Horta's View From the Stalls: Popcorn, Movies, Scams, and Numbers...

April 6, 2003

It was perhaps one of the most enjoyable jobs I ever had.  I was only 16 and I had gotten a job at the local movie duplex. That’s right, I said it, the duplex. Remember those? When you didn’t need a GPS device to find the right theater your movie was in, because there were only two screens, one on your right, and one on your left. I looked pretty sharp too, in my red jacket, cummerbund and bow, black slacks, and paten leather dress shoes.

It was kind of daunting at first because I was afraid that by working in a theater, I would eventually lose my fascination and enjoyment with the movies. But to my surprise and delight, I actually learned a lot, and the experience only increased my fascination with the movie biz. Not the Hollywood, Oscars, and movie star, side of the house, I’m talking the experience of the popcorn and tickets, and dark theater side.

Yes, I certainly learned a lot, and I am going to share with you just how it is a movie theater makes money. I’m going to share with you some neat behind the scenes information, that I enjoyed finding out...  I'm going to share with you just how The Numbers really work!

Ticket Sales Aren’t How Movie Studios Make Money. Well... Not Really

Fact of the matter is, movie studios lease out the movies they produce to theater companies like a Loews, or an AMC. However, it isn’t a flat fee like a car lease, or an apartment rental. Studios take in a percentage of a movie’s ticket sales on a weekly basis. Each week that the movie is in theaters beyond it’s release date, the less of a percentage the studios collect. Only after the studios get there cut, do the theaters make a profit. And all movies don't necessarily go for the same lease amount. A big production flick like Terminator 3: Terminatrix will cost theater companies in upward of 80% of its ticket sales its first week out, while a smaller production film from the same company may be considerably less. The longer a movie is popular and the longer it plays in theaters, the more money everyone makes all around. This reason alone explains:

• Why studios love it when a movie with low production costs hits it big. Movies like My Big Fat Greek Wedding, and The Blair Witch Project, would have been considered smash hits, even if they would have only made 40 million or so.
• Why multiplex theaters have screens and theaters of various sizes. The less seating, and the smaller the venue, the less overhead. The less of an audience a movie brings in the less theater revenue. But if a multiplex can actively balance ticket sales, with overhead cost, the longer a movie can run and the more money they can make.
• Why those cozier theaters will run certain wannabe blockbuster movies after the bigger cinemas have dropped them off their marquise. Those smaller theaters have much less overhead then the larger multiplexes and they know it. This is also the reason dollar theater and double features exist.
• Why ticket costs are forever increasing. Production cost are so high with so many movies, that the cost is passed on to the theaters. A higher ticket price helps offsets rising overhead, and movies that don’t always do so well.
• Why there is one person to sell the tickets, and a separate person just to rip them in half. It’s also the reason why ticket punching has become computerized. Remember the old push button raffle looking tickets we used to get? Back in the day, less scrupulous ticket punchers would occasionally run a "2 for 1 Rip It" scam. If a couple came up to buy tickets, the ticket puncher would punch 1 up, rip it, and give each person half a ticket. The ticket taker, if there was one, and the ticket puncher, would then pocket the profit of the 2^nd ticket that was never punched up. Also, next time you’re in a theater, notice where the cameras are and where they are pointing. They aren’t there to catch people cutting in line.
• Why movies can be in theatres so long, they overlap into their own DVD VHS release date. Harry Potter, and the Chambers of Secret, is still in theaters, but will be released on video the 11^th of this month (April). Right about now, theaters probably collect almost 95% of ticket sales, and based on attendance, it’s worth keeping in some theaters. Studios aren’t hardly making any money on that, so at that point they release it for video, where they know they may make as much as they did in gross box office sales.

Movies, Don’t Come With Any Trailers or Commercials... Just Armed Guards

Here’s a little story my movie manager related to me one night during a private employee showing and pizza party in our little theater. The year was 1980, and he was waiting for the movies to be delivered. You see, similar to a morning paper, these movies, which were also called, reels, platters or cans, get delivered to individual theaters in the wee hours of the morning. On this morning, my manager was waiting for the delivery of a reel which was to premiere that Wednesday... a movie called The Empire Strikes Back. The morning this movie was delivered, my manager got quite a shock, because it earned not just a single guard, but two armed guards the size of tanks, and the 2 film reels that this movie consisted of were each hand cuffed to each guard (Note: Films no longer come in 2 film cans any more. To find out why, keep reading). It seems that it wasn’t unheard of to have a movie reel stolen. But the value of the reel isn’t just in the movie itself or the potential box office value