time. In the first couple of weeks the film shows in the theatre, the theatre itself only gets to keep about 20% – 25% of the green. That means, if you showed up to watch Bridget Jones’ Diary on opening night, then of the $12 you put out for a ticket, the movie theatre only got to keep between $2.40 and $3.00 of it.

That’s not a lot of money, especially when you think about how much bigger and elaborate theatres are these days. It’s not cheap running one of these places. It can get even worse. This percentage will vary from movie to movie depending on the specifics of the individual leasing deal. For instance, 2 movie theatre managers told me that for Star Wars Episode II: Attack of the Clones, the studio took 100% of the box office take for the first week of release. Can you imagine that? They had to over staff and have above normal capacity flood into their theatres… and they got to keep $0.00 from the ticket sales. That almost seems criminal.

Now, as you move into the second and third weeks of release, the percentage starts to swing to anywhere from 45% – 55% that the theatre gets to keep. It gets better after the fourth week when theatres generally can keep up to 80% or better of the ticket sales. There is an obvious inherent problem with this arrangement. I don’t know about you, but when I finally get around to seeing a film that’s already been in the theatres for 4 or 5 weeks, I’m usually one of the only people in the place. It doesn’t do the establishment a lot of good to keep 80% of the ticket sales when only 14 tickets are sold per show. And with more and more and more movies getting released every week, the length of time that a movie stays in theaters is shrinking. Bad news for the movie theaters.

Movie theaters are then forced to really make their money off concessions. One theater manager said “We’re not in the movie business… we’re in the candy business”. Very true. So if you ever wondered why a $0.15 bag of popcorn is costing you $5, and a $0.08 cup of Coke is running you another $4… it’s because the economics of the industry system is so screwed up that the concession stand is where theaters have to make most of their money.

2) The Cost Of Making The Movies
With the cost of today’s movies getting higher and higher, the studios leverage their position with the theaters to squeeze more and more out of the arrangement mentioned in point #1. 10 years ago they weren’t paying Chris Tucker $25 million dollars for one movie… for 3 months work… a hack… CHRIS TUCKER… $25 million. Superman Returns did NOT need to cost $200 million to make. Spider-Man 3 did NOT need to cost $250 million to make. These numbers are astounding when you consider that just 7 years ago they would have called you mad. The pace of costs is far outpacing the requisite inflation… and there is really no excuse for it.

This is directly tied to how much you and I pay at the box office, and thus tied to why popcorn has to cost so much, and thus tied to why we see commercials. The higher the costs go for for making films, the higher my costs will be to enjoy a night at the theater. Sure, Transformers made tons of money… but the studios have to squeeze us for everything they can get to make up for their flops… their films that DON’T make money.

And people always wonder why I get so pissed off whenever I think about Chris Tucker getting $25 million. Because ultimately that money (at least in part) is coming out of my wallet.

3) The Organism of the Studio/Theater Relationship
To really make sense of all this, you have to step back and look at the Studios and the Theaters as one industry entity and view it from the perspective of how the parts work together to truly get a grasp on how big and out of control the problem is. You can’t just try to blame the Studios… nor can you just blame the Theaters. You have to look at them both (in this situation anyway) as one industry… how it functions… and ultimately how it affords its mistakes and inefficiencies at our expense.

The studios spend too much money making movies (and make too many movies), they squeeze as much box office revenue as they can from the Theaters thus forcing the theaters to charge us high ticket prices to make what little they can from each ticket, gouge us at the concession stand to make ends meet and show commercial after commercial after bloody commercial to pad some profit.

Do you see what happens? Look over #3 again. Ultimately, the studios don’t have to learn from their mistakes, theaters don’t have to manage themselves smarter… because as costs and losses and expenditure add up… they just keep passing off the bill to us. We pay for their mismanagement and spiraling costs. Why should they change anything or fix anything when they know that we’ll just get a cash advance in order to pay more to make up for their mistakes.

We pay for their mismanagement with our high ticket prices.

We pay for their mad decisions with $6 bags of popcorn

We pay for Chris Tucker’s $25 million paycheck with our time watching in-theater commercials.

All the while the industry continues happily along its downward spiral feeling no ill effects of their stupidity… because they’ve taken those ill effects and shoved them up our rectums for US to deal with.

4) The Solution Has To Start With The Theaters
If this insanity is ever going to stop… if change in the economics of going to the movies is going to ever happen, I’m convinced it will have to first start with the theaters. Movie theaters have to better organizes themselves and collectively stand up the the Studio system and REFUSE to let 80% of the box office dollar for a films first week of release go flying out the door to Hollywood. By not standing up collectively, the movie theaters act as complicit enablers to the studios behavior.

WHAT WOULD HAPPEN IF THEATER OWNER ASSOCIATIONS REFUSED TO GIVE ANY MORE THAN 50% OF OPENING WEEK BOX OFFICE MONEY TO THE STUDIOS? I’ll tell you what would happen:

a – Studios would be forced to SERIOUSLY look at their own economics and financial responsibility. There would be no more $25 million dollar pay days for B string actors

b – Theaters would actually start making some money on… you know… MOVIES

c – With added revenue from the actual box office, the pressure on theaters to add more ads, to raise ticket prices, to jack up popcorn costs… would be at least a little bit alleviated.

It has to be a collective effort by the theater owners or else the studios will just refuse to give their movies to the stubborn theaters and give all the business to others. If the Theater Owner associations collectively said “no”, the studios would have no choice but to start to fix their leaky boat

5) Why Not Going To The Theaters Won’t Fix The Problem
Some people will say “Well then let’s not go to the movie theaters until we force them to change”. That will NEVER work, because as I’ve demonstrated above, when there are financial losses, the current industry system just takes back those loses from those who are buying the tickets. They’ll blame piracy for the dip in thater attendance and raise prices even more. It’s a systemic problem.

And if you think you’re safe from these rises and gouges because you just watch movies at home on DVD…. guess where the systemic problem will strike next once they’ve bleed the theater goers as much as they possibly can? DVDs and HD discs will suddenly start costing $60 a shot and Hollywood will pressure Washington to pass tax laws on Big TVs to pay a fee to the studios for each unit sold, thus raising prices there too.

You see… the answer to all the current systems problems is to take more from us. Thus, the system itself has to change, the the theaters are the ones who have to start it.

Just some late night ramblings. Take it as you will.

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140 thoughts on “Economics Of The Movie Theater – Where The Money Goes And Why It Costs Us So Much

  1. My problem is you kinda contradicted your self. You said first few weeks they keep up to 25% but a the a few paragraphs later you say up to 55% so what is it then 25 or 55%

    1. He wrote that in the first “couple” of weeks the theaters keep up to 25% and in the second or third week the keep swings up towards 50%. Obviously there is an overlapping period in that second weeks time frame and is most probably conditioned upon contracts and how the movie is doing up front. I don’t see the contradiction though.

  2. I go and see about 2 movies a year because they do not have the quality movies to warrant paying that much.
    I would go see 5-6 movies a year if they were somewhat better. But it seems like they just slap them together (even though they spend $150-250 million making them).

  3. Hey John. Enjoyed your ramblings. ;) I was wondering if you’ve given any thought to the lack of money going back to the Studios after a new agreement is revamped. (I would suggest a 75% return straight through the run but I know absolutely nothing about the economics although I would imagine they can come to an agreement in that regard.)

    I would think if the Studios didn’t have the resources they bring in now they would be forced to make smarter descisions on the movies they greenlight. I would suggest that they would be more likely to turn out the same blockbusters they do but it would make them more hesitant to OK something new. If this was in place 20 years ago we might very well have missed out on Tarantino. To create the cutting edge they have to be allowed to have these failures or we jeopardize the evolution of cinema. I believe the Studios budget themselves with this in mind as well. It would be interesting to hear a bit about where the money gets allocated by the Studios themselves. (I know, I know, Chris Tucker – but he did make them a boatload of money anyway)

    Liked your article!

  4. In Australia we pay about 16.00 for a movie at the bigger complexes -more for 3d movies – My local cinema is the cheapest on the Gold Coast and charges 7.50 up to 5 pm weekdays and then 10.00 after and on weekends. If you get their loyalty card (which is free) you get a free movie for every 6 you pay for. Drinks are .5.50 large coke and 5.00 popcorn, I get my drink at Hungry Jacks next door and walk it in. The cinema also makes money on its posters and displays that you can make a bid on. I made a bid for a huge, wall sized Hunger Games poster on canvas and got it. I love movies and will see at least 40 a year. . Movies are the one place a single person can go on their own and not feel weird not having a partner.I prefer a smaller complex as the larger ones sound system is often too loud, especially for action/adventure movies (I often bring ear protection so I can hear the movie without damaging my hearing).

