Originally Posted by 1mper1um
Cinemas have to charge for the concessions because the returns on ticketing are so low. It's the only reason. The 50% argument is not true but just an accepted round about figure that makes discussions such as these easy (the same goes for how much a film needs to make to break even with the accepted figure being 200%).
Are you seriously arguing that cinema owners would drop the price of choc-tops (and reduce revenue) if they got more revenue from other sources? That doesn't seem to make much sense. Have you ever spoken to the people involved in these decisions?
Even the Commercial & New Business Director from the largest cinema chain here wasn't making that argument - to quote Matt Rivera's notes from the talk (because I don't have mine handy):
Liebmann's powerpoint presentation was better suited for a shareholders' meeting. You won't be very surprised to learn that Hoyts is all about profit maximization. He spoke of maximizing eyeballs, but I think he meant "wallets", since the bulk of the chain's revenue growth stems from increased [consumer] spending - at the candy bar, on premium screenings (comfy chairs & glass of wine) and of course, 3D - rather than increased visits.
No mention of diversification of product to expand audiences towards consumers of specialty cinema: the growth areas seem to be live broadcast of sporting events, pop concerts and product launches.
I know we all have our opinions - but after seeing Liebmann's presentation on the plans of the largest cinema chain here (and talking with him afterwards) I can't see any way that they would seriously consider lowering prices at the candy bar. There isn't a set target where they lower their prices if they find they are making too much profit - it is simply about maximising income. As simple as that.
(Yes - I do appreciate that the '50%' figure is fairly rubbery - especially with the recent 'virtual digital print fee' being added on. However for the indie sector it isn't too far off.
For a low-budget British film from 1997 (Yes - I know it isn't that recent, but it is an example that is publicly available):
Box office receipts: £4 000 000
Cinema exhibitor's share + VAT: (-) 2 840 000
Distributor's gross receipts: 1 160 000
Recovery of P&A: (-) 1 400 000
Distributor's commission: (-) 232 000
The 50% value seems close enough!
(I'm not going to defend the bizarre idea that a break even point is 200% of cost - it doesn't make sense on any level. Thankfully I'd never heard of it before, so it might just be a local myth)
Granted - we do have a slightly different cinema market here than they do in the USA - for a start our DVD market hasn't totally collapsed yet - and the DVD prices are still higher than yours. (Although we have higher prices for almost everything. Except roo steaks)