Meh. This one's pretty simple. Ticket revenue mostly goes to the studios. The theater pulls in the cash through the concessions. The cost of the concessions, while high by microwaveable popcorn standards, are highly competitive among their peers.
Popcorn & soda is where theatre chains make their money. From what I recall the marginal cost of each soda was about $0.25, popcorn is even less.
Otherwise I would have (as a theater owner) slashed my ticket price by 99% and doubled the cost of popcorn. Still a win for the moviegoer and theater owner.
One of the things I'll never forget is the trainer telling us one day, "We're not in the movie exhibition industry. We're in the snack concession industry. We just use movies to get the patrons in the door."
The reason is that, in the movie industry, the Hollywood studios have almost all the power. When the original Batman came out and lines were around the block, the company actually lost money on ticket sales (after theater costs). That's because Batman cost the theaters 90% of the gross ticket sales.
If the theaters were really making big profits the companies would have margins -- and stock prices -- akin to Apple's. They don't. Check the stock listings: they have a marginal business.
Amazing the answers you get when you throw a bunch of economist at the question who know nothing about the industry.
(Me? I hate the stink of popcorn. I'd pay extra to go to a cinema that didn't sell it.)
I'm 100% unsure of what you mean here. What peers?
I said it somewhere already, but will repeat myself - "Treat yourself, not bloat". This is a secret to good experience with movie theaters (and with most things in life, actually :))
"There’s only one problem with home cinema: it doesn’t exist. The very phrase is an oxymoron. As you pause your film to answer the door or fetch a Coke, the experience ceases to be cinema. Even the act of choosing when to watch means you are no longer at the movies. Choice—preferably an exhaustive menu of it—pretty much defines our status as consumers, and has long been an unquestioned tenet of the capitalist feast, but in fact carte blanche is no way to run a cultural life (or any kind of life, for that matter), and one thing that has nourished the theatrical experience, from the Athens of Aeschylus to the multiplex, is the element of compulsion. Someone else decides when the show will start; we may decide whether to attend, but, once we take our seats, we join the ride and surrender our will. The same goes for the folks around us, whom we do not know, and whom we resemble only in our private desire to know more of what will unfold in public, on the stage or screen. We are strangers in communion, and, once that pact of the intimate and the populous is snapped, the charm is gone. Our revels now are ended."
I think it's interesting even if you don't agree with him (he's as much a part of the "old guard" as anyone I guess, as a grumpy snobbish Brit writing for the NYer, and therefore is has something invested in the nostalgia of going to the theater, even if not a monetary investment).
http://www.newyorker.com/arts/critics/cinema/2011/11/07/1111...
Theaters bid for the right to show movies, it's an up front cost to then. This cost is recouped primarily through ticket sales. Revenue beyond that is derived from sales of concessions.
This is why big players like Cinemark dominate the landscape. Through economy of scale (# of theaters && screens) they can drive attendance and concessions. Very much a volume approach and so they show they movies that have a broader appeal.
Indie chains like Landmark have fewer locations and screens, but they target metro areas with people who are more into "niche" films. They usually end up charging a bit more for concessions but they make their money through a loyal customer base. So for them it's important to be seen as stewards of good artistic movies.
Yeah, I used to drink the Kool Aid big time. : )
But really, it's hard for all movie theaters, but particularly the art houses.
(That's why the Stanford in Palo Alto is such a treasure. It has wealthy backing and so you get a cheap ticket and cheap concessions. Seeing movies there is a real experience).
I say this because I found, by googling, that the studios get 100% of gross sales for opening week of a big release. Then this percentage goes down over time.
I've never heard of 100% gross to the distributor (studio), about 85% is the highest I've heard of, and that was for super-high demand premiere weekends. I think most blockbusters are closer to 70% on opening weekends. But it's all case by case, with a number of factors at work. There can be minimum run length guarantees (this many weeks on this particular screen), which can sometimes be conditions for getting other movies from the same distributor. Each deal really is individual.
The rule of thumb is about 55% of box office goes to the distributor over the entire run of the film. The distributor then takes a cut before the rest is passed on to the production entity. Of course, it's often the case that the distributor and the production entity are two divisions of the same studio, so welcome to the accounting games.
I had a friend who was assistant to the president of distribution at one of the giant studios. He would tell me that the dist. head would be able to discuss individual theaters and even screens with the big chains. They knew the demographics, seating capacity, all of it. The exhibition could be negotiated on a very fine level of granularity.