    1. Its about the same in Southern California. $12.50 for a primetime ticket, $11.00 for a big ass popcorn and soda.

    2. In India the shows are priced at $2-$5 in towns depending upon the time of day and day of week.. the theatre makes more money from the food stalls than from the ticket itself. In bigger cities tickets are sold for $3-$10. On an average a person at the theatre spends $1(few spend $10, some spend $5 and many don’t eat at theatre) on food apart from the ticket.
      The money as we see is made mostly from the food they sell rather than from ticket sales, so giving the studios upto 90%of sales will not really hurt the exhibitors.

  5. You will have an easier time finding pure energy than you will finding multiple corporations willing to work together for the common good.

  6. Money.cnn.com says just the opposite. They say the theater makes the greater percentage during the first few weeks and then the percentage drops down. So who is right????

    1. Well it’s usually safe to bet against CNN, but what sounds more reasonable; the theater is keeping The Avengers showing for 3 months because they’re barely getting anything for those last 2 months, or Disney/Marvel probably milked all the earnings out of the first few weeks and they need to make their money back?

  7. Exactly. To number 5, I always laugh when I hear this because right now Summer sales are down so they are blaming piracy while using Expendables 3 as an example. The problem is you are talking about people who make well into 6 digits who are out of touch that an 8 dollar matinee with a 15 dollar popcorn and a soda price tag are a tad high for a family of 4. So they opt to not go to the movies and wait to rent it from Redbox which will cost them less than $2 dollars plus they can go to the 99 Cent store and buy candy and a box of 3 bags of popcorn or a dollar each. DVD sales have gone up in the last 14 years with a slight dip in 2008 but these same suits cannot figure out why. Many of those flops in the box office make money one the DVD distribution side which is hardly talked about. Not to mention on the pricing is the extra 5 dollars you get charged for 3D. So that is 8 dollars for the matinee PLUS 5 dollars if it is 3D. If it is AMC Prime well that is another 5 dollar charge for having motorized recliners and 20,000 watts of sound or whatever. I used to go to the movies a lot. Twice on Saturday and then again on Sunday. Now I might go once a week if that.

    On top of that they will layoff the very people who work in their own DVD division that brings them this extra cash from bombed movies. I support a DVD division of a major studio. It is pretty funny. I remember once listening to a marketing manager say how come their blu ray sales are not climbing. Hmmm, 29.99 price tag verses the $10-14 non blu ray version. Oh but we have all these extra features on the blu ray. Yeah but most people just want to watch the movie. So they started to offer all versions on the same higher price. One of the versions is the digital copy to put on your iPad or laptop etc.

    Physical media is going away btw. Studios want to do all digital meaning that you will have to subscribe to a service to lease the right to watch it for a limited time like VUDU or you will have to subscribe to their personal channel to one time watch the movie or like VUDU, lease it for a set amount of days. They think they have to compete with Redbox, Netflix, VUDU, etc.

  8. What you didn’t mention is these tickets also need to pay the studio executives who get multi-million dollar salaries, perks and private jets along with producers, directors, writers, etc.

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  10. What’re you complaining about Chris Tucker for article typer?…Your one or two dollars towards his 25 mil won’t make or break him…not in a million years you bum!

  11. You were right until you said they would raise dvd prices, dvd prices are already up for the movies that just release to dvd. They know that raising them more would leave everyone downloading and at the 5$ bin. Not to mention DVDs are outdated and HDS obsolete.

  12. Another solution is for theaters to start pushing more indie movies. The theaters should do indie movies which give them more revenue, then advertise those movies during the advertising time, since those movies won’t have much of an advertising budget.

  13. Sixty five years ago it cost a quarter to go to a movie. Allowing for inflation that translates to $5 for a ticket now. The tax rate then was 8% so you had to actually earn 27 cents to pay for a 25 cent ticket. Now the tax rate is something over 50% so you have to earn ten bux to pay for a five buck ticket. Studios are not solely to blame for this situation. It seems incredible, but citizens are very fond of their tax situation. They vigorously defend the government’s demand for half their earnings. You figure it out.

    1. You are completely wrong, Jewels Vern. Tax rates were not 8% 65 years ago. They were far higher than they are now. It was 82% on regular income and 25% on capital gains in 1949. You need to research tax rates before you start posting nonsense.

    1. shitty research,because by 2007 that info was 4 years since outdated(as he admits taking the info from his book and info he had years prior). cinema chains get 45%-50% of quarterly admissions total revenue. (concessions aint counted here). The system changed entirely in 2003.

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  15. What is this author's problem with Chris Tucker? There are other actors that actually average 20 million a movie. Some get paid off interest like Robert Downey Junior probably made more than that off of Avengers. Chris Tucker got a huge payday when he was hot and only got 25 million one or two times because Rush Hour was hot. I am positive he did not make that much off the first one. I could see if he brought up how Tom Cruise was averaging 20 million a picture for a couple of year now which is a huge hit when a lot of people starting not supporting him because of that Scientology stuff.

  16. Go for it Rachel. Nice to see your note. Never go to theaters myself now that I'm old, but did every week in my youth. Still enjoy the old "clean" ones on TV tho.

  17. The bottom line is that you are the pot calling the kettle black. You point the finger at the studios for trying to maximizes their profits and you are doing the same thing. Trying to spend the least amount of money you can to see a movie without thinking about the studios or the theaters. The point is that you have a choice on whether you see the movie or not. Yes they make a lot of money so do many individuals and businesses. Do they mismanage their money possibly. Here is a point I didn't see anyone bring up. If a movie flops the theaters quit showing it because it doesn't bring people in. So they don't lose any more money but the studios are still out the cost of production. That is a risk that the studios have to take the theaters don't. As far as tickets being more money they get away with it because enough people buy into it. People want better special effects and name brand actors that is why big budget movies exist. Look at how much money the Avengers and Iron Man 3 made for the studio and theaters. Hits for studios are usually good for theaters also. As far as actors making the money that they do, some are better than others. How much they get is based on their popularity among many people not JUST YOU.
    I also like to point out that the people who usually are for unions are usually the consumers who complain about high prices everywhere. If you want higher salaries for little guys (including theaters) than you pay more for the product. If you want Walmart prices for products than you get employees that aren't paid well and cheap crap. There is greed at the top, the middle, and guess what there is GREED at the bottom. LOOK IN THE MIRROR SOMETIME before you go off on businesses.

  18. Movie theaters really need to just go away. Between the sheer inconvenience, the price, and the absolutely, horribly unforgettably and totally RUDE AND OBNOXIOUS audiences you find in America (I've not encountered them in other countries in which I have watched a movie), they're really a bad way to get people to watch a movie.

    I'm going to see Elysium tomorrow….during the day. I think the ticket is about $6-$7. I'm also not going to buy any drinks because they don't have Dr. Pepper or Pepsi, and I'm not going to buy any popcorn either because it seems like it is now some kind of nasty tasting soy product. So, the movie theater will make NOTHING from me.

    I would pay $15 if I could just watch it from home right now. The studio could rake in all that money….more than twice as much as if I go see it in the theater.

  19. Supply and Demand rules all business right? If the number of cinema goers starts to fall dramatically then eventually prices will start to go down. Maybe film budgets will go down first, and ticket prices later, who knows. I expect that those who make big money now will try to hang onto their pay checks for as long as possible, seeing who will budge first. Are we really all going to stop going to the movies? We LOVE the movies. That’s why there are so many theatres, so many movies made, and so why ticket and candy prices are so high. 
     
    We as consumers have to make it known that we don’t want it anymore before they will consider offering it for less. No one else can do this for us.

  20. I completely agree with you about the cost of making movies. An Adam Sandler film averages at a cost of 75 mil!!! I can only assume he is terrible at budgeting his films. The promise of CGI was that everything could be done cheaper and yet it does not seem to be the case. It is also true that the number of theaters in America have almost tripled since the 1970’s. They have also become much more technical as well as expensive. I wouldn’t quite place the theater industry as the poor slaughtered lambs of Hollywood. If Hollywood needs to be ashamed of its cost of making movies then theater owners need to be ashamed of the cost for a box of Goobers. If two or three people are running the concession stand, just a handful of customers could pay all of their salaries for the night. I think we are forgetting how ridiculously high the mark-up is for items that are very cheap for them to buy. You are right, they may be in the candy business, but it’s obviously a good one. Also you can’t dismiss the money they do make from showing films. It’s a combination effect that I don’t think is as desperate as we would be led to believe. I think the idea of 60 dollars for a DVD or extra taxes on large TV’s is a bit much. If the industry is hitting in such a manner then it’s all over because it would be a suicide move.    

