Question:
How much does it cost (on average) for a cinema to show a particular film ?
Does it depend on the potential earnings.. so will Hollywood cost more that Bollywood etc. ?
With so many films showing in multiplexes each charging £5 a shot for 2 hours. There must be money to be made.
I think they are on a % of the ticket price but probably with some minimum and maximum ? fixed amount. This was one of the reasons the studios were against the Virgin (now UGC) season ticket, although they could not stop it.
In my sisters business studies course they looked at UCI who claim they breakeven on the film (ticket price covers cost of the building renting film etc), and then all the profit came from the over priced drinks popcorn and sweets.
What usually happens is that the distributor will agree a deal with the cinema whereby the cinema takes the lion's share of the box-office takings up to a certain figure - normally the cinema's break-even figure - and with any amount over that the split shifts dramatically in the distributor's favour.
The actual percentages will depend on the film and its likely popularity - with a major blockbuster, the distributor will drive a hard bargain, but with an independent film with limited potential the cinema will be in a much stronger position, as the alternative will be the film not getting shown at all.
But you're unlikely to get rich running a cinema (and believe me, I speak from experience!) - because of course another problem is that there's an absolute upper limit you can make in ticket sales, based on the seating capacity and the number of screenings per day (a major reason why cinemas don't like excessively long films!). That's a major reason why popcorn and Coke prices are so outrageously inflated and why cinemas discourage patrons bringing in their own food.
This is a very complex area. Deals are made on a film by film basis. There is a very good book called the Movie Business by Jason E Squire which explains how this works.
Let me give you a funny little anecdote taken from that book.
There was a little movie called Star Wars that was released early May 1977. 20th Century Fox negotiated a deal with one independent cinema whereby the film would continue to play until the weekly box office take dropped below $2,000 dollars. Then they could choose to drop the film if they wanted. This same cinema negotiated a deal with Columbia pictures to show the film Close Encounters from December 1977. When it came time for the cinema to show Close Encounters, they couldn't because Star Wars was still exceeding its minimum weekly box office take by quite an amount. The cinema was in breach of contract with Colombia because they had an agreement to show Close Encounters. Columbia took the cinema to court to recieve compensation.
You probably know this already, but cinemas don't make any money on ticket sales, all the profit is in the concessions.
Another nice little quote just to follow on from Nick and Michael's points:
‘That axiom is: Movie theatres are not in the business of exhibiting movies. If they were in that business, they would long ago have gone under. They are, instead, in the far more lucrative business of selling paper cups full of flavoured sugar water at astronomical prices to people who spend just enough time sitting in darkened rooms to notice that their blood sugar level requires a boost.’
from 'To the Rear of the Back End: The Economics of Independent Cinema' (Schamus, J.)
Does it depend on the potential earnings.. so will Hollywood cost more that Bollywood etc. ?
With so many films showing in multiplexes each charging £5 a shot for 2 hours. There must be money to be made.
Answers:
I think they are on a % of the ticket price but probably with some minimum and maximum ? fixed amount. This was one of the reasons the studios were against the Virgin (now UGC) season ticket, although they could not stop it.
In my sisters business studies course they looked at UCI who claim they breakeven on the film (ticket price covers cost of the building renting film etc), and then all the profit came from the over priced drinks popcorn and sweets.
Answers:
What usually happens is that the distributor will agree a deal with the cinema whereby the cinema takes the lion's share of the box-office takings up to a certain figure - normally the cinema's break-even figure - and with any amount over that the split shifts dramatically in the distributor's favour.
The actual percentages will depend on the film and its likely popularity - with a major blockbuster, the distributor will drive a hard bargain, but with an independent film with limited potential the cinema will be in a much stronger position, as the alternative will be the film not getting shown at all.
But you're unlikely to get rich running a cinema (and believe me, I speak from experience!) - because of course another problem is that there's an absolute upper limit you can make in ticket sales, based on the seating capacity and the number of screenings per day (a major reason why cinemas don't like excessively long films!). That's a major reason why popcorn and Coke prices are so outrageously inflated and why cinemas discourage patrons bringing in their own food.
Answers:
This is a very complex area. Deals are made on a film by film basis. There is a very good book called the Movie Business by Jason E Squire which explains how this works.
Let me give you a funny little anecdote taken from that book.
There was a little movie called Star Wars that was released early May 1977. 20th Century Fox negotiated a deal with one independent cinema whereby the film would continue to play until the weekly box office take dropped below $2,000 dollars. Then they could choose to drop the film if they wanted. This same cinema negotiated a deal with Columbia pictures to show the film Close Encounters from December 1977. When it came time for the cinema to show Close Encounters, they couldn't because Star Wars was still exceeding its minimum weekly box office take by quite an amount. The cinema was in breach of contract with Colombia because they had an agreement to show Close Encounters. Columbia took the cinema to court to recieve compensation.
You probably know this already, but cinemas don't make any money on ticket sales, all the profit is in the concessions.
Answers:
Another nice little quote just to follow on from Nick and Michael's points:
‘That axiom is: Movie theatres are not in the business of exhibiting movies. If they were in that business, they would long ago have gone under. They are, instead, in the far more lucrative business of selling paper cups full of flavoured sugar water at astronomical prices to people who spend just enough time sitting in darkened rooms to notice that their blood sugar level requires a boost.’
from 'To the Rear of the Back End: The Economics of Independent Cinema' (Schamus, J.)
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