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Who profits from movie theater ticket sales

Hi Matt,

Like most people, I have been going to see movies since I was a kid. I even remember the newsreels that were at the theaters on military bases where we were stationed. But that’s not my question. Since the cost of seeing a movie now is right at $12, I was wondering what the cut is for the theater? Or do the distributors get all of the ticket sales? Since food sales are a serious markup, giving up all ticket sales wouldn’t be that bad.

— Rich

Movie theater economics are complicated because of the huge expenses involved in producing and distributing films, especially big Hollywood blockbusters that deal in the hundreds-of-millions of dollars. For the most part, the distributors get the lion’s share of the ticket sales. People often argue over the exact figures. Movie theaters will have you believe that the distributors are robbing them blind, while some critics of that argument claim the theaters get to keep as much as 50 percent of the ticket sales. In truth, the percentages vary for individual films. Generally speaking, movies are less profitable for theaters at the beginning of their runs, when the distributors take a deeper cut of the profits because demand for the flick of the moment is at its highest. That’s where the $9 popcorn comes in. Profits on concessions are astronomical. Most restaurants can only dream of equaling the profitability of movie theater junk food. Popcorn can make as much as 90 percent profit and theaters need that to offset the cost of showing hot new features.

It’s easy to be cynical about the movies. They’re expensive and we often feel like the theaters and distributors are ripping us off more than anyone else. But it’s sobering to look at the instability of cinema companies. They seem very volatile, going out of business and changing ownership with shocking regularity, and that’s compelling evidence that they aren’t exactly raking in the profits. AMC and Regal, the two biggest movie theater chains in the country, would be lucky to profit $100 million in a year. That’s peanuts compared to big movie studios and distributors.

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Hi Matt,

Like most people, I have been going to see movies since I was a kid. I even remember the newsreels that were at the theaters on military bases where we were stationed. But that’s not my question. Since the cost of seeing a movie now is right at $12, I was wondering what the cut is for the theater? Or do the distributors get all of the ticket sales? Since food sales are a serious markup, giving up all ticket sales wouldn’t be that bad.

— Rich

Movie theater economics are complicated because of the huge expenses involved in producing and distributing films, especially big Hollywood blockbusters that deal in the hundreds-of-millions of dollars. For the most part, the distributors get the lion’s share of the ticket sales. People often argue over the exact figures. Movie theaters will have you believe that the distributors are robbing them blind, while some critics of that argument claim the theaters get to keep as much as 50 percent of the ticket sales. In truth, the percentages vary for individual films. Generally speaking, movies are less profitable for theaters at the beginning of their runs, when the distributors take a deeper cut of the profits because demand for the flick of the moment is at its highest. That’s where the $9 popcorn comes in. Profits on concessions are astronomical. Most restaurants can only dream of equaling the profitability of movie theater junk food. Popcorn can make as much as 90 percent profit and theaters need that to offset the cost of showing hot new features.

It’s easy to be cynical about the movies. They’re expensive and we often feel like the theaters and distributors are ripping us off more than anyone else. But it’s sobering to look at the instability of cinema companies. They seem very volatile, going out of business and changing ownership with shocking regularity, and that’s compelling evidence that they aren’t exactly raking in the profits. AMC and Regal, the two biggest movie theater chains in the country, would be lucky to profit $100 million in a year. That’s peanuts compared to big movie studios and distributors.

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Comments
1

A movie theater is a candy store you go to to watch movies. If they had to depend on movie revenue, they'd go broke. Just think of the cost of leasing and maintaining that huge building, the electric bill, the salaries of the dozens of people who work there.

I've been going to Cinepolis and can't see going to a "regular" theater any more. It's like first class vs. coach.

April 10, 2013

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