  21. First, don’t needlessly hate on Chris Tucker. Daaayym!
     
    You mentioned hikes in DVD/netflix/whatever other revenue sources should funds dry up elsewhere. Surely if Theatre owners did stand up collectively then this would happen anyway. If the production houses think that they should be getting X amount back from making a movie then they will make it happen some way or another. The only entity that can really send a proper signal back that they have priced it wrong is the end consumer base will be listened to in time as long-term statistics are analyzed and it’s decided one way or another that demand is shifting or whatever.
     
    If we as end consumers expect theatres to stand up and fight so we can have lower ticket prices, then I think we should be getting involved as well. A sense of community with the local theatre should be developed so that the voice of the end users can be heard in discussion as well, and action can be organized.
     
    In my mind, I almost think that the Movie companies should be paying a heavier price to the Theatre companies because they provide the only facilities where their product can actually be used as intended.
     
    As you said, we have to look at them (production houses and theatres) together. It’s part of the same experience.
     
    Here’s another idea, and I’m not sure how it would work, but what if the production houses owned the theatres. They only showed their own movies and could manage all the costs into it, and we as consumers could choose between going to see that new Warner Bros flick, or the Miramax, or whatever. Smaller houses could negotiate screenings with a bigger house, and it then some middlemen would be avoided.
     
     

  22. Dark Knight, didn’t come out 30yrs ago in some supposed “golden age” of movie industry ethics and responsibility. Neither did Gladiator or Toy Story. And all the “wasted” money is still going into advancing mankind’s ability to entertain and amuse. What you are calling for is for the people en mass (i.e. the Government) to take over and regulate the industry, and last time I checked N Korea and Iran weren’t putting out any oscar nominees:P

    1. damn, are the paranoid right-wingers really on every fucking comment board?
      not everything is either free-market or communism. what i got from this thoughtful article is that there are ways to put our heads together to the benefit of the us, the customers – not to create a one party fanatical dictatorship for the country. and obviously you didn’t hear about “A Separation,” which was a brilliant and critically acclaimed film from none other than Iran (“god forbid!”)
      and seriously, “advancing mankind’s ability to entertain and amuse”? give me a fucking break.
      in other news, this is very informative info for people to understand. thanks for writing it up. having worked in the industry for over 10 years now, it has always seemed like such a rigged game to me. but check out “Beasts of the Southern Wild” if you haven’t already. well worth whatever the price of admission is in your area.

  23. Great article but it must be said that you subjectively gave Chris Tucker some fight, him being your chosen scapegoat. All hate must be directed towards the ‘game’, which is the studio/theater system and not one of ‘the players’ (Chris Tucker), as he’s just a noble product of the system.

  24. Nice post. I would like to point out one economic fact you seem to be missing. As much as you and I don't like Chris Tucker- you can't open a movie without him. Chris fills seats. Actually I am not sure where you got that number from – I would be surprised if Chris Tucker still commands 25 million a picture. Because so many movies are released and because movies are so expensive to make studios are terrified they won't make their money back on that magic opening week end. That's why stars get so much money. If they did not fill seats they would not get such high salaries. Personally I can't stand Jim Carey but if Bryan Cranston had starred in Mr Poppers Penguins it would not have been #1 at the box office it's opening weekend.

  25. “$25 million? who do you think your kidnapping Chelsea Clinton?” It is an outrageous market. It seems to stem from how much the actors etc demand etc, and know they can get it. I know personally what will ever keep me from going to the movies is the price of the tickets. I am only going to see a movie once in a while even if it is a big movie that I have been wanting to see if it is going to cost me $15 a pop and not a guaranteed good seat. At that point why don’t I just wait until it hits the $1.50 theater, red box, or DVD. A ticket price $15 is normally what a DVD costs, I can watch a DVD as many times as I want.

  26. Just to throw in some up-to-date ticket price figures; The gf and I took our little boy to watch the Lion King 3D the other day and it cost UK £29.60 (currently $47) for us 2 adults and the child. We were intending to watch the 2D version (as 3D is ****) but we misjudged the times. The 2D version would have been £22 ($35). (Incidentaly the gf also insisted on spending £14 on 2 small cokes, 1 small popcorn and 1 ice cream!!..women.)

    Albeit a classic, I think this is an outragous price for 2 adults to take a child to see a childrens film and we would not have gone if we had known the price. We will not be going again, as I refuse to be party to this whole farcical business sector. I will not spend my hard earned money paying for the studios inefficiencies and the theatres ineptness. The only deffense the theatres have for not showing solidarity and banding together to confront the studios is the possibility that the studios might have enough money/credit to afford to wait them out (with films in the pipeline) until the theatres go out of business and the businesses or property leases are bought out by the top studios, who will then take 100% profit and have more freedom in ticket price structure. Are there regulations in place to stop studios having too much of a monopoly?

    I completely agree with this post in that the solution is for the theatres to band together and support one another. It is that simple. Put a universal price plan in place where they state that from a certain date (eg. June 2013) they will pay a set % to the studios (potentially based on the films predicted gross) but not anywhere near as high as the % the studios currently set, but at a price that will allow them to make a profit whilst keeping tickets at a price that will allow the theatre to be more affordable to potential customers and will drive the dwindling demand back up.

    Or… they can carry on independantly working themselves into bankruptcy with this unsustainable business plan.

    P.S. I’m 24, when I was a boy we used to go to the cinema every weekend for £1 a kid :) including pre-film entertainment (not adverts).

    Interesting read, cheers.

  27. One thing I have picked uoon at the local cinema here in Vicksburg ms is this: management holds films over way too long. Case in point: the last excerism has been in Wilcox for almost three months now. Holding films over like this one for a long peirod time has created some problems. One some of the locals have been complaining about this; another fact the cinema owner appears to have a predjuice against Disney pictures. But to hold a summer film over into the fall is only going to make a cinema house lose profit.
    Another fact that: the local theatre hasn’t gotten 3d tech to compete with his competitors in Jackson metro area. And none of the paranormal activity films didn’t open here either I might add. A lot of the blockbuster films have bypassed this small market all together.

  28. I like the way the movie industry works. I just go to a morning showing and never buy the overpriced food. Pretty cheap!

  29. With the massive size of some of the superchains of movie theaters, such as cinemark, is it not feasible for them to produce their own major motion pictures and keep all the green in house?

    1. That would be like saying, “If Best Buy makes so much money, why don’t they manufacture their own TV’s and keep all the money for themselves.” Its just not what they are in the business of doing.

      And as much money as you think Cinemark makes, its not enough to keep a studio alive.

  30. Oh and as for the theaters getting together to not show a big film, it wouldn’t work for many reasons, but also for the fact that even if the studio is taking in 100% for a movie as big as Star Wars or The Dark Knight, the theater is probably going to have loads of people buying concessions.

    It sucks for us, you’re right. But it’s not going to change. The theaters are happy and the studios are happy. We aren’t. Do they care? No!

    1. Why would it? Distribution of DVD media to retailers is a completely separate deal that has nothing to do with the Theaters.

      They don’t see one dime of DVD sales. Thats profit for the studio and whoever is handling the distribution.

  31. I am glad to have come across this article about movie theaters. I am an employee at one of the only theaters in Vegas where it isn’t part of a casino. The low income neighborhood surrounding us has allowed ticket prices to go down to about $4 for matinee and about $6 at night time where they were previously $9 and $12. Our concessions are just like you described and our low ticket prices don’t seem to make customers less aggravated at the snack bar. I wish we could fix up our theater but with what little money that is made we get paid with. We are often undermanned and almost never prepared for anything. It’s so bad we double up on movies shown per auditorium. In other words we alternate two movies throughout the day in one room. I want to boycott the studios because if we don’t start generating some revenue soon we will be closed because we can’t keep up to code with no money to do so.

  32. From a theatre’s profitability standpoint, there are way too many variables to consider. A large 20 screen theatre is going to have different dynamics than a small 6 screen theatre. A corporate theatre (Regal, AMC, Carmike, etc) is going to be different than an independent theatre. Large corporations can negotiate better with the studios and get better support. They can get bulk discounts from their suppliers on all of their purchases, they can set up national accounts for their on-screen advertising, etc. Smaller theatre owners don’t have these options, but they also dont have people in the corporate office making millions of dollars, so maybe it balances out a little there.

    Next time you’re at a theatre, take a look around. Is it a newer theatre with designs and fancy furnishings? Those things cost crazy money to build. Someone above said that theatres lease their buildings, but I’ve never seen that. Perhaps some of the older, small theatres do, but that’s probably a thing of the past. The theatre I used to work at still hadn’t paid for itself after 10 years of being open.

