The Economics of Your Local Cinema
This, as it turns out, isn’t a myth. Slate has an articled entitled The Popcorn Palace Economy, which discusses how the local cinema is, in fact, in three businesses: the fast-food business (where they make all their profit), the movie exhibition business and the advertising business:
For this type of business, theater owners don’t benefit from movies with gripping or complex plots, since that would keep potential popcorn customers in their seats. “We are really in the business of people moving,” Thomas W. Stephenson Jr., who then headed Hollywood Theaters, told me. “The more people we move past the popcorn, the more money we make.”
There’s some further analysis of this article and the industry on Ars Technica.
January 10th, 2006 at 11:25 am
I wouldn’t be surprised if, similar to theatres, sports stadiums, teams and leagues are really in the advertising, fast food, and merchandising businesses (to say nothing about TV revenues).
January 10th, 2006 at 4:01 pm
I used to work at a movie theatre in Edmonton, and on the grand opening day, we sold a medium popcorn for a dollar. The theatre still made over 60 cents profit on each bag of popcorn, which at the time was regularly priced around $4.50.