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Topic: Movie Theater Chains Should Focus on Customer Satisfaction, Not Popcorn Profits
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System Notices
Forum Watchdog / Soup Nazi
Posts: 215
Registered: Apr 2004
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posted 03-08-2011 03:47 PM
Movie Theater Chains Should Focus on Customer Satisfaction, Not Popcorn Profits
Source: hollywoodreporter.com
quote:
NEW YORK – BTIG analyst Richard Greenfield feels movie theater operators have the wrong priorities and should re-focus on the consumer experience.
“We believe exhibitors’ core strategy of raising ticket prices through 3D premiums and pushing concession pricing as far as humanly possible in the midst of shifting theatrical release windows is a dangerous strategy,” he said in a blog post on Tuesday. “Exhibitors should be less concerned with paying dividends and maximizing near-term revenues/profits through $6 buckets of popcorn at 98 percent margins than with increasing consumer satisfaction with the movie-going experience.”
Greenfield’s ire was raised by an investor conference appearance a day earlier by Regal Entertainment Group CFO David Ownby who, among other things, touted how profitable popcorn is for exhibitors.
“One of my friends is a commodity trader and every time the price of popcorn goes up, he calls me to remind me that it’s going up,” Greenfield quoted Ownby as saying. “And I like to remind him that we sell a bucket of popcorn for $6. Our cost in that $6 bucket of popcorn is about 15 cents or 20 cents. So if that cost doubles it doesn’t really hurt me very much.”
Ownby also touted the premium prices for 3D movies that exhibitors can charge after a low capital investment in the technology, saying “we typically [charge] a premium anywhere from $3 - in a very few markets now we’ve gone to $4.50. I would say the average around the country at this point for us is about $3.50.”
All this led Greenfield to use the following title for his blog post: “As Gas Prices Soar - Regal Touts Charging You $6.00 for 15 cents worth of Popcorn and $3.50+ Premiums for 3D.” The analyst’s conclusion: “In the face of shifting release windows (not to mention soaring gas prices), we found it disturbing to hear Regal management tout how much they are overcharging the American consumer for popcorn.”
Greenfield pointed to this weekend’s performance of 2D animated film Rango, which made $38 million, as an example for “how 3D premiums may not be the best way to drive the profitability of a film.” Said the analyst: “Rango opened well above Gnomeo and Juliet and should be at least double Mars Needs Moms, despite MNM being released in both 3D and Imax.”
He predicted that this Friday’s release of Mars Needs Moms would “bomb, with childrens’ 3D tickets at a Manhattan Regal going for $13.00 in the early afternoon, versus only $9 for Rango, with a Regal in Brooklyn charging children $15.50 for a 3D Imax showing of Mars Needs Moms.”
Greenfield also made some predictions on the premium VOD plans of Disney, Fox, Sony, Universal and Warner Bros. Studios have signaled first trials could come by mid-year. “All appear ready to begin releasing movies on VOD around eight weeks after they are released in movie theaters for around $25,” the analyst said.
“We expect a stream of high profile movies to trial early release, premium-priced VOD by the end of the second quarter - with titles such as the final Harry Potter and Cars 2 likely to be included," Greenfield added. "While exhibitors continue to view these as so called “tests” and “hope” to be compensated by improved theatrical film rental splits, we believe the studios are very serious about moving this initiative forward and that studios have no interest in giving exhibitors more favorable splits.”
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Mike Blakesley
Film God
Posts: 12767
From: Forsyth, Montana
Registered: Jun 99
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posted 03-09-2011 10:57 AM
He's right that theatres need to do more to maximize the experience.
But notice how he has no specific recommendations? It's because he can't think of any. Any theatre worth its salt has already got digital sound, comfortable seats, big screens, the very latest movies, etc etc. The biggest problem facing the industry seems to be "people," IE talkers, cellphone users, seatback kickers, crying babies, etc.
Theatres are in a real bind, because it costs X amount of dollars to operate a theatre but if you need to do upgrades, and you raise prices to pay for them, you're portrayed as a price gouger by "experts" such as this guy.
Sure there are "bad" theatres around which have dinky screens, bad presentations and so on. These places deserve to go down the drain. But most of the theatres I have been in do their job properly.
Between my wife and me, we probably see about a dozen movies in different cities every year, both on vacation and during business travels. In the last year we've been to theatres in three towns in Florida, plus one in Denver. She also probably goes to the Carmikes in Billings about 6 or 7 times a year. I can't remember the last time either of us had a major complaint about presentation. If there were problems it was always about the other people.