    A theatre with a great location can be paying upwards of a million dollars to lease that location. Big theatres take up a lot of land when you add in the parking lot. Imagine your average ticket price is $7.00 after factoring in discounts for matinees, children, etc. If your average take is even 40 percent, you’re looking at $2.80 per ticket. That means you have to sell over 350,000 tickets just to pay your lease.

    I never got a look at the utility bills, but movie projectors pull a lot of power. Look around your theatre and see how many lights there are in the lobby, hallways, auditoriums, bathrooms, etc that are always on. Think of running air conditioning and heat for a building that size. Think of how much water they must use for all those sodas they sell and toilets they flush. Remember too that a large movie theatre can easily have 30 phone lines. They need multiple lines for their showtime recording, their customer call-in line, their corporate data lines, fire/police alarms, etc. All of these things add up to a LOT of money.

    Let’s take a quick look at payroll. Minimum wage is up to $7.25 now. Some states have their own minimum wage that is even higher. A big 20 screen theatre will easily have over 300 6-hour shifts throughout the week. That’s over $600,000 each year, and that’s not including over 50 additional shifts for supervisors and managers that make more than minimum wage and may have bonuses and other benefits.

    The theatre also has to allow for maintenance and repair of the building and equipment. They also have to have their building cleaned by a janitor company, that is wicked expensive. They have to pay for snow plowing, landscaping, parking lot sweeping, etc. They also have to occasionally upgrade their building to keep people coming back.

    Lawsuits. In this suesociety that we live in, everybody is looking to sue big companies. People trip or fall, claim discrimination when they get kicket out, etc. One or two bad lawsuits each year can easily be over a million dollars.

    Supplies. They don’t spend much on popcorn and soda, but it does add up. They also have to buy the cups and bags and candy and whatever else they sell. They have to buy office supplies, janitor supplies (lots of toilet paper), etc.

    There’s a lot more, but I’m running out of time here. I just wanted to give you a few more things to think about. If the theatre belongs to a large corporation, that corporation wants to make money to pay their bigwigs, not to mention the theatres all have to pitch in to pay the different departments – legal, human resources, computers, district managers, accounting, etc. Oh, and don’t forget Uncle Sam takes a nice amount in taxes…..

    1. Chuck, think again. There is no such thing as 300 six hour shifts for a 20 screen theatre. Shifts are scheduled like this: 11-5, 12-8, 2-10, and 5-close. On a weekday you will have 1 usher working, 1 projectionist, 1 manager, a box office person that also runs concession. On a weeknight you may get 1 extra person for box office and concession (they will double as an usher). On a weekend you will have (generously) 20 employees. Rarely will one employee work a full shift. You can expect an employee to work an average of 4-5 hours (unless they are closing). If you are closing you guarantee your time at the theatre. I can recall countless times where I’ve clocked in for less than 10 minutes and then was sent home to “balance the schedules”. If you want to work a full 6+ hours then you have to ask friends for their shifts. In stead of 300 6 hour shifts look at that as a third. When I was working at the movies for two years an average pay check for two weeks was between $75-$120. I worked every single position to guarantee more hours.

      1. I just re-stumbled upon this message board. Heh.

        Every theatre will vary of course, but I’m figuring a 20 screen theatre with nice ammenities and a good attendance of around 1 million people per year. A theatre that doesn’t do any business can get away with a lot less, but not be profitable.

        For example, at the 20 screen theatre I worked, on a weekday, we would have something like:

        1 box office
        1 customer service
        1 coffee bar
        2 concession
        2 doorpeople (most theatres could use 1 – we had a bad design)
        1 usher
        2 managers (one to run the floor, one to do office type stuff)
        2 projectionists (still running film and doing builds, teardowns, maintenance,etc)

        That’s 12 shifts in the afternoon (11-5). Then the evening people would come in (5-close), and you’d have another 12 to replace them and you’d have another usher and concession worker). That’s the minimum to operate our building. Keep in mind, this is during a slow period. These numbers get much bigger in the summer, so you have to average it out over the year.

        Obviously, an older theatre that isn’t as nice wont have things like a coffee bar, or a customer service desk. If you don’t care about cleanliness you can get by with one usher from 2-10 instead of one in the afternoon and two at night. Most theatres will only have one doorperson working at a time.

        Just to give a quick example of a Saturday night during a slow period, we would be looking at 3 boxoffice, 7 concession, 1 coffeebar, 2 doorpeople, 3 ushers, 2 managers, 2 projectionists. That’s 20 people just on one evening, not factoring in Friday evening, Saturday afternoon, Sunday aftertnoon and Sunday night.

        Factor in the summer season when things get crazy, and the number jumps up even more.

        Keep in mind, I’m basing my numbers on a theatre that is doing good business. A theatre with the staffing you described is probably doing a fourth of the attendance.

        Also, I didn’t include shifts for unloading deliveries, employee meetings, special screenings, birthday parties, orientation and training shifts for new employees, etc, all of which signifcantly add to the payroll number over the course of a year.

        We were also required to have security officers on the weekends for legal liability reasons. It wasn’t a bad area, so these people basically got paid significant money to just walk around, the theory being that it’s cheaper in the long run to not be held liable in court in the unlikely event of an incident.

  33. Your right he is a hack, and we have to put up with sandra bullok, one film wonders. I am interseted in opening up a… wait for it… A drive in, With all the possibilities of non night income and the world of movies to choose from (not first run). How do you contract for a series or a 6 month old movie. let’s face it the Drive In concept is 50% movie and 50% outside experiance. What is the down side I know most of the upside. I’m in the Florida Panhandle with a 10 month movie season.

  34. Thanks for the article. I was wondering why AMC theaters sells “silver experience” tickets in bulk at $6 bucks a pop while “gold experience” ones are $7.50 a pop. The only difference between the “silver” and “gold” ones is that for silver tickets you have to wait 10 days after the movie is released. But considering the business model, it makes sense. The longer you wait to see the movie, the more money the theater makes rather than giving it to the studio. That’s why the studios advertise so heavily – they DEPEND on people seeing the movie immediately after it is released. People like me who wait for 10 days to pass are their worse nightmare. But in the end, I only pay $6 a ticket and I bring my own popcorn.

  35. Great article. I don’t see the system changing any time soon. If a theater refused showing a film like Transformers: Revenge of the Fallen, then their income would fall down faster than a hooker’s skirt. The Theater Owner Association could contemplate it and say: “Why don’t we stand up against this?” but they know that it’s too risky. Some theaters will play the movie nonetheless, and like you said, theaters need money to run efficiently. I don’t see a clear solution to this problem because I just don’t see theater owners doing this and I don’t see studios lowering production costs.

    It sort of starts with all of us: the studios, the theaters, and the fans. Why do theaters green light pieces of garbage like Disaster Movie? Because they know people will actually go see it, and theaters will screen it for that same reason. I sort of see it as a Domino Effect because we’re all effected by one another in a way. So where should the solution start? As for me personally, I don’t have a damn clue.

    And to people saying that we should wait for a Matinee two weeks after a film is out to save some money: that wont work. Face it, we’re human. We want the next big thing, and with today’s era of intense marketing months before a film’s release, fans only get hyped more and more to see a movie, and I’m no exception. For example, I was 100% hyped to see The Dark Knight when it came out. I was freaking out over the fact that I couldn’t go at midnight (yes I’m that much of a fan) so instead, I took the first showing of July 18th which was 9:00 AM. EVERYONE was talking about it, and it sucks being a film fanatic and missing out on the next big thing. Sure, you’ll eventually see it, but you want to see it NOW. It’s human nature.

  36. Here in Australia we pay over $17 to go to the cinema, and then pay even more for the sugar hit to go with it.

    True insanity.

    Lesson 1 = I will never go to a movie in the first 2 weeks again.

    This gets worse when you consider the fact that actors do some movies for the paycheck and then other movies at a lower dollar value because of the quality of the script and director. If you follow that concept through to its natural conclusion, big budget films pay even more to their stars to produce product that even their actors think is so so. Then they have the gal to be arrogant towards the very people that display their product – the theatres. So, they spend the GDP of a small country on a crappy movie that lasts 2 weeks and only the theatre loses out.

    Turns your stomach doesn’t it.

  37. Wow, thats amazing! You have to also think about all the money that goes into the advertising for movies as well. Such as Pop up displays and Movie banners. It all adds up after awhile as well.

  38. I recently entertained the idea of purchasing a large closed down movie theater with a group of large investors but after reading this and other literature on this issue I am seriously questioning this financial endeavor.

