Comments on: Economics Of The Movie Theater – Where The Money Goes And Why It Costs Us So Much http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much The Official Home of Correct Movie Opinions Sat, 21 Nov 2009 02:47:21 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: chuck http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-224330 chuck Tue, 22 Sep 2009 21:12:28 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-224330 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..... 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…..

]]> By: psinned http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-221685 psinned Fri, 04 Sep 2009 16:26:13 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-221685 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. 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.

]]> By: Tina http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-217893 Tina Thu, 13 Aug 2009 16:39:11 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-217893 I live in Norway, and the rates here varies from $13 to $17, even if the theater itself (screen, sound and seats) sucks. I live in Norway, and the rates here varies from $13 to $17, even if the theater itself (screen, sound and seats) sucks.

]]> By: Anna http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-213772 Anna Sat, 18 Jul 2009 16:43:59 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-213772 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. 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.

]]> By: Scubanole http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-212813 Scubanole Mon, 13 Jul 2009 13:13:54 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-212813 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. 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.

]]> By: Gabriel http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-211984 Gabriel Thu, 09 Jul 2009 01:09:46 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-211984 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. 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.

]]> By: Peita http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-209082 Peita Thu, 25 Jun 2009 02:51:23 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-209082 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. 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.

]]> By: Anonymous http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-206610 Anonymous Sun, 14 Jun 2009 07:53:58 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-206610 There was a strike in Bollywood recently between cinemas and producers, this is how it ended, http://www.bollywoodhungama.com/news/2009/06/05/12956/index.html There was a strike in Bollywood recently between cinemas and producers, this is how it ended,
http://www.bollywoodhungama.com/news/2009/06/05/12956/index.html

]]> By: HOT PEPPER http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-205334 HOT PEPPER Mon, 08 Jun 2009 21:09:36 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-205334 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. 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.

]]> By: EI Theater http://themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-190531 EI Theater Wed, 18 Mar 2009 04:35:29 +0000 http://www.themovieblog.com/2007/10/economics-of-the-movie-theater-where-the-money-goes-and-why-it-costs-us-so-much#comment-190531 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. 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.

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