January 09, 2006

The economics of the movie theatre biz

We were talking about this in the GEWF forum. Now here's an article from the arstechnica website:

Edward Jay Epstein has written a brief article looking at just how the theaters make their money. As you might expect, it's not from begging, or charity. No, theaters have three major sources of revenue: the movies themselves, their concessions, and more recently, their onscreen advertisements. The concessions are a cash cow, and everyone knows it. The only other places on earth where prices are this ridiculous are airports, theme parks and four star hotels.

From the Epstein article:

Once upon a time, movie studios and movie theaters were in the same business. The studios made films for theater chains that they either owned or controlled, and they harvested almost all their revenue from ticket sales. Then, in 1948, the government forced the studios to divest themselves of the theaters. Nowadays, the two are in very different businesses. Theater chains, in fact, are in three different businesses.
Posted by jackhodgson at January 9, 2006 08:35 PM