  39. thanks JAMES (theater owner) for your insight.
    That is truly some jaw-dropping data to chew on.

    HOUSE ALLOWANCE? wow… thats harsh.

  40. This theory would work if they did stand up together, as opposed to the alternative others think (which is the studios just increasing prices on movies).

    If enough studios could form a “union” together, and “strike” big enough movies..say the next harry potter.

    Refuse to show the movie at ALL locations in the union until they not only lease the movie to them at the STANDARD rate, but cut them a 50% share (which is only fair, the studios make the movies, the theaters show it to the masses, it takes two)

    Then things would get done. Think about it. The next batman movie..probably is going to make 400 million AT LEAST. If carmike, and lowes and weststates told them to suck it hard, and refuse to show it, the studios would LOSE so much money they would have to accept.

    Yeah the theaters would miss out too, but since they are not showing the movie, paying the licesning fees, or staffing people for its showing, they are not losing ANYTHING! They are making their money, and their employees paychecks by showing the other 900 million movies that movie patrons come to see.

    Start with the big movies, show em whose boss, and it can be done.

  41. For a movie theatre to stand up to the studios, their corporate office would have to be a lot farther from screwed up than they are.

  42. Greed would outweigh anything. No matter what the savings pushed back to the theater they will still want more money and continue to raise prices. Hollywood is a corrupt system of overpaying hardly believable actors in a lot of cases, yes there are the good actors that deserve the money(maybe no 15mil a flick) but Chris Tucker in no way deserves more than 100k for any move he’s ever made…and that being generous…

  43. I work at showcase cinema de lux in England, and the prices are so high at my cinema, nobody bothers coming, which therefore means the cinema loses money, and to try and save some of their loss they cut our hours….i only work 4 hours a week because of rediculous cinema prices, something needs to change.

  44. Great article. I have always known that it is not the theater’s fault that we pay an arm and a leg for a night at the movies, but this gave me a much better understanding of how it works. I also agree that not going to the movies will never fix the problem. This and all the other problems with the economy all stem from one thing. GREED. Filthy hedonistic wipe your butt with silk over a solid gold toilet GREED. $25 million for one freaking movie?? Criminy he’s already set to live in luxury the rest of his life. How much more does he need? Even A list actors don’t need to get paid that much. I don’t even want to know how much the studio executives make on each movie.

  45. Heres an easy solution, only go to the movies you really want to see in theater, don’t buy from the concession stand and watch the flops on network tv when they naturally appear (or just get a netflix subscription).

    Honestly though, the system is supply and demand; the prices are high because people are willing to pay those high costs- if the collective population refused to pay the price (or couldn’t) then it would have to drop to meet demand, thats how all economics work. (fundamentally anyways, the rest is just parasitic bullshit attached to confuse the average onlooker).

    One major flaw in the theaters standing up to studios is I think the two major theater companies in America are owned by studios; so I don’t see a subsidiary company back-talking to its parent lol.

  46. you are correct, it is a really bad arrangement between the studios and the theaters proving once more that studio heads are scum.

  47. THE FACTS

    Let me start with saying that I really enjoyed this article.

    Let me continue by adding that I have been a movie theater owner for over a decade now and I was raised in the business. I am the fourth generation of my family to be in the cinema business and staying competitive over the years through all the technological advances since the 1930s has been no easy task. Also, just so you know, I own a first run theater that has always been a first run theater.

    Now that you know a little bit about where I am coming from.

    Most of your information is correct. 100% of the box office may be a little high, but I wouldn’t doubt it.

    You are absolutely right that the problem is systemic in nature and that the change will probably need to be started by the theaters themselves.

    I feel it is pertinent to ad that only half of the problem is the costs associated with studio licensing. In fact, perhaps a bigger issue is the amount of control the studios place on the theaters.

    Some of the problems:

    Support from the Studios is a joke, they do not care about any business but their own. The supply of marketing materials and support is non existent for anyone but the biggest chains.

    I have personally been in a situation where the Studio could not or would not even confirm that we could license the film 4 days before its scheduled release. Not all movie theaters can play all films and for that reason knowing ahead of time, whether or not you can even play that film and when, is of the utmost importance for marketing and generating strong sales. How they expect us to do that with 3 days notice is beyond me.

    You see basically the system is only set up for the mega plexes that do play all films. Unfortunately the health of the industry should probably be judged by the weakest sector and those cinemas are the smaller market independents. The independents are struggling, and probably will continue to struggle, until they are bankrupt. the studios want the independents to be bankrupt, by-the-way: because independent businesses have varied expectations and needs and for that reason they are a slightly bigger pain in the ass for the Studios.

    But back to the control. Studios dictate everything, when it comes to what a licensee (theater) can and can not do with their film. They dictate whether or not the theater can have rolling stock before a presentation, and they can demand a cut of the revenue from those commercials. They also dictate, to some extent, which trailers (previews) must precede the film, which is why we have so many trailers, the theater is trying to advertise films they know are going to be popular and the studio is trying to shove any thing they have made lately down the consumers throat.

    The theater/studio relationship is more like a competitor then one would imagine.

    For the next set of dictations form the studio, readers must understand, that first run, also can mean the first time that theatre has played that film, no matter what the age of the film is.

    So to carry on, lets say that a movie theater wanted to carry some varied content, like a sporting event or some other form of entertainment on a screen. In the industry that would be called splitting that screen. Now, because the studios compete with each other, they do not often allow splitting of screens that are playing their film. For the theatre with 20 or 30 screens, that usually isn’t problem, but for smaller cinemas, it is huge, probably one of the biggest problems. HS3, High School Musical 3, recently opened in theatres. This films was playing in major markets and in many of them, the theatres had show times where no one, NO ONE, showed up, so the theatre was left to leave that screen doing nothing because they could not split that screen. This brings us to how theaters ended up being bigger then they could reasonably expect to support. Basically, because of no splitting rules and length of run terms dictated by the studios; theatres where encouraged to add more and more screens to serve the same number of patrons. Thus, we end up with, like you mentioned, screenings of films with very few people in them, more pressure on the margins from the concession stand, and a diminishing of the experience which is suppose to be social!!! By the way, someone mentioned that the theaters need to control the audience, couldn’t agree more!!!!!

    Here are some items that are covered by the MLA from the various studios. Terms that are negotiated and change on a per film basis and are usually decided nationally, not regionally, or by market. Keep in mind that the studios understanding of the movie industry is great, but of the Theatre industry it would appear that they are totally out of touch and wouldn’t understand the first thing about selling tickets to a movie.

    Items that are dictated on a per film basis:

    Splitting, yes or no, usually no.

    Ticket price – legally they can not dictate your ticket price but they can refuse to license you if you prices are to low – basically dictation if you ask me.

    Rolling stock.

    Yes or no, and how much of a cut they will be getting.

    How Long?

    The length of time a theater must license a film for in order to play it, on release is usually 4 weeks, sometimes six. Many times with no splitting during the entire run.

    Terms.

    The percentage of the box office that the studio will be taking off the pre tax sales. Therefore, if you sell 1000 dollars of tickets, including tax, on a film with 70% term and the tax was 10%. The theater would pay 70% of the pre tax amount which in this case is 700, plus tax, which may also be 10%. In the end the terms are not what they appear to be, because in a gross revenue to gross cost scenario, the theater is paying 770 (what they pay the studio) on 909.09 (the pre tax revenue) which is actually 85 %. Crazy isn’t it.

    Which of our films have you played and when?

    Occasionally, the studio will throw in the requirement that you had to have had such-and-such a film for so long to be able to play their latest film on release. The last time we experienced this, we hadn’t played the previous film; the previous film that they where comparing to was 2 YEARS old at this point, and therefore, we didn’t get the latest film until its 5th week.

    More things that are dictated,

    House Allowance.

    This is the maximum amount of money the theaters portion of the terms can be. Thats right people there is a cap on how much the theater can make. Once the Theater has reached their house allowance then the terms usually go to 90/10 (90% for the studio and 10% for the theater.

    Minimum. This is an amount decided by the studio that is the minimum licensing fee, so even if no one shows up to a film at all (it has happened) then the theater has to pay this amount.

    I am sorry but this industry is so idiotic, that I would charge anyone to find one person who says that it is run efficiently. At least any person who knows the industry that is.

    Wow, this is a long comment isn’t it?

    The glory at the end of it all. As the industry goes digital, which is a whole other nightmare. An entire other article. The joke that the studios are paying for the equipment is almost a complete lie. They are not and anyone who wants to argue otherwise, has only to ask themselves one question, is my local theater all digital or even mostly digital?? No, then the studios are not paying for it, because any theater that has been offered free equipment would be stupid not to accept it.

