4 ms·

From what I understood theaters weren’t exactly raking in massive piles of cash on ticket sales, and really only made money on concessions. So is there really

by rblatz 8y ago

From what I understood theaters weren’t exactly raking in massive piles of cash on ticket sales, and really only made money on concessions. So is there really much wiggle room to negotiate ticket prices with theaters?

listenallyall 8y ago
Here's AMC's income statement: http://investor.amctheatres.com/AsReported/Index http://investor.amctheatres.com/AsReported/Index Gross margins on ticket sales were 50% in 2017, so it would appear they do have wiggle room. Concessions are almost pure profit at 84% margin. Sacrificing some lower-margin ticket revenue (shared with studios) to generate growth in higher-margin snack sales (not shared) would seem to be a win for the theaters.
- gamblor956 8y ago
  True, but ticket sale revenue was more than 2x that of concessions revenue, so they'd be giving up profit. And let's face it: heavy users of MoviePass are also the least likely to be heavy purchasers of concessions.
  - listenallyall 8y ago
    You are assuming every ticket purchased by MoviePass (potentially at a negotiated discount) would have been purchased at full price by the customer. This is not the case, MoviePass definitely increases the number of tickets sold. Would a theater prefer an empty seat and zero revenue, or, say a $6 ticket and a few bucks on popcorn? They already do this for matinees.
    - gamblor956 8y ago
      I think we agree that if the alternative was nobody watching, it would be a net benefit to get anyone in the seats...if they bought concessions. However, I think we disagree on whether a person using MoviePass would be more likely to buy concessions. In my experience at my local megaplex (where tickets are $18 for matinee!) MoviePassers usually sneak in their food, even though they just saved $12 (or more) on their ticket and the beer and food is actually reasonably priced for the quantity compared to what you'd get at a nearby restaurant. While the small boost to ticket sales is a net benefit to the theater in the short term, it's clearly a net loss in the long term if they lose concessions revenue because now they're not just sharing the ticket sales with the studios, they're splitting it with a third party. (On average, theaters usually don't make a profit on the ticket sales for the first few weeks a movie is showing--they rely on concessions to make up the shortfall and push them into the black. Theaters only make back their money based solely on ticket sales on long-tail movies that spend a few weeks in the theaters.
      - laurex 8y ago
        The company itself says that Movie Pass customers purchase an average of $13 of concessions, about double average movie goers. (Not to defend the general idea of MP as a business). https://www.google.com/amp/s/www.wired.com/story/moviepass-second-act/amp https://www.google.com/amp/s/www.wired.com/story/moviepass-s...
        gamblor956 8y ago
        The company also claims that it's not in danger of going bankrupt in the next few months, even though their auditor isn't sure they have enough money or current assets (i.e., membership fees) to survive through the end of June and raised serious concerns about their ability to survive as a going concern.
    - TheCoelacanth 8y ago
      That depends a lot on how much they have to pay the studios to show the movies. My understanding is that most of ticket money from soon after the movie's release goes to the studios with a larger share of later ticket sales going to the theaters. That might mean that the theaters would be willing to sell tickets for $6 later in a movie's run to fill up a theater, but early on they could easily be losing money at that price.

by rblatz 8y ago

listenallyall 8y ago

Here's AMC's income statement: http://investor.amctheatres.com/AsReported/Index http://investor.amctheatres.com/AsReported/Index Gross margins on ticket sales were 50% in 2017, so it would appear they do have wiggle room. Concessions are almost pure profit at 84% margin. Sacrificing some lower-margin ticket revenue (shared with studios) to generate growth in higher-margin snack sales (not shared) would seem to be a win for the theaters.

gamblor956 8y ago
True, but ticket sale revenue was more than 2x that of concessions revenue, so they'd be giving up profit. And let's face it: heavy users of MoviePass are also the least likely to be heavy purchasers of concessions.
- listenallyall 8y ago
  You are assuming every ticket purchased by MoviePass (potentially at a negotiated discount) would have been purchased at full price by the customer. This is not the case, MoviePass definitely increases the number of tickets sold. Would a theater prefer an empty seat and zero revenue, or, say a $6 ticket and a few bucks on popcorn? They already do this for matinees.
  - gamblor956 8y ago
    I think we agree that if the alternative was nobody watching, it would be a net benefit to get anyone in the seats...if they bought concessions. However, I think we disagree on whether a person using MoviePass would be more likely to buy concessions. In my experience at my local megaplex (where tickets are $18 for matinee!) MoviePassers usually sneak in their food, even though they just saved $12 (or more) on their ticket and the beer and food is actually reasonably priced for the quantity compared to what you'd get at a nearby restaurant. While the small boost to ticket sales is a net benefit to the theater in the short term, it's clearly a net loss in the long term if they lose concessions revenue because now they're not just sharing the ticket sales with the studios, they're splitting it with a third party. (On average, theaters usually don't make a profit on the ticket sales for the first few weeks a movie is showing--they rely on concessions to make up the shortfall and push them into the black. Theaters only make back their money based solely on ticket sales on long-tail movies that spend a few weeks in the theaters.
    - laurex 8y ago
      The company itself says that Movie Pass customers purchase an average of $13 of concessions, about double average movie goers. (Not to defend the general idea of MP as a business). https://www.google.com/amp/s/www.wired.com/story/moviepass-second-act/amp https://www.google.com/amp/s/www.wired.com/story/moviepass-s...
      - gamblor956 8y ago
        The company also claims that it's not in danger of going bankrupt in the next few months, even though their auditor isn't sure they have enough money or current assets (i.e., membership fees) to survive through the end of June and raised serious concerns about their ability to survive as a going concern.
  - TheCoelacanth 8y ago
    That depends a lot on how much they have to pay the studios to show the movies. My understanding is that most of ticket money from soon after the movie's release goes to the studios with a larger share of later ticket sales going to the theaters. That might mean that the theaters would be willing to sell tickets for $6 later in a movie's run to fill up a theater, but early on they could easily be losing money at that price.