Cinema ticket prices: the profits in the popcorn

Ticket2This month, for the first time, some cinemas in Australia started charging $20 for movie tickets.

Explaining the need to push up prices, one cinema owner, Benjamin Zeccola of Palace Cinemas – the independent upmarket/arthouse chain – defended this by saying it was primarily because of the rise in the illegal downloading of movies, (plus high wages).

According to research by the Intellectual Property Awareness Foundation (an organisation representing film and television companies campaigning against online content theft), more than a quarter of young Australians illegally download movies or TV shows, among the highest rate in the world.

There is little doubt that illegal downloads are having a massive impact on cinema house revenues. At the same time, the cost of having a night out at the cinema has skyrocketed in recent years (as a kid in South Africa in the 1980s I paid 1 Rand for movies as part of the Ster Kinekor club – about 50 Australian cents), which partly explains why illegal downloads are so high.

The other factor behind the rampant illegal downloading of movies is that the notion that you are “stealing” has never really sunk into the collective consciousness of downloaders, and may never do so. You can say it’s the same thing as riding off on someone elses bike or filling up your car with petrol and driving off without paying for it, but people that download movies illegally, probably don’t visualise it in that way because its free, easy to do and the chances of getting caught are virtually zero.

A $20 movie ticket seems high (and it is), but it’s somewhere in the mid-range of what other comparable countries are charging:

  • In Manhattan, an adult ticket at the AMC Empire cinema is US$13 (A$14) – 35 per cent cheaper than the $20 Australians are now expected to fork out.
  • But in London, a movie at the Odeon on Leceister Square in the heart of the West End, will set you back £15.50 – a whopping $28 in Australian dollars, or 40 per cent more expensive.

But the ticket is only part of the cost. When you factor in the popcorn, drinks and snacks, you’re unlikely to see much change from a $50 note, and nothing from a $100 note if you take a family of four to the movies.

Running a cinema though is an expensive business.

Most cinemas are in shopping centres, which charge among the highest rents in the country. Then there’s the cost of renting the film from the distributors, staff wages, maintenance costs, utility bills and equipment and goods to pay for.

According to a 2013 article in the UK’s Independent newspaper, the cover price of a cinema ticket is consumed by film rights (40-60%), staff salaries (20%), rent (15%), utilities (5%) and other costs (10%). Add that all up and there’s no margin to speak of.

Which is why you pay ludicrous prices for popcorn, drinks and snacks.

According to the same article, “in order to remain competitive, a multiplex’s main source of profit actually comes from the concessions stand, rather than the box office”.

Or to quote from Arrested Development – “the money is in the banana stand”.

Just consider that you can buy a 375 packet of unpopped popcorn kernels – enough to make three or four jumbo sized popcorn boxes – for $1.34 at Coles, but the cheapest box of a popcorn at the cinema will set you back at least $5. Add the choc-top ice-cream and drink to your purchase and even if you use a “combo” offer you’re likely to fork out $10 to $15 more on top of the $20 movie ticket.

No wonder then, that so many people are buying enormous televisions – which get cheaper and cheaper, bumping up their broadband download allowances and illegally downloading movies for the cost of a monthly internet connection.

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