    But, I believe that some time in the future, the studios will either be bankrupt, or not recognizable as they are today. This will happen in a Digital Cinema World. As all things digital go, the content will become less expensive to produce, and therefore, small companies who want to market films will be able to. The smaller companies will compete more for the screen time. They will be competing with live events and alternative content, like plays, opera, and gaming, maybe even TV shows. The competition for the screen time will bring the balance of power back to the exhibitor, where it should be, and the exhibitor we be able to do what they do best, promote and exhibit films and other entertainment to their market which only they know.

    Sorry for the length, thanks for reading.

    James Wilson

    email me if you want any further information [email protected]

  48. In my city, people don’t complain about the ticket prices as much as they do about the morons who ruin the theater experience for everyone else…that’s more of a bigger issue. As for the 25 mill that Chris Tucker got? I could care less because I didn’t see that movie in theaters and thank god because I saw it for free on “on demand” and still felt robbed. It is a shame he got that much for such a lousy movie, which was clearly a money-maker and nothing else. The spirit and fun from the first 2 Rush Hour(s) was gone.

  49. one thing i would like to add is that distributors can also ask for dollar amounts instead of just percentages.. For The Flags of our Fathers, the theatre I was running the Projectors for was asked to charge 10 dollars a ticket.. and that is intended to ALL go to teh film company, so if the theatre wanted to make any money off that, they would have to up it even more. but they refused not to do that high, and the film company, (paramount was the one) stopped giving us movies. even to this day. (they stopped giving the entire theatre chain films). so having theatres refuse to pay that much will not always solve the problem. unfortunatelly.. its ultimately due to the actors.. blame the actors.. lol send them a letter requesting the 10 dollars back for the movie.

  50. The studios won’t be able to afford its mistakes and inefficiencies at our expense for very long. At a certain point consumers will get fed up to the point where they will simply stop watching films at the theater. There are many other forms of entertainment and consumers will skip out on a night at the theater and wait for the dvd. okay, so the Studios decide to raise dvd prices, people will pirate the dvds. When people get cheated they will cheat back. Lots of people do it already by paying for one show and then staying in the theater for other films also.

  51. the only problem with the theatres standing up to the studios and demanding more of the profit is the obvious:

    We say, sorry, $0.50 (I’m in New Zealand, that’s our average take, in NZ$, per ticket) profit for us isn’t good enough and we’re not raising ticket prices anymore just so you can get more money and they say: OK, fine. We won’t send you any more reels. Sucks to be you.

    This happened in a cinema near where I live, I had friends who worked there. It closed down 8 months ago.

  52. Ticket prices in Sweden varies between 16-18 $. As in other European countries, there is a tax included in the price which sends a small percentage to the Swedish Film Institute, which then finances crappy Swedish films. So basically, movies like Indy IV and the Dark Knight finances the entire Swedish film output.

  53. WOW! I thought this write-up is excellent information. I am one of those who complain about the drinks, popcorn, and candy being sooo expensive. It is a shame how the society is. I believe actors and actress are well over paid considering the so called middle class doesn’t even exsit any more. Nice Work on the article. :-)

  54. In any statistical model, the existence of “outliers” 3 and 4 standard deviations from the mean does not disprove the model. If it is a good screen and has decent popcorn you are a lucky guy and should be careful about who you let in on this gem of a place.

  55. The problem with this is that there are still cheap, first-run theaters.

    For example, my wife and I saw The Dark Knight Saturday night.

    We paid $2.50 apiece for our tickets; that was the regular general admission price.

    If this article is 100% accurate, how does that theater stay in business?

    1. Xeno, what theatre are you going to that is $2.50? Even over in Georgia you don’t see that except at dollar theaters. Dollar theaters are paid differently, there is less staff, less people, and the theaters are rented dirt cheap.

  56. what i believe is…these high rates are only to balance the economic status of every individual living in the country…(or rather it should be..)and this can be achieved through cinemas only because it is not a daily-basic need of a human..!! so only those who can afford it spent their money..(or rather donate…in return of entertainment)…according 2 me money earned/collected from such means should be used by the the governing body of the country……

  57. We may be paying $10 for a movie ticket, and $5 for popcorn, but that money pays the wages of employees. The studios employ thousands of people, and even when they make a flop they are employing thousands more. Plus they are distributing money throughout the country, to buy costumes, vehicles, SFX, fees to cities to film, etc. An unintended consequence of reducing costs would mean less wealth for someone else. Entertainment is basically a value created out of nothing or very little. If you can convince someone to pay money to sit there and be entertained, and only come out with memories, not an asset you can resell, then that is generating product, which makes the economy go round.

    Im not saying movies and popcorn arent overprice, but just that making a simple change isnt so simple. ALSO, how many movie theatres are owned by the studios?

  58. This is why I have taken my own popcorn, candy and drinks to the theater for the last 15 years IF i were to go. This is also why I bought magic DVD program. 450 movies and counting!

  59. Um, I don’t know where you get your information wrong, but maybe do some more research. It has way more to do with inflation and theatre overhead than anything. Studios NEVER get 100% of a films first or second or any weeks gross. Ever. Over the course of a year, a studio MIGHT get upwards of 55% of the theatres gross for their titles, and that’s about it. Theatres don’t share ANY of their revenue from concessions, so why shouldn’t the studio see at least half of the rental for the movies they made.

    Shoulda known the fact that you call your site the “The Official Home of Correct Movie Opinions” that you don’t know what you’re talking about.

  60. [email protected] says:

    Maybe they should just make cheaper movies like Casablanca. Less special effects and more real acting! There are tons of good movies that were produced with small budgets. But people want more and more action…
    Producers and theaters need to realize that the more movies become expensive the more piracy will increase.

  61. for didoman.com

    yes personally if I see that a auditorium is empty after the last trailer in the program I do switch off the projector.

    sometimes a stray customer will wonder in a few minutes before the movie is about to start and then your stuck running it !!!!!

    occasionally the movie buyers randomly visit sites to check the progress of customer numbers but on the whole I dont like to run movies to empty screens, it also means at the end of the night I have one less screen to close down so helps me and save energy for planet earth, everyones a winner.!!!!

  62. Question to the theprojectionist, If the cinema is empty do you still run the movie. Wouldn’t you see that no tickets where sold so about 10 minutes into the film, just turn it off and save the planet.

    I know where I live the 10 Cinema Megaplex never has anybody in it during the day and mid week, except for Tight Ass Tuesday…

    I must admit nothing beats a good cinema experience once a week and for the amount of money that these guys spend on making the movies, sort of makes me guilty by not going….

    Tom Cruise – $25 Million Dollars
    Projectionist – $10/hr

    Got a love it……

  63. (Type your comment here. Make sure you’ve read the commenting rules before doing so)

    I UNDERSTAND THE THE MOVIE COMPANIES FORK OUT ALOT OF MONEY ON MAKING AND ADVERTISING THE MOVIE. I ALSO THINK THAT IT IS TOTALLY REDICULOUS THAT THESE CELEBRITIES ARE MAKING MULTI MILLION DOLLARS FOR EACH MOVIE. I DONT THINK THERE IS A MOVIE STAR OUT THERE WORTH WHAT THEY GET PAID. WE BUY GOING TO THE MOVIE ARE FUNDING THERE FAT SALARIES. I THINK THEY SHOULD PAY THEM LESS AND PASS TRE SAVINGS TO US. I THINK THE SOLUTION IN REAL SIMPLE..

