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A peek into movie theater economics
Arstechnica ^ | 1/5/2006 12:12:40 PM | Ken "Caesar" Fisher

Posted on 01/07/2006 12:04:06 PM PST by Ma3lst0rm

Our undying devotion to simultaneous movie releases has earned us a small share of hate mail over the years, especially from folks in the movie theater business. Our complaining about the crowds, the inconvenience, and most importantly, the cost really gets on their nerves. They make all manner of excuses for what goes on in theaters. The high prices of concessions, we're told, stems from two factors. First, they say, movie theater employees earn more on average than your man at McDonald's, so you shouldn't expect the price to compare with Chez McDo. More importantly, they claim that the movie studios take all of the proceeds from ticket sales, leaving the theaters without a way to make money. The problem with all of this is that it's not true.

(Excerpt) Read more at arstechnica.com ...


TOPICS: Business/Economy; Technical
KEYWORDS: cinema; hollyweird; hollywood; loews; movie; movies; multiplex; rialto; strand; theater; theaters
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It amazes me more and more how many of the industries whether it be entertainment or medicine how quickly they are laid bare in their lies about how much profit they make in their efforts to rip off and in some ways enslave their customers.
1 posted on 01/07/2006 12:04:08 PM PST by Ma3lst0rm
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To: Ma3lst0rm

I would be interested to hear how you think going to a movie theatre (a totally voluntary act)is ripping you off and particularly your thoughts on how it might enslave you.


2 posted on 01/07/2006 12:09:36 PM PST by saganite (The poster formerly known as Arkie 2)
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To: saganite

I dislike the movies of today. But, my babe loves them.

sigh.........


3 posted on 01/07/2006 12:11:39 PM PST by Loud Mime (Build the Border Wall - Enforce the Law)
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To: Ma3lst0rm

Industries are free to rip us off all they want. We have a choice, unlike when our rulers rip us off.

That being said, I don't understand it, but the reason we have these crappy little theatres and the big ones became obsolete has to do with the way theatres and movie companies divide up the money. The way they gamed the system in the 70s made little theatres more profitable than big ones. Which is a shame.


4 posted on 01/07/2006 12:12:23 PM PST by AlexandriaDuke
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To: saganite
I am enslaved! Prisoner to the movies, I tell ya! Movies are more enjoyable when being restrained anyway. [\sarcasm]


5 posted on 01/07/2006 12:13:20 PM PST by jdm (jdm74.com/serena-maneesh.mp3)
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To: Ma3lst0rm

my son worked for a locally based super-megaplex theatre chain in Az. worked for minumum wage, expected to constantly upsell in the concession, to the point that theatre goers were angry with him, but if he didn't upsell the concessions, he received demerits, to top it off, when he was scheduled for a shipping/recieving/stocking shift, if the trucks were late, they made the kids clock out and wait for the truck and then clock in.

all this hard work, and the kids really do work hard, for minimum wage and they(theatre chain) give the kids 2 conditional passes for the theatre every month. as a result, they have a very high turnover rate.

why work for that when you can go to in/out burger and get 8.50 hr. instead of the 5.15 hr.?

what bugged me most and I encouraged my son to quit, was the demerits for the kids if they didn't upsell enough. the movie patron could have already spent 30 bucks for the family to get in, and then another 20 or so at concession and the kids were ordered to look at what had been ordered and suggest something else, like nachos or pizza. Patrons were angry at him, where the anger should fall on the management.


6 posted on 01/07/2006 12:17:22 PM PST by machogirl
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To: jdm

Maybe if they would come up with something orginal other than remakes of all the stuff made in the 70's and 80's.

I am cheap , I go to the dollar theater .....lol


7 posted on 01/07/2006 12:18:26 PM PST by Tonysgirl (THERE ARE NOOOOO FREE LUNCHES)
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To: machogirl

But he was in showbiz!


8 posted on 01/07/2006 12:19:08 PM PST by durasell (!)
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To: saganite
I do not go to the movies unless I get a large buttered (that fake stuff) popcorn and a large drink. It's just not going to the movies without them.

What gets me are the pre-show adds. I like the previews but the adds just chap my butt.

I've now become very selective on what I go see at the theater. 4-5 years ago I'd take the kids and we'd kill an afternoon at the theater.

Now we're much more likely to wait until it comes out on DVD. And on that subject, now we pass on the first addition and just wait 2 months until the directors cut/extended version comes out.
9 posted on 01/07/2006 12:21:03 PM PST by PeteB570 (Guns, what real men want for Christmas)
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To: Ma3lst0rm

So the movie makers get all the profit from those $8 popcorn buckets and $5 watery sodas? I find that a little hard to swallow, pardon the pun.


