money.cnn.com/2002/03/08/smbusiness/q_movies -> money.cnn.com/2002/03/08/smbusiness/q_movies/
Small Business graphic Why does that popcorn cost so much? There's got to be something wrong when a "small" popcorn bag is the size of the average movie-goer' s head.
graphic graphic graphic graphic graphic What's wrong is that you thought you were going to a movie theater. When you go to the movies, you're really going to a candy store. "Owners joke about being in the candy business," said theater owner Howar d Edelman, proprietor of Movieland Cinemas, an independent string of cin emas in the Long Island, NY-area. "If you didn't have concessions at a m ovie theater, there would be no movie theater. We have movies just to ge t people in to buy popcorn and candy, where we make our money." Tickets Most of the money from ticket sales goes back to the movie studio. A film booker leases a movie to a particular theater for a set period of weeks . The percentage of ticket sales that the studio takes decreases on each week that a movie is in the theater. If the screening was arranged by a n independent middleman, he also takes a slice. So the movie has to pull in sizeable audiences for several weeks in order for theater owners to make any serious profits.
Adverstising: Theaters split the $50 to $100 fee for ad slides before movies with local advertising agents. During the film's opening week, the studio might take 70 to 80 percent of gross box office sales. By the fifth or sixth week, the percentage the studio takes will likely shrink to about 35 percent, said Steven Krams, president of International Cinema Equipment Co.
graphic If you've got a blockbuster like Titanic or The Lord of the Rings, with a udiences that keep streaming in for weeks, everybody's happy -- especial ly theater owners.
That's why the extras -- especially the concession stand -- are so import ant. Without pricey snacks, most theaters couldn't stay in business. Studios also pay theaters to show trailers, Edelman said. But they pay fo r them after the fact, based on the number of people who saw them.
graphic "Studios send a couple of new trailers every week and they send new comme rcials. We have to call in our numbers every night to the film companies , and they give you 'x-amount' per person," Edelman explained. Finally, tidbits like local advertising can generate revenue for the thea ter as well. Most theaters have slide projectors with ads that play befo re the movie begins. An advertising agency charges local businesses abou t $50 to $100 a month to show their ad, and the movie theater takes half , Edelman said. Costs The costs of running a theater include the price of building the theater (or leasing it), utilities, equipment and maintenance, the cost of leasi ng the actual films, and the cost of paying their employees. And theater owners have to weigh the benefits of certain cost-reduction s trategies. Concession companies, for example, may give $25,000 to $50,00 0 to the building of a new screen, if the theater will contract with the m for several years and split profits made on snacks, Krams said.
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