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Volume 14, Issue 13 ~ March 30 - April 5, 2006

Trying to Make it at the Theaters

Selling tickets in the popcorn and soda business

by Matt Makowski

King Kong was released on DVD last Tuesday. Some considered it a box office disappointment. I didn’t see it in the theater, but I may rent it.

Home-viewers like me are a threat that Hollywood takes very seriously. Home theater systems with THX surround sound and uber-televisions bigger than some apartments I’ve lived in are inching their way down in price. Movie theater ticket sales are also dropping, while the price of a ticket is going up.

The U.S. box office dropped six percent in 2005, according to a recent press release from the statistic hounds at Nielsen Entertainment/NRG. Nielsen also reported that 1.4 billion theater tickets were sold last year. That’s 84 million fewer tickets sold in 2005 than the year before. A similar yarn can be spun for 2004. In fact, ticket sales have dropped three years in a row. Many analysts think this is proof of a national swing, not just a temporary trend, away from the movie theater experience.

Explosions look more real than ever on the oversized home theater screens. When that guy got shot in the face, it sure did look authentic. This is good news to some, but not all. Is there too much violence in the movies these days and not enough options for more benevolent fare? Not exactly.

There was a five percent increase in the number of films released last year in the U.S., and PG-13 films accounted for 17 of the top 20 movies, according to the Motion Picture Association of America. So why are fewer people going to the theater?

Is last year’s $20,000 home theater system that’s now on sale for $18,999 really eating away at the box office? Doubtful. Could it be Internet movie rental services like Netflix and the more conventional Blockbuster? A little bit, perhaps.

But at the heart, we can blame the studios as much as the services. They’re the ones flipping from big-screen runs to DVD sales in mere weeks. Remember when it used to take nearly a year before you could rent a new movie?

My take on the shrinking audience is something else altogether. It’s in the popcorn; actually, the price of the popcorn.

Why does a small popcorn cost nearly five dollars at the theater but less than 80 cents at the grocery store? Because movie theaters don’t make money from the movies they show.

A theater gets 10 to 20 percent of the ticket sales, according to Mike Porter, a manager at the Crown Theater in Annapolis. “We’re in the popcorn and soda business,” he said.

Because theaters are only making 50 cents to one dollar per ticket sold, they’ve got to do something to stay in business. So they inflate the price of popcorn and strike exclusivity deals with Coke so that their cost for a soda amounts to near 100 percent profit.

Cheryl Severe, the owner of Premier Cinemas in Pasadena, said she is having a hard time combating the costs of running a theater on popcorn and soda sales. “Just gas and electric costs me $5,000 a month,” she said.

Add on repairs and maintenance, $600 projector lights, paying her employees and little things like a case of toilet paper a month — and Severe is counting pennies to stay afloat.

Meanwhile, King Kong has a disappointing run in the theater despite taking home more than $500 million worldwide.

I’m tired of sneaking snacks into the theater. Besides, movie theater popcorn is better. But pricy popcorn mixed with my lack of self-control deems me unfit for the theater. So I wait for the DVD.

If Hollywood really wanted people to go to the movies, they would strike a better percentage deal with the theaters and let those popcorn prices go down.

© COPYRIGHT 2004 by New Bay Enterprises, Inc. All rights reserved.