10 posted on 01/07/2006 12:22:08 PM PST by ozzymandus
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To: Tonysgirl
I go to the dollar theatre every once and a while too. The movies there aren't any worse/better than the $9 ones!
11 posted on 01/07/2006 12:23:02 PM PST by jdm (jdm74.com/serena-maneesh.mp3)
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To: Ma3lst0rm
the theaters are splitting the total right down the middle, taking $6 of a $12 ticket (for instance).

On a big name release the theaters will sometimes make 5-10%. Why do you think that there are building the multiplex theaters with multiple snack bars? The revenue is in concessions.

Now with the new business plan of the distributors of releasing DVDs closer to the theatrical release dates, the wide screen home technology and Internet distribution of product, I think that movie theaters may become a thing of the past.

12 posted on 01/07/2006 12:23:32 PM PST by Mike Darancette (Mesocons for Rice '08)
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To: Ma3lst0rm
It is a pity that there are so few drive-in theatres left. Summer nights under the stars, with any of the goodies you brought along to eat. Snuggle up to your honey with a blanket. Or you can just wait for the DVD and do the same thing at home.

:)

13 posted on 01/07/2006 12:24:28 PM PST by M203M4
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To: AlexandriaDuke
exactly, though there tactics are repulsive and outrageous, you voluntarily accept to be subjected to that treatment by buying a ticket. But fear not moviegoers, capitalism has saved the day again. Entrepreneurs saw an opportunity to free the masses of moviegoers from loews or regals tyranny with netflix,red box,on demand videos, etc. And now those chains who exploit there natural monopoly on concessions will have to compete with these companies who offer cheap and on demand blockbusters.

Capitalism saves the day!
14 posted on 01/07/2006 12:26:40 PM PST by spikeytx86
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To: durasell

well, that's a stretttttttttttch, if they had enough "work hard" tickets, they could exchange those for "movie posters", of course all the popular ones were taken by the managers.

I also disagree with management that they don't even give the kids gloves when they "cup" (clean the theatre after a showing/before the next one). Those kids have to pick up junk left from patrons without gloves. In this day and age of nasty diseases, this is outrageous.

I worked for a super large national chain in the 80's and we had to "cup" the theatre (6 plex then) and run into the concession without washing our hands. I was the only one who washed my hands and I was told not to everytime a manager saw me do it.

my son is much happier at his new job, he only makes minimum wage there too, but no upselling, he's works retail and he's there to help the customer.


15 posted on 01/07/2006 12:28:24 PM PST by machogirl
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To: Ma3lst0rm
We studied this in one of my MBA classes, and the author is correct. We were given the assignment of calculating the optimal ticket price to charge for a movie ticket, taking in all of the fixed and variable costs, labor, advertising, amortization, taxes, etc. We pretty much came to the conclusion that ticket prices were pretty much where they needed to be - if we raised the ticket price, fewer people would patronize the theatre. In-theatre advertising was the only way to go, and the ridiculous margins on concessions, by our calculations, were worth it (as long as people couldn't bring in their own!).

When I go to the movies, I just factor in that bucket-o-popcorn as part of the price to pay for being able to sit in a theatre and enjoy a movie. One other thing I will pay extra for: theatres that strictly enforce silence (they do in a few movies where I live).

16 posted on 01/07/2006 12:31:29 PM PST by COBOL2Java (Freedom isn't free, but the men and women of the military will pay most of your share)
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To: ozzymandus

Movie theater operators usually get half of ticket sales and keep all the profit from concessions. The other half of ticket sales goes to the movie makers.


17 posted on 01/07/2006 12:33:28 PM PST by Ma3lst0rm (Poverty of soul is not easily remedied.)
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To: ozzymandus

In the early and mid 80's, I worked part-time at a movie theatre in Edina, a suburb of Minneapolis. The threatre was the old Southdale Cinema, a four-plex. Maybe some Twin Cities Freepers remember the place.

At the time, we were paid $3.35 an hour and never ever received a raise. It was thought by mgmt "Hey, if you don't like the pay, then quit".

One day, one of the managers was feeling in a talkative mood and told us about what it actually costs to make popcorn and what we actually sold it for.

After all these years, I can't remember the number. But the margin was incredible, absolutely incredible. He told me "This is how we make a profit. We don't see that much profit off sales of tickets".


18 posted on 01/07/2006 12:38:46 PM PST by MplsSteve
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To: Ma3lst0rm

In 10 or 15 years, movie theaters will be slightly more common than drive-ins are today.


19 posted on 01/07/2006 12:41:12 PM PST by ThinkDifferent (I am a leaf on the wind)
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To: Ma3lst0rm
I thought some of the bigger chains actually finance the production of movies to guarantee their supply, like HBO has to.

If they own a share of the movies, it should contribute to the theaters bottom line when the movies go to DVD and around the world, right?
20 posted on 01/07/2006 12:50:44 PM PST by Mark was here (How can they be called "Homeless" if their home is a field?.)
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