Movie-Going and the High Cost of Popcorn

Movie-Going and the High Cost of Popcorn

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Summer is here and to paraphrase an old saying, movie studios and theaters need to make hay while the sun is shining.  From May through August, attendance at multiplexes around the country is at its highest.  People have far more disposable time and income on their hands during this time of year, so it stands to reason that the studios schedule one blockbuster after another, hoping to get filmgoers to part with their hard-earned cash to see the latest big screen spectacle.

However, as anyone who’s been to the Savoy 16 in the past month can attest, the consumer’s dollar doesn’t go as far as it used to, as there are a variety of screening options that, if taken advantage of, can make for a very expensive evening.  With standard ticket prices ranging in price from $7 – $9.50 and an extra charge of $2.50 for seeing a film in 3-D, a 20-dollar bill will only get two of you through the door and that’s if you go to a matinee. Seeing a film in the IMAX format will set you back $16 but ironically, that’s not the most expensive option at the theater.  That dubious distinction goes to a ticket that you might buy to see a film in 3D while sitting in a moving D-Box seat.  A matinee screening in this format runs $16.75, while an evening show is $20.

A flimsy argument can be made that these prices are justified what with the expense needed to install the equipment necessary to deliver this sort of viewing experience.  In the end, the choice comes down to the filmgoer to decide for themselves whether to splurge or not. As Shakespeare once wrote, “A fool and his money are soon parted.”

Which brings us to the eternal economic question that everyone has when they go to the movies – “Why does popcorn cost so much?”  It’s a rather complex economic conundrum but it comes down to this – if a small popcorn and soda didn’t cost $8.00, movie theaters would not be able to stay open and ticket prices would be higher.

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On the surface, this seems to make little sense but what needs to be considered is that during the first three weeks of a film’s release, the movie studio takes the lion’s share of the money paid for admissions.  While specifics vary from film to film, the rule of thumb is that the movie studio takes up to 80% of the ticket price during the first two weeks of a film’s release.  So, if you run out opening weekend and plunk down $9.50 for a movie, the Savoy 16 gets to keep roughly $1.90.  The longer a film is in release, the better deal becomes for the theater, as their percentage of the take increases.  During the third week they take 30% of the ticket price, during the fourth week they get 40% and so on down the line.  However, only rarely does this work to a theater’s advantage as studios, with their blitzkrieg advertising campaigns, instill a sense of urgency to see a movie right away so by the time week three rolls around, the initial shelf-life of a film has passed and very few tickets are sold for it.  Movies like Titanic, Avatar, The Avengers, and the Pirates of the Caribbean” film are the sorts of films whose success results in a win-win situation for both the studios and theaters but blockbusters like this are all too rare.

Considering all of this, it becomes obvious that the deck is stacked against theaters where turning a profit on a film is concerned.  And while prices for concessions are outrageous, keep in mind that these prices go towards keeping ticket prices down. If a box of M & M’s were to cost only $2, the theater would have to raise the price of admission in order to make up the difference.  To be sure, the news of movie theater chains going under is quite rare and there’s no question that companies like AMC and Carmike are turning a nice profit, so don’t go out of the way to throw a pity party for them. After all, it’s a known fact that the mark up on a bag of popcorn is, on average 900%.  For example, a $6 bag only costs the theater 60 cents to make.  The difference between the cost of a soft drink and what is passed on to the consumer is even higher.

In the end, the one getting the short end of the stick is the filmgoer who ends up footing the bill no matter what. There are no cheap options and while home video is a viable alternative, there’s no replacing the big screen experience. And while consumers are not above bringing in their own refreshments, that smell of the popcorn in the lobby is a siren song that has wrecked many a wallet on the rocks of compulsive consumption. As I can attest, being a knowledgeable consumer doesn’t necessarily mean you’ll be a smart one.     

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