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Author Topic: Another "Excellent" Industry Article
Michael Coate
Phenomenal Film Handler

Posts: 1904
From: Los Angeles, California
Registered: Feb 2001


 - posted 01-05-2006 06:30 PM      Profile for Michael Coate   Email Michael Coate   Send New Private Message       Edit/Delete Post 
http://www.slate.com/id/2133612/

quote:
The Popcorn Palace Economy
The thirsty moviegoer fuels the business.
By Edward Jay Epstein
Posted Monday, Jan. 2, 2006, at 2:20 PM ET

Once upon a time, movie studios and movie theaters were in the same business. The studios made films for theater chains that they either owned or controlled, and they harvested almost all their revenue from ticket sales. Then, in 1948, the government forced the studios to divest themselves of the theaters. Nowadays, the two are in very different businesses. Theater chains, in fact, are in three different businesses.

First, they are in the fast-food business, selling popcorn, soda, and other snacks. This is an extremely profitable operation in which the theaters do not split the proceeds with the studios (as they do with ticket sales). Popcorn, for example, because of the immense amount of popped bulk produced from a relatively small amount of kernels—the ratio is as high as 60:1—yields more than 90 cents of profit on every dollar of popcorn sold. It also serves to make customers thirsty for sodas, another high-margin product (supplied to most theater chains by Coca-Cola, which makes lucrative deals with theater owners in return for their exclusive "pouring" of its products). One theater chain executive went so far as to describe the cup holder mounted on each seat, which allows customers to park their soda while returning to the concession stand for more popcorn, as "the most important technological innovation since sound." He also credited the extra salt added into the buttery topping on popcorn as the "secret" to extending the popcorn-soda-popcorn cycle throughout the movie. 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."

Second, theater chains are in the movie exhibition business. Here they are partners with the studios. Although every deal is different, the theaters and the studios generally wind up splitting the take from the box office roughly 50-50. But, unlike the popcorn bonanza, the theaters' expenses eat up a large part of their exhibition share. They pay all the costs necessary to maintain the auditoriums, which includes ushers, cleaning staffs, projectionists to keep the movies in focus, and the regular replacement of projector bulbs that cost more than $1,000 each. The way they can squeeze out more profits from this business is to cut expenses to the bare minimum. Not uncommonly, theater owners delay changing projector bulbs even if they do not produce the specified level of brightness on screen. Or, rather than using a separate projectionist for each film, multiplexes use one projectionist to service up to eight movies, an economy of scale that saves seven salaries. While these projectionists are able to change reels for one film while other movies go unattended, this practice runs the risk that the other films might momentarily snag in the projector and get burnt by the lamp. To prevent such costly mishaps, projectionists slightly expand the gap between the gate that supports the film and the lamp, even though this puts a film slightly out of focus. This is often considered an acceptable trade-off to the financially pressed chains. "I've never heard a teenager complain about PQ [picture quality]," one movie chain executive said. "If they find it too dark, they still have the concession stand."

Third, the theaters are in the advertising business. They sell on-screen ads. And some advertisers are paying more than $50,000 per screen annually, especially to theaters willing to pump up the volume to near ear-shattering level so that seated customers will pay attention. Since there are virtually no costs involved in showing ads, the proceeds go directly to the theater chains' bottom lines. But to fit paid advertising into the gap between showings, multiplexes have to cut down on the length of the studios' coming attractions (which are free advertising), a decision that hardly pleases studios. (Often, getting the coming attractions shown involves the studios "leveraging our goodwill," as one studio executive explained. The studios will threaten to hold back a popcorn movie, such as the new Harry Potter or Star Wars sequels, unless the chain agrees to play a full reel of trailers.)

To keep their people-moving enterprise going, theater owners prefer movies whose length does not exceed 128 minutes. If a movie runs longer than that, and the theater owners do not want to sacrifice their on-screen advertising time, they will reduce the number of their evening audience "turns" or showings from three to two, which means that 33 percent fewer people pass their popcorn stands. Even so, if a long movie promises to bring in a big enough audience—a promise King Kong made but did not deliver—the theaters will play it. Indeed, the ultimate test for the popcorn economy is: Will a movie attract enough consumers of buckets of popcorn and soda to justify turning over multiple screens to it? Theater owners know that the popcorn audience is mainly teens. And, since the observation of teen test audiences over many years has demonstrated that they prefer action to dialogue, expect a salty, supersize portion of amusement-park movies this year.

Edward Jay Epstein is the author of The Big Picture: The New Logic of Money and Power in Hollywood.


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David Stambaugh
Film God

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From: Eugene, Oregon
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 - posted 01-05-2006 06:40 PM      Profile for David Stambaugh   Author's Homepage   Email David Stambaugh   Send New Private Message       Edit/Delete Post 
quote:
theaters and the studios generally wind up splitting the take from the box office roughly 50-50
With most movies gone from theaters within a few weeks, is that average 50-50 split still accurate?