I also object to that "15 cents worth of popcorn" crap. First, by the time you figure a bucket (we use buckets), the corn itself, the oil and the butter, you're way over 15 cents even on a small size. Second, that amount doesn't take into account the electricity, the building cost, the popcorn machine cost, the employee making the popcorn, another employee serving it, plus all the other things like insurance, taxes, advertising, the cost to pick up the popcorn you spill on the floor, and so on.
The part about the 3-D premiums is just as stupid. First, there is the large cost of the 3-D equipment. But then nobody seems to notice that 3-D is A LOT of work. You have to hand out the glasses, collect the glasses, wash the glasses (Dolby) and replace the glasses. It's not like we collect a surcharge for nothing. If we charged extra for "color," then he'd have something to gripe about.
In short, this guy is just another self-proclaimed "expert" who is whistling into the wind. He doesn't know anything but the very basics about the theatre business. Clearly he's never been IN the business.
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Bobby Henderson
"Ask me about Trajan."
Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001
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posted 03-09-2011 11:19 AM
Why is the Hollywood Reporter and other industry people even listening to Richard Greenfield? What credentials does this guy have to make him some sort of expert on the movie theater industry?
While I absolutely agree movie theaters should concentrate on improving the movie-going experience and working very hard to keep it maintained at a high level, the idea that the pitch is coming from a guy who wants to give 10% more of theater earnings to distributors is a giant contradiction. It ruins his credibility.
quote: Mike Blakesley
But notice how he has no specific recommendations? It's because he can't think of any.
I don't think his comments were really about improving the movie-going experience as much as they were complaining about what theaters are charging at the box office and concessions counter. Money is his thing. He's a bean counter. It takes a more creative mind to think of what can be done to improve the movie-going experience. Bean counters are not creative.
Worse yet, bean counters are making decisions on creativity -hence all the sequels, remakes, etc. from Hollywood as well as doing things to undermine a theater's ability to maintain a professional theater atmosphere. If the movie industry dies or turns into some far lesser home video only thing the bean counters will get much of the blame for what happened.
quote: Mike Blakesley
Any theatre worth its salt has already got digital sound, comfortable seats, big screens, the very latest movies, etc etc. The biggest problem facing the industry seems to be "people," IE talkers, cellphone users, seatback kickers, crying babies, etc.
It takes a sufficient level of staff members (and quality staff at that) to maintain order in a movie theater. That costs more money. It also costs more money to properly maintain the digital surround sound system, projectors and lots of other stuff that needs maintenance and repairs. Bean counters love to defer any maintenance and repairs and hope the theater can just get by with certain things left broken. They don't care about a theater operating in tip top order and giving customers the most for their money. They only care about the next quarterly report. They probably don't even go to movie theaters and probably hardly watch movies at all. I think a bunch of these guys have their heads buried in spread sheets 80 hours per week.
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Jim Cassedy
Phenomenal Film Handler
Posts: 1661
From: San Francisco, CA
Registered: Dec 2006
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posted 03-09-2011 11:35 AM
AGGGGAH! I could go on a several paragraph rant about that
NYT article, and at some point, I still might.
Mike seems to have covered enough of my 'tripwire' talking
points in the previous post that I think I can hold my temper
for now.
Newspaper writers and most of the public have no idea of
how much money it takes to operate a theater. They think
the theater operator just pockets the entire inflated
admission price and overpriced concession profits and
then goes home and rolls around in a bathtub full of
dollar bills they've gouged from the public.
I won't waste anyones time here enumerating the numerous
business costs 'behind the marquee'. First of all, I'd only
be 'preaching to the choir' as they say; secondly- I'm a
projectionist, not an accountant, so I really don't want
to get too involved in commenting on something out of my
area of expertise.
I would like comment on one thing though:
quote: Manny Knowles
It's a gas-related expense
Well, "yes and no". I guess it depends on your location
and the availibility of transit choices.
The theaters I work for are all within the city limits
of San Francisco. The last time gas prices took a spike,
our business actually improved, as many people were now
unwilling to spend gas money to drive to some of the
suburban mega-multiplexes on the outskirts of The City.
We picked up a lot of "local business" from people who
would either walk, take a cab, or hop on a city bus to
get to one of the theaters, all of which are located
within one block of a bus stop.
Some of those customers drifted away when gas prices fell
but some remained regular, loyal customers. Gas has already
hit $4/gal here in SF, so we're begining to see some of our
'local' business coming back again.
Gas Prices Are Already $4/gal Here
(This Station Is Located 1 Block
Away From One Of "my" Theaters)
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