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 an 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.
graphic Where movie theaters make their money
• Movie tickets: From 20 to 55 percent of ticket price, increasing the longer the movie is shown there.
• Snack sales: For theater owners, this is where the real money is made. Concession companies may pay up front to run this part of the business.
• Trailers: Movie studios pay theaters to show trailers based on how many people saw them.
• 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.
If you've got a blockbuster like Titanic or The Lord of the Rings, with audiences that keep streaming in for weeks, everybody's happy -- especially theater owners.
The munchies
That's why the extras -- especially the concession stand -- are so important. Without pricey snacks, most theaters couldn't stay in business.
Studios also pay theaters to show trailers. But they pay for 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 commercials. We have to call in our numbers every night to the film companies, and they give you 'x-amount' per person.
Finally, tidbits like local advertising can generate revenue for the theater as well. Most theaters have slide projectors with ads that play before the movie begins. An advertising agency charges local businesses about $50 to $100 a month to show their ad, and the movie theater takes half, Edelman.
Costs
The costs of running a theater include the price of building the theater (or leasing it), utilities, equipment and maintenance, the cost of leasing the actual films, and the cost of paying their employees.
And theater owners have to weigh the benefits of certain cost-reduction strategies. Concession companies, for example, may give $25,000 to $50,000 to the building of a new screen, if the theater will contract with them for several years and split profits made on snacks.
Hope this dispels all the negativity against theater owners. In the end it's the movie studio squeezing out every last penny they can get. And as times goes on the studio are nipping ever so more.
In the end everyone wants a piece of the pie!
graphic Where movie theaters make their money
• Movie tickets: From 20 to 55 percent of ticket price, increasing the longer the movie is shown there.
• Snack sales: For theater owners, this is where the real money is made. Concession companies may pay up front to run this part of the business.
• Trailers: Movie studios pay theaters to show trailers based on how many people saw them.
• 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.
If you've got a blockbuster like Titanic or The Lord of the Rings, with audiences that keep streaming in for weeks, everybody's happy -- especially theater owners.
The munchies
That's why the extras -- especially the concession stand -- are so important. Without pricey snacks, most theaters couldn't stay in business.
Studios also pay theaters to show trailers. But they pay for 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 commercials. We have to call in our numbers every night to the film companies, and they give you 'x-amount' per person.
Finally, tidbits like local advertising can generate revenue for the theater as well. Most theaters have slide projectors with ads that play before the movie begins. An advertising agency charges local businesses about $50 to $100 a month to show their ad, and the movie theater takes half, Edelman.
Costs
The costs of running a theater include the price of building the theater (or leasing it), utilities, equipment and maintenance, the cost of leasing the actual films, and the cost of paying their employees.
And theater owners have to weigh the benefits of certain cost-reduction strategies. Concession companies, for example, may give $25,000 to $50,000 to the building of a new screen, if the theater will contract with them for several years and split profits made on snacks.
Hope this dispels all the negativity against theater owners. In the end it's the movie studio squeezing out every last penny they can get. And as times goes on the studio are nipping ever so more.
In the end everyone wants a piece of the pie!
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