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Brad Miller
Administrator

Posts: 17775
From: Plano, TX (36.2 miles NW of Rockwall)
Registered: May 99


 - posted 01-05-2006 07:02 PM      Profile for Brad Miller   Author's Homepage   Email Brad Miller       Edit/Delete Post 
quote:
To prevent such costly mishaps, projectionists slightly expand the gap between the gate that supports the film and the lamp, even though this puts a film slightly out of focus.
But of course, EVERYONE does that! [Razz]

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Louis Bornwasser
Film God

Posts: 4441
From: prospect ky usa
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 - posted 01-05-2006 07:12 PM      Profile for Louis Bornwasser   Author's Homepage   Email Louis Bornwasser   Send New Private Message       Edit/Delete Post 
Wow! This person almost understands....and in English, too. Louis

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Joe Redifer
You need a beating today

Posts: 12859
From: Denver, Colorado
Registered: May 99


 - posted 01-05-2006 07:35 PM      Profile for Joe Redifer   Author's Homepage   Email Joe Redifer   Send New Private Message       Edit/Delete Post 
quote:
To prevent such costly mishaps, projectionists slightly expand the gap between the gate that supports the film and the lamp, even though this puts a film slightly out of focus.
I've read that before. Has this article been around for awhile? I've never known any projectionist or tech that would consciously do this. Most projectionists today are too braindead to even think of something like this... they just lace 'em up and go (I hate the term "lace"). This would require future-thought, which is not part of the typical floor/booth jockey's brain functions. Those who do have those brain functions won't use them for something like that, and if they did they'd have enough sense to turn the focus knob a smudge so the film runs in focus.

Damn I hate stupid people.

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Mike Spaeth
Phenomenal Film Handler

Posts: 1129
From: Marietta, GA
Registered: Jul 2000


 - posted 01-05-2006 09:09 PM      Profile for Mike Spaeth   Author's Homepage   Email Mike Spaeth   Send New Private Message       Edit/Delete Post 
quote:
While these projectionists are able to change reels for one film while other movies go unattended, this practice runs the risk that the other films might momentarily snag in the projector and get burnt by the lamp.
That's my favorite ... how many MULTI plexes, let along MEGA plexes still "change reels"?

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Bobby Henderson
"Ask me about Trajan."

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From: Lawton, OK, USA
Registered: Apr 2001


 - posted 01-05-2006 10:20 PM      Profile for Bobby Henderson   Email Bobby Henderson   Send New Private Message       Edit/Delete Post 
quote: David Stambaugh
With most movies gone from theaters within a few weeks, is that average 50-50 split still accurate?
Quite far from accurate.

The split between distributors and theaters is very lopsided in favor of distributors in the opening weeks. The theater only sees more even or favorable percentages if a movie has legs and plays for months on end.

The balance varies from picture to picture. But the old saw of the movie theater only making money from the concession stand is quite true, especially these days.

In recent years we have seen movie distributors front load a major release with 2 or 3 times the normal number of prints. Usually a major "wide" release would have 2000 to 3500 prints. Some releases in recent years have had over 8000 prints.

With so many prints in circulation the movie can play itself out in under a month. Look how fast "Spiderman" racked up over $400 million in North America alone. Anyone who wanted to see the movie saw it quickly. They didn't have to wait in long lines or stay away from the theater for a month for crowds to thin a little like they did with "Titanic" or "Forrest Gump."

Naturally, movie theaters are getting screwed in this situation. The guys running NATO and various movie theater chain executives need to get some kind of unified front -while they still have any leverage remaining. They need to have that balance of box office percentage weighed against the number of prints in circulation. Really, as obvious as it seems, I would actually be shocked if the exhibitors aren't already forcing some kind of deal along those lines already. They're crazy if they don't.

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Paul Linfesty
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From: Bakersfield, CA, USA
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 - posted 01-05-2006 11:04 PM      Profile for Paul Linfesty   Email Paul Linfesty   Send New Private Message       Edit/Delete Post 
quote: David Stambaugh
With most movies gone from theaters within a few weeks, is that average 50-50 split still accurate?

Basically, yes. Major studios generally end up with around 50-55 percent of the boxoffice over the long haul. Many studios now do an averaging for a run and apply a fixed percentage that stays for the entire first run (say 53 percent every week till out the door). AMC was the theatre chain that first started to push for this consistancy several years ago as a way of cutting administrative costs and other chains now routinely contract with distributors to have a fixed rate for the entire run.

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Lyle Romer
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From: Davie, FL, USA
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 - posted 01-06-2006 12:49 AM      Profile for Lyle Romer   Email Lyle Romer   Send New Private Message       Edit/Delete Post 
quote:
quote:
quote: David Stambaugh
With most movies gone from theaters within a few weeks, is that average 50-50 split still accurate?

Quite far from accurate.

Actually, this is very close to accurate. I have seen the numbers very recently from a few independent chains that don't even have megaplexes (to keep product longer) and the split is a few points above 50-50 in favor of the studio.

