Since film studios do not own movie theaters (per a 1948 SCOTUS anti-trust ruling), the cost to make a film has little to do with the cost of a movie ticket.

But why not? Couldn't the studio charge the cinema a different amount for each film? Like if an indie studio just wanted to get their movie out there they could charge little over the cost of the media, and the cinema could charge half-price. Or because everyone's going to want King Kong, they could charge a shedload more to the theatres and pass that into the tickets as well.

Sounds logical to me.

Possibly it's because most films don't make much money. The successful ones are always subsidising the unsuccessful ones so there's little direct relationship.

"Since film studios do not own movie theaters (per a 1948 SCOTUS anti-trust ruling), the cost to make a film has little to do with the cost of a movie ticket."

Rachel, I'm not sure I follow this logic. If this were the case, then you could argue that because bakeries don't own grocery stores, the cost of a loaf of bread has no relationship with its price. I think that would fairly easily be disputed.

I was wondering what the breakdown of costs for a movie theatre are and found these articles.

http://money.cnn.com/2002/03/08/smbusiness/q_movies/
and
http://arstechnica.com/news.ars/post/20060105-5905.html
It's actually quite complicated. They also mention the important popcorn and soda money as well.

But personally, different prices might cause me a bit of confusionm but I'm more worried about this -- if an expensive computer-generated flick like DoomIII is $10, but Pride and Prejudice is only $7, can the person I'm going to the movie with force me to skip the gore-fest because of price? :)

Bob: Excellent links...very insightful. But, even after reading those, I believe there's something to be had in variable movie pricing. Imagine undercutting your competitor on a movie where you know people will bring dates (and buy concessions). They already do some variable pricing -- matinees are cheaper than evening shows. Why not on a per-movie basis too? I mean, we've already read how not each movie *costs* the theater the same each week, so why charge the same? In fact, why not charge less each week, although not so much less that you lose additional profit (i.e., decrease the price slower than your costs decrease)? Anyway, I think there's something to it...it'd be interesting to see if there's any market research out there that might suggest this is a bad idea. Beyond the initial confusion (because it's a new idea), I don't think people would find it significantly off-putting. After all, different meals at a restaurant are different prices; different rooms in a hotel can vary widely in price; and video games in an arcade range from a quarter to a buck to play. Why not movies?

The theater pays the same no matter how much the movie cost to make. Unless the studios change their model, the variable in the ticket cost to the theater would not be the prodution cost of the movie, but how long the movies is been out.

I wonder if a theater can build a business model on that?

"The theater pays the same no matter how much the movie cost to make."

Are you certain of that, Bob? Where did you read that? I'd be shocked to learn that a theater would have to pay the exact same first-week cost for Enron: The Smartest Guys in the Room as it would for Star Wars III.

Even if that's so, why shouldn't longer movies cost more? A theater can get several more showings of a 90-minute movie into a single day than it could a 3-hour movie, so why doesn't the longer movie ticket cost more?

From the articles, it looks like most studios take 90+% of the box for the open week or two, with that percentage dropping over time.

Length? Wow, smart thinking. That's another variable! This is getting so complicated that I'm starting to get a headache. I better stick with something easy, like my regular job. :)

I think you should run a study and charge a studio some serious buckolas to figure this out for them!

Bob

It's slightly off this topic, I'm reminded of the stuff Mark Cuban has been saying over on his blog about the "day and date" release window of movies. The latest of which are Go See Bubble and What Business are theaters in ?.

He's not talking so much about pricing of movies, but rather improving the value of what theaters provide to customers so that they'll want to come to a theater instead of waiting to watch the DVD at home in a few months.

Luke,
That's precisely the issue I'm trying to raise: if theaters fail financially, it's their own damned fault. Nobody's going to convince me that the era of the movie theater experience has passed -- I personally believe there's a world of opportunity for someone to approach the business in a fundamentally new - and customer-oriented - way that will prove significantly more successful than we see now in most theater chains. If theaters focused first on the customer experience, as Disney does at its parks, they would find their lives to be much easier, and we customers would enjoy going to theaters again. Just my opinion, but I believe it.

Sorry for the long comment, but I actually am doing just what Craig mentioned. I'm trying to build a theatre and come at it from a new angle and with a new goal in mind... the experience and the moviegoer.



I am part of a 4 man team drawing up plans for a new movie theatre in our city. We have one theatre now, but it's falling apart and it really doesn't deserve to be called a theatre in my opinion. Many people have expressed interest in wanting a good theatre, but with the decline of movie attendance recently and the seemingly sparse pickings for 'good' movies today, I'd like some input from Slashdot about how we might go about making this work.



We've rounded up some financial backers and one very experienced theatre entrepreneur, but I'm looking for moviegoer input about what kinds of things people will tolerate and what kinds of things would make a movie experience worth going to over waiting for the DVD to watch in a home theatre.



Price isn't up for discussion yet because the advertisements, types of food available, and other things are more important in my mind, but maybe I'm wrong. Price varies heavily on geography too, so we'll have to deal with that another time. And of course, we'll be THX certified and possibly have digital projection if enough movies are available that way now. Stadium seating is another given, as will be cry rooms and possibly a balcony screen or two.



Bearing in mind that there is probably only room for 1 theatre in town, the point is for us to be the one and either kill the other one or buy it and use it for dollar movies.



Here are my top 10 ideas that would draw me personally to a theatre:



1. Putting plasma screens on the walls in the lobby, halls, and theatre with ads instead of showing them on the big screen. Of course they would go dark in the theatre once the previews started.



2. Having certain entire days priced lower and doing away with matinee pricing (i.e. $3 Wednesdays).



3. Having more non-traditional types of food available (like hamburgers, chicken, etc...) Maybe even as far as having a McDonald's partner and share the building to provide their menu for movie-goers.



4. Having moviegoer loyalty points good for free tickets based on how many movies you go to (but not having to carry a stupid membership card and not requiring massive amounts of points savings).



5. Based on those loyalty points, having the opportunity to pre-screen movies with the staff the night before release (if the legalities could be worked out).



6. Seeing the same movie multiple times would progressively cost you less per ticket.



7. Buying bulk passes of movie tickets where you end up getting 10 to 50 percent savings.



8. Every showing having some kind of ticket or seat number based give away (poster, free ticket, etc...).



9. 'private screenings' for small groups (10-20) in a special screening room that only costs slightly more than the normal tickets added together and isn't limited to a 2 hour time frame. The thought is that a group could rent the room for an evening and have a birthday party in there followed by a movie or something like that.



10. Having a non-traditional seating and screen layout where you more or less recline 45 degrees and the screen is higher off the ground to meet the eye level of that position.



Each of these ideas obviously has a profit impact, but I'm a huge movie experience kind of guy and I'm not out to be a millionaire. Small profits are fine so long as there are profits. Something needs to change to catch up with today's movie-goers and since I'm not the one in charge of making better movies I'd like to try to make the venue a little better instead.



Thanks for your input!

... Also sorry about leaving the word Slashdot in there... I also submitted the question there but it's sure to be rejected.

I am most certainly interested in the GearBits crowd's opinions.