  64. hi guys,

    I am a cinema projectionist of 12 years now and love to read the legendary “myth’s” people have about how much cinemas/theatre make in revenue from customers.

    the facts are simple:

    the only time advertisers are interested in is shows at 6pm friday to last show sunday as that is where the most amount of cash is generated.

    cinemas/theatre pay very low rental for the buidings they use.
    very few of them actually own the builsing they trade in.

    cinema movie are mass produced on polyester stock whic his cheap to produce, easy to run and can be processed to be reused in future.

    out of 45 shows per week only 10 are money making performances.

    cinemas waste 25% of daily stock through not being trained properly in portion sizes.

    cinemas use projectors that are of “dinosaur” age. alot of the machinery is oloder then the projections or the age of the building.

    cinemas waste 30% of electricity per month through opening to early and running to empty screens for 6 hours per day.

    auditoriums on average only run air conditioning twice per week. not every day

    there is more bacteria on the seats then in the bathrooms

    big industrial popcorn bags are purchased for £1 each and a 10th of the bag is charged for £5 to customers.

    cinema staff are paid less per hour then someone working in a coffee shop.

    if you report a picture or sound problem with the movie you watch 80% of projectionist dont do anything

    you can use a mobile in the auditorium and even next to the projector without any technical problems.

    cinemas say “dont use your phone” in screens due to customer complaints NOT technical problems.

    piracy in cinema is decreasing.

    internet downloading is forcing cinemas to go digital 5 years before they planned to.

    my advice to you is simple:

    buy your own food from a supermarket to save 80% of your cinema bill.

    call the theatre 30 minutes before you arrive and ask for priority sitting. its free and you will be given the best seats by the manager.

    when the cinema states its sold out its a lie (they hold 30 seats spare in case vip turn up)

    if you experience a sound/picture problem in a screen ask to speak to a projectionist and ask them what sound proccessor/projector they are using and the volume level. guarentee he or she will check the problem asap.

    dont dont dont waste time ordering tickets over the phone, cinemas make £1.30 extra from ticket sales. only pay cash

    make friends with the projectionist, he will run the movie to rehearse it early one morning and you’ll get to see it for free.

    if your not happy with your visit, keep your tickets and write into the cinema with your concerns. 99% of the time you’ll either get a refund or a pair of tickets free

    1. I dont know where you work but out of the two chains and 3 theatres I’ve worked at the 30 seats we hold out on are the seats that people leave empty because they don’t want to sit next to somebody they know and majority of those seats are two close to the screen. Complaining that your seat wasn’t where you wanted to seat or you movie was crappy doesn’t deserve a refund. Part of theatre problems are the film companies. Part of the contract states that if you don’t play this movie you can’t get the major blockbuster this summer. The other problem is if there is a problem and you would like to please the customer the film company charges the theatre for the percentage of passes you give out. Now that there is 3D the film there is a third company involved. I see so many people walk out with glasses and not recycling the film company wants to have the theatres pay for them so they can get a profit off that also. RECYCLE before they use the excuse that its costing them money and the film company wants to increase their profits while we are left with the electric bill, $30,000 and up in rent a month, and paying a staff to please the customer because they get there 10 minutes before their show and don’t want to wait in line.

  65. jonson roth could be on to something.
    i mean we’ve all seen the power of viral marketing and the blogosphere.

    someone should make a blog called
    christuckerdoesntdeserve25million.blogspot.com

  66. Exactly who is the effing moron who agreed to first give a idiot, talentless hack like Chris Tucker $25M? Gotta be some political machinations going on, eh? We need to blog about this kind of idiocy and start naming names.

    So, sounds like we the moviegoers get screwed no matter what. But if we spend more time watching web video instead, they’ll not get our eyeballs. In other words, what if we can organize, by way of blogging, a moratorium on all new movies for a year, in theater, DVD and any rental formats. If we succeed and make our concerns clear, maybe with a 100 movie bloggers helping out, we might at least slap Studios/ Theater Owners in the face a bit. A wake up call that we’re mad as hell and not going to take it anymore. At least not $25M for Chris Tucker.

  67. You guys are forgetting a major concept known as supply and demand. Things very rarely are priced based cost, rather they are priced based on supply and demand.

    You determine if for each additional raise in price if it knocks enough people out of the market to not make the move worthwhile.

    In a roundabout way the high costs imposed by the studios may result in higher prices, but not in the way you describe it. By the studios making it expensive to run a theater, they end up limiting the supplies of theaters. (There is not one on every corner.) So, the supply is low, the demand is still the same, the price goes up.

    The Studios and the Theaters though have done a lot of marketing and upgrading to increase the Demand for going to a movie, thus allowing them to charge a higher rate.

    I guarantee you that if tomorrow the Studios dropped their percentage to 25% across the board, you would see almost no difference in movie prices. Why would they. If they could sell 10,000 tickets at $10 apiece, why would they drop the price to sell 15,000 tickets at $7.50 apiece… to be nice? What about the shareholders of AMC who expect to be rewarded for their investment? SHould the board be giving away its shareholders money to make movie goers happier?

    Eventually you would see more theaters being built because all of the sudden you could make a killing on running a theater, and then prices would drop.

    However, with all of these theaters there would be a lot of demand for the Studios movies, and thus the Studios would charge more, Theaters would go out of business and prices would return to what they are.

    The laws of supply and demand are pretty much always going to work.

    So you can rail about costs all you like, and if you choose not to be $10 for a movie, that is your right as a consumer, but trust me that the cost of making the movie has no direct effect on the end price charged to the consumer. It is a common misconception about how markets work.

  68. It is sad that it cost $6 for a bag of popcorn, but as you and others say the machine is rolling and therefore hard to stop. I would say let the studios take over the theaters, but alas they would just raise prices across the board and spend more and more millions on bad movies. I go to the movies 2 to 3 times a month and more if I have to check out a movie before taking the youngsters and all there friends. I can only see it getting worse.

  69. John:

    I agree with you that the theaters are getting a raping from the studios.

    I’d love to help them out by buying more snack bar items, but there’s nothing there I can eat.

    Theater managers…how about stocking some Caffeine Free Diet Coke and some Atkins bars. I want to help you out…but work with me here.

  70. In a way, discussion about theatrical releases is kindasorta moot. Currently cinema revenues account for less than 13% of worldwide studio receipts.

    Don’t get me wrong; I’m an avid cinema-goer and don’t even watch movies on ‘the small screen’. So I’m not cheering for the continual diminution of the ‘silver screen’. But as Dylan sang, the times, they sure are a changin’.

    Mostly the studios see theatres as a means to get the word out. Break the ice. That’s it.

    And it’s only going to get worse when downloadable movies at initial release becomes a reality. And believe me…it’s gonna happen.

  71. i think you are right in that it has changed kurt.
    the 20/50/80 thing was good for its time but due to the way films are so front loaded now i believe most of the major chains have renegotiated the balance of who gets what when.

  72. I’m not 100% sure on this, but didn’t that scaling frontloaded model between the studios and the theatres (20/50/80) end about 2-3 years ago. Have you checked with anyone lately (you mention Attack of the Clones, well that was 5 years ago at this point, I honestly do think this has changed.

    David Poland talks abuot this stuff all the time, i bet a quick email may clear things up for you. I don’t have references, and I don’t know I’m right on this, but I do think things have changed, thereby labelling your points #1 and #3 slightly mis-informative if I’m right.

  73. Brillaint article John; and i wish that the theater owners would band together. Of course, as with many problems in this world, the idea of an entire industry taking a united stand seems too complicated for them to grasp. At the very least, it will require a lot of courage.

    Let’s ask ourselves a ‘what if’ here. What if one of the major chains (let’s say Loews – it’s the only one i know) did demand a new deal with the studios, but none of the other chains did? The studios say ‘no deal’ because there are plenty of other chains that haven’t asked for any change, and those chains would see it as a way of killing their competition. Would the studios just stop giving their films to Loews?

  74. I’ve been saying for a while that the only thing that will happen if people “boycott” the theatres is that the quality of movies will go down steadily.

    Great and innovative science fiction will be gone. Difficult to understand dramas? Gone.

    We will have nothing but a newly revived series of Kangaroo Jack films, because teenagers with nothing to do but pay ticket prices will determine what gets made, because what gets made is what makes money.

    Support your favorite films by seeing them in the theatre, it’s the only way to talk to the studios. Vote with your wallet. You can complain and gripe about the system, but the only people you hurt are the artists that deserve to be helped.

  75. Very interesting article. I’ve always wondered where the money went when you bought a movie ticket. Any chance you could enlighten us on the rental industry? It would be interesting to know where our five bucks go when we rent a movie at Blockbuster, or where our fifteen bucks a month go for Netflix.

  76. Actually gas companies are not largely responsible for the higher costs of gas. It has to do with the market value of oil which constantly fluctuates based on supply and demand. There’s probably some manipulation there, but it has more to do with the people who control the oil wells. The demand for oil mounts as emerging economies in the world suck up more and more everyday, namely India and China. The difference with the entertainment business is that consumers DO NOT NEED entertainment, while the world NEEDS oil.

    So with respect to entertainment, the consumer really has all the control. If people pay for something, then they are doing so on their own free will. If you think ticket prices are too high, or you dislike the advertising, or whatever, then boycott. Your wallet is your vote. I know people who pay extra to see their movie in IMAX. But I also know people who wait 1-2 months and watch their movies in the dollar theater. Yeah, the quality of the picture and sound is not great but you get what you pay for.

    With marketing costs, the studios have no choice but to market like hell. Audiences are so fickle and getting them in on opening weekend is absolutely critical. Fifty percent dropoffs the next week are the norm. But this is crazy because no one has seen a movie before opening weekend! The reason people see a movie on opening weekend is because of marketing which explains why great movies often make little BO and some of the crappy blockbusters make a ton. Once you’ve bought your ticket, you can’t get your money back if the movie sucks.