On major films like Harry Potter, Narnia or Kong it is higher for the studio but the year averages out a bit over 50-50.

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Dominic Espinosa
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From: California, U.S.A.
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 - posted 01-06-2006 04:35 AM      Profile for Dominic Espinosa   Email Dominic Espinosa   Send New Private Message       Edit/Delete Post 
Yeah, 50% of your TOTAL gross...
Seriously, where's this guy at so I can give him a piece of my mind?

quote: Idiotboy
"We are really in the business of people moving," Thomas W. Stephenson Jr., who then headed Hollywood Theaters, told me.
Do you believe everything you hear from a dingleberry at Hollywood Theaters? I wouldn't go near that company if you paid me.

quote: Idiotboy
Or, rather than using a separate projectionist for each film, multiplexes use one projectionist to service up to eight movies, an economy of scale that saves seven salaries.
*cough*platters*cough*

quote: Idiotboy
To prevent such costly mishaps, projectionists slightly expand the gap between the gate that supports the film and the lamp, even though this puts a film slightly out of focus.
What are you serious?
quote: Idiotboy
"I've never heard a teenager complain about PQ [picture quality]," one movie chain executive said. "If they find it too dark, they still have the concession stand."
It depends on the market, dumbass.
And who the f*ck says PQ anyway?

quote: Idiotboy
Since there are virtually no costs involved in showing ads, the proceeds go directly to the theater chains' bottom lines.
Lamps, projectors, design departments, need I continue?
Obviously it's profitable but come on people.
quote: Idiotboy
(Often, getting the coming attractions shown involves the studios "leveraging our goodwill," as one studio executive explained.
And what studio exec said that? One of the little guys, right?
quote: Idiotboy
The studios will threaten to hold back a popcorn movie, such as the new Harry Potter or Star Wars sequels, unless the chain agrees to play a full reel of trailers.)
Not really. Our print of Potter played 5 minutes of previews in it's first week and continues to cary that light pack this week.
There's more previews on bigger movies because we know there's more audience, a better chance at getting them back to see something else, and a lot of people are coming in, gives you more time before the feature for your stragglers.
More like, the studios will withold a "popcorn movie" so you'll play it's dog of a film. *cough*bloodrayne*cough*.

quote: Idiotboy
To keep their people-moving enterprise going, theater owners prefer movies whose length does not exceed 128 minutes.
Sure, because the theaters have any influence on how long the movies are.
The movies are short because they have no freakin plot, you nad!

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William Hooper
Phenomenal Film Handler

Posts: 1879
From: Mobile, AL USA
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 - posted 01-06-2006 05:11 AM      Profile for William Hooper   Author's Homepage   Email William Hooper   Send New Private Message       Edit/Delete Post 
quote:
Once upon a time, movie studios and movie theaters were in the same business. The studios made films for theater chains that they either owned or controlled, and they harvested almost all their revenue from ticket sales.
I zoned after this; there were independent theaters even *before* the studio ownership days, & they were as much a part of busting up the studio/theatre ownership system as were independent producers. At any rate, the studios made films for all the theatres that they could get to run them, whether they owned them or not.

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Louis Bornwasser
Film God

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From: prospect ky usa
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 - posted 01-06-2006 08:12 AM      Profile for Louis Bornwasser   Author's Homepage   Email Louis Bornwasser   Send New Private Message       Edit/Delete Post 
Lesson here is: What is the difference between history-as-fact and history-as-remembered> Louis

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John Walsh
Film God

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From: Connecticut, USA, Earth, Milky Way
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 - posted 01-06-2006 11:46 AM      Profile for John Walsh   Email John Walsh   Send New Private Message       Edit/Delete Post 
Actually, I agree generally with most everything in that article. The author obviously is not a projectionist, but the *ideas* he brings up are valid. To nitpick at minor comments does nothing except ignore the overall, important point.

NATO was, is, and will always be ineffective. You can't get hundreds of theaters owners to agree on anything, let alone take on the 5-6 studios. There's not supposed to be any collusion within an industry, but it's easier for 5-6 studios to get together than hundreds of owners.

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Mike Blakesley
Film God

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From: Forsyth, Montana
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 - posted 01-06-2006 12:55 PM      Profile for Mike Blakesley   Author's Homepage   Email Mike Blakesley   Send New Private Message       Edit/Delete Post 
The part that bugs me is the very common misconception that the only costs involved in popcorn are the cost of the bucket, seed and oil. They forget that you have to pay for the machine, the concessionist, the electricity, and the cost of the "real estate" that the concession stand takes up -- building, heat/AC, and so forth.

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Dominic Espinosa
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From: California, U.S.A.
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 - posted 01-06-2006 02:36 PM      Profile for Dominic Espinosa   Email Dominic Espinosa   Send New Private Message       Edit/Delete Post 
I'll pick the nits cause it always ticks me off when somebody goes out spreading untruths about our business.
Over half that article is half truths and total bull.
And people are going to read it and approach the industry with a chip on their shoulder.
Frustrating.

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