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Tuesday, April 1, 2008

Mongo vs. The Megaplex

Part Two of the series, If I Ran Hollywood

I used to love going to the movies. As a kid, I loved being dropped off at the theater, going in to purchase my ticket, finding that perfect seat to enjoy the film, and being geeked out at what unfolded on that big screen. Now, whether it is because of my ever increasing age or decreasing wallet, I find no joy in the megaplex. I want to chalk it up to bad theater behavior; people talking on cell phones, rustling plastic candy wrappers during the hushed, tense dialogue, that kid that won't stay in his seat. However, I believe the problems with my movie going experience extend into the lobby more so. Here's the why and how I would change it.

Before 1948, movie studios owned chains of movie theaters in which to show their films. The government stepped in and split this business up making theaters an entirely different business. I remember as a kid going to see an evening showing of a blockbuster like Die Hard and only paying $4.00. I was devastated when the price breached the $5.00 mark. In just about 20 years, the price of that $4.00 showing has now doubled. Then again, so has the size of the popcorn and soda at the concession stand. What has happened is that while the deal between studios and theaters have not really changed all that much, although I'm sure there are exceptions, the price of going to see a movie has. Most deals spell out somewhere around a 50-50 split in revenue between the studio and the theater. A lot of times you will hear that a theater says its costs vs. revenue from films cause them to raise their prices, but sometimes this is just not true. Granted the wear and tear on the seats is probably monumental, not to mention that projector equipment is expensive, but look at what a theater gets from their business. Yes, half of the profits from film showings go to the theater but what about other profits? Concessions sales go right to the theater. Anyone who has worked in the food and beverage industry knows how little it costs to provide fountain soda. They're not selling cans or bottles but premixed fountain drinks that are either kept in a canister or a "bag in a box" container. Why do you think most restaurants have free refills? Also, popcorn kernels are relatively inexpensive versus the yield of popped corn, which sells for about 90 cents on the dollar of profit. Don't forget that butter and salt. Did I say salt? I mean SAAAAALLLLLTTTTT! Anybody else really thirsty right now? Perhaps another drink will quench that SAAALLLLT induced thirst. Reduce the price of concessions, and you'll probably get more sales. The more sales you get, the more profit you get. Although, I don't see this practice changing as there is always a line for drinks, usually causing me to miss one of my favorite things, the movie trailer.

How about that promotional advertising? The film trailer was such a great little thing. It's a 30 second teaser that would bring you back to pay more money later on for the finished product. 2 minutes later I was watching the movie I paid for. Now, it seems like I forget which movie I've paid to see because it's a half an hour later and I'm still watching commercials. Those commercials that have taken over the first half hour of the film's showtime go right to the theater. Trailers for upcoming films are promotional material from the studio, not paid for by the theater. A lot of movies have gotten inflated ticket sales due to highly anticipated trailers attached to otherwise underselling films. One of the local chains around my area got smart. They put a big huge screen in the lobby above the concession stand. On it, they show trailers and commercials. While you stand there, you begin to notice the food. Next thing you know, you're watching a commercial for a car and eating milk duds while waiting to get theater to be cleaned up from the 7:00 show. Stop putting so many damn commercials in the previews. It's driving me and most people nuts. There are even moves to get theaters to publish the "actual" start time to a film.

The trends of the movie theater feed directly into the movie business. Exploding action flicks get better play in theaters because the theaters can get better business by attracting more advertisers that pay them while partnering with the studios to have product placement. The downside is that most people can't stand these practices. We aren't stupid. Between the inflated prices, commercial saturation, the talkers, and the cell phones, the audience has migrated back to their living room and is willing to wait until a film is released on DVD. We can pause, eat for free, and have no commercials or external annoyances to distract us from our experience. Home theater technology has allowed us to mimic the movie theater experience. Better yet, the cost of a DVD is roughly $20. That's just about the price of two tickets and you get to watch it again and with a lot of extras. Why pay that much for the headache of one trip to the theater?

Take notice 30 Screen Megaplex. The country is headed for a recession. The one place we had to escape these problems is quickly becoming part of the problem. Why not figure a way to get back in our good graces instead of causing your own demise? Since the studios are no longer owners of the retail theaters, perhaps it's time for NATO (That's National Association of Theater Owners, not the other NATO) to start demanding better movies to show on their 30 screens. That way, when a film gets into its fourth or fifth week of release they can start to make a better profit from ticket sales and not be inclined to jack up ticket prices. Of course, with any business, why would you drop ticket prices? It's the same idea as gas prices. Why should they drop them? It's a billion dollar industry with no end in sight. Now if you'll excuse me, that 64 oz diet cola has made its way through my bladder faster than From Justin To Kelly made it to home video release. And yet, they'll both end up in the same about that?

Some Source Material I stole from....
A Peek Into Movie Theater Economics
A Thirsty Moviegoer Fuels the Movie Business
Economics of the Movie Theater

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