New research from Stanford and the University of California, Santa Cruz suggests that there is a method to theaters’ madness–and one that in fact benefits the viewing public. By charging high prices on concessions, exhibition houses are able to keep ticket prices lower, which allows more people to enjoy the silver-screen experience.
The findings empirically answer the age-old question of whether it’s better to charge more for a primary product (in this case, the movie ticket) or a secondary product (the popcorn). Putting the premium on the “frill” items, it turns out, indeed opens up the possibility for price-sensitive people to see films. That means more customers coming to theaters in general, and a nice profit from those who are willing to fork it over for the Gummy Bears.
Indeed, movie exhibition houses rely on concession sales to keep their businesses viable. Although concessions account for only about 20 percent of gross revenues, they represent some 40 percent of theaters’ profits. That’s because while ticket revenues must be shared with movie distributors, 100 percent of concessions go straight into an exhibitor’s coffers.
This is one of the reasons I go to the drive-in. Order a pizza, head on over with a bag of Dorritos and you get 2 movies for the price of 1 at the walk-in.
Also, you can kinda talk to the people with you a bit better.
Generally speaking, as I understand it, the cut that goes to the studio is a percentage any way. That means that raising ticket prices don’t really raise profits for the theater anyway.
They didn’t need a study to find this out. All you have to do is ask a movie theater owner. They could have told you that.
In fact, to further expand on the this topic, blockbuster movies like The Lord of the Rings Trilogy or Star Wars demand so much per ticket that a movie theater’s cut of each ticket sold amounts to about a quarter–as in $0.25. The big name studios know that their movies are going to draw record crowds so they can in turn demand high prices.
Whereas independent movies often share a large chunk of the ticket sales with the movie theater as an incentive to get the theater to show the movie.
The perfect storm for a theater is a movie like Passion of the Christ (Mel Gibson) where it was an independent film which wasn’t projected to be so popular so they went 50/50 with movie theaters. So out of that $8 ticket, the movie theater made $4 per ticket sold. Turns out, that movie was a HUGE hit and a HUGE draw. Movie theaters were able to make A LOT of money from that one movie alone. Much more than say the rest of the blockbusters from that year put together.
So next time anyone wants to complain about movie ticket and concession prices, they need to remember that ticket prices are controlled by the studios for the most part and theaters have to charge those enormous prices for concessions to stay in business.
That may explain the popcorn price, but I still think the ticket prices are way too high. I can’t think of a movie that came out in the last ten years that is worth it (to me) to pay $9.00 to see. Most of the movies I have seen in theaters in the past ten years have been at the matinee shows or the cheap theaters (the ones showing the shows at the end of their run).
I think if they cut their concession prices in half they would sell 3 times as much popcorn and soda, and everyone would be happy and fat