    John, I think your point of cutting back on the crazy costs is the one thing that must happen. Any single person making more than 10 million for a movie is insane. Even that much is absolutely crazy. Most people will work their entire life and never accumulate as much as a million (not to mention inflation). It’s a crime how much some of these people get paid.

  77. Yea know this sounds like the same problem as with the high prices for gas in the US. The companies want to make more money so they raise prices to make a bigger profit. Whats sad is that we as a nation or as human beings will take this price increse with bad language but do noting about it. Sorry guys and gals but this problem will never get fixed. So sit back and watch the industry implode on itself.

  78. Hey Brooks,

    You said:

    “Marketing cost. STUDIOS not the theaters pay the marketing costs. The studios make the movies, put all the risk and money into them, and then pay the marketing costs that drive people to the theaters.”

    But that is all part of the whole systemic problem. Yes studios pay marketing costs…. but that only adds to their incitement to squeeze higher percentages out of the theaters…. which in turn force theaters to jack prices, show commercials… ect. ect. ect.

  79. This issue is so complicated. I hear what you guys are saying, but there are many sides to this.

    First of all, the dollar figures that studios put out there are inflated to give the impression that this is a movie worth seeing because it cost so much. Want to see what a 250 million dollar movie looks like? Go see Superman Returns…it’s a marketing ploy. The actual movie cost is not even close to that. But it’s impossible to say for sure since all of Hollywood accounting is shrouded in complete darkness (hence the impending WGA strike, and SAG and DGA soon to follow).

    Marketing cost. STUDIOS not the theaters pay the marketing costs. The studios make the movies, put all the risk and money into them, and then pay the marketing costs that drive people to the theaters. It is damn hard to produce a film. Look what some of these filmmakers have to go through for a single project, often many years in the making. The theaters just wait for people to show up and collect. The amount of work is trivial, overhead in comparison is minimal, and the risk is also very low. This is why I think the studios should get as much of the money upfront as possible. Even with a high percentage take, the STUDIOS will not even recoup marketing costs from their BO take, let alone their production costs. And I am pretty sure that Studios don’t see a dime on all the concession business and advertising revenue. So all that more than makes up for their reduction in percentage take.

    With that said, I agree that the Studios should stop paying jackasses huge amounts of money and they need to reduce their production costs. I don’t understand how this even happens when it is so difficult to get a project through the studio system in the first place. The Studios are so risk averse and fiscally conservative most of the time and have thousands of projects competing for very few spots. Some project spend years and years in development before getting the greenlight. You would think a system like this would prevent the kind of excess that we see every year. It’s like someone on a strict diet and exercise program all year long, and then from Thanksgiving through New Year they decide to stop exercising and eat as much crap as possible. They go from being in “300” shape to being fat and lazy almost overnight. Then the cycle repeats in various forms.

    Ticket prices. I don’t understand why anyone would pay $12 for a ticket, at least on a regular basis. I can see a matinee during the day for $5.50, it’s not crowded and I can pick any seat I want. Especially if I don’t go opening weekend. Why not wait a week or two?

  80. to Jimmy: to stop the movie at the end of a reel these days is impossible in most theaters because they use platter systems in projection. also to stop the movie would be much more of an annoyance and disturbance then some rowdy dick in the theatre. if you have a problem tell and usher and they should be able to sort it out ( ushers generally check a movie three times during the feature, but they are checking for cell phones, cameras etc they cant wait around for quiet moments in the movie to hear people talking.) if im every in a movie and they stop it because someone is talking to much, that person has won.

    1. You are absolutely correct. I think stopping the reel during a movie would turn a lot of people away from the theater. If you want to stop some annoying jerk in front of you from talking out loud or typing on their cell phone, just tell them to stop. Too many people just sit around and tolerate this bad behavior. It’s like ignoring your 10 year old child when they act up in school. If they refuse then get an usher to intervene. The person may not like you very much but who cares, you just paid a good chunk of your paycheck to watch a 2 hour film.

  81. Wow talk about eye opening.
    I love the way that this post followed my thought process, as untill I saw point 5, I would have been in that catogry.

    But if this is the case my sympathy goes to us, as we pick up the bill. Its ashame that companies in hollywood and cinemas in genral remain so nieve about certian issues, when all they need to do it open their ears to people who know the way. People like John Campia :P

    Brian

  82. Very nice article.

    I myself have not thought about this before really. I never really thought past handing my money over the counter.

    So i guess all this time when people talk about how much films have grossed each week etc and how much money they make… does that mean all those figures are based on the percentage the studios take from the total addmission or is that just on ticket sales in general?

    I had always thought wow this movie made $100m, and my $10 is in there too… should i be thinking that my $3-5 is in there?

    That does suck for theatres and it does make me sympathise for them having to hike their prices continually. Never the less i’m sure i’m still going to go regularly no matter how much they increase so there isn’t much point in me saying otherwise.

    Bloody great post though!

  83. I’ve done a little research about the situation in Europe.

    Ticket price structure in France:

    Theater revenue: ~41%
    Producer and distributor revenue: ~41%
    VAT (value-added tax): ~5%
    TSA (special tax that goes to the French film fund): ~12%
    SACEM (tax that goes to composers, music editors etc): ~1%

    The ad revenue constitutes around half of the theater revenue (~20%).
    These percentages seem to vary little from one year to the other.

    Sources:
    http://cinetribulations.blogs.com/tribulations/2004/11/composition_du_.html
    http://www.linternaute.com/sortir/cinema/business/dossier/cinema-trop-cher/ou-va-votre-argent/3.shtml
    http://cinepays.free.fr/adamr/adamr.html

    Some average ticket prices in Europe:

    Spain: 4.8 Euro (6.8$)
    Germany, 2006: 6 Euro (8.5$)
    France, 2006: 6 Euro (8.5$)
    Luxembourg, 2004: 6.6 Euro (9.4$)
    Sweden, 2005(?): 8.3 Euro (11.8$)
    Switzerland: 9.6 Euro (13.7$)

    Sources:
    http://www.ffa.de/start/download.php?file=marktdaten/3_Besucher_Umsatz_Preise/3.4_Entwicklung/eintrittspreise_02bis06.pdf
    http://www.cna.public.lu/1_FILM/1_5_Les_salles/index.html
    http://www.sweden.se/upload/Sweden_se/french/factsheets/SI/Le_cinema_suedois_FD112d.pdf
    http://www.cnc.fr/CNC_GALLERY_CONTENT/DOCUMENTS/publications/dossiers_et_bilan/304/01_chapitre.pdf

    I’m from Romania; the normal ticket price in the capital city is ~4$, not including malls/movieplexes where the price is usually 5-6$ during the week and 7-8$ in weekends.

  84. Wow. NICE POST, John! It’s a shame that you aren’t in charge of the National Association of Theater Owners. Your editorial has a lot of merit, showing yet another reason why I visit the Movie Blog every day.

    To ethernz – I also wouldn’t mind seeing the theaters loosen up their prices for a change. But I fear that you may be right in your opinion that the theaters’ mentality will probably be as you described. Still, it’s something to hope for.

    To Time Waster – Short of kicking the “obnoxious crowds” out of the theater, there’s not much else the theater can do, but I propose a solution: If a person (or persons) becomes too rowdy, the theater should stop the film immediately at the end of the reel, and refuse to continue onto the next one unless the offending parties leave the theater, receiving no refund for their ticket. The remaining patrons who have behaved themselves will not only continue watching the film, but they, upon exiting, will receive a voucher/coupon off their next visit to the theater (maybe a small discount in ticket prices and/or snacks.)

    I know that sounds stupid, but it’s the only thing I can think of to punish people who ruin the experience for everyone else.

    1. Once the theatre screwed up their projector and it played Sugarland- All I Wanna Do and a fanta commercial over and over. We finally got to watch our movie and we got 25% discounts for next time. I hate that song now. My point being that theatres CAN and WILL give you a refund if they damn well please.

    1. The person who speaks about the crowds. I have one thing to say. The theaters can’t control them, they are your fellow people. Blame society not the theaters for others actions.

  85. Having the movie theaters stand up to the production company is a great idea in theory. In practice if they did demand 50% of ticket prices back they’d probably just view it as a 50% increase in profit. It’s hard to get corporations to let go of their money (which is why the theaters would struggle to get anywhere) and I’d doubt that the movie-going public would get much of that back in their pockets. That being said if the theaters only dropped the price of tickets by 10% I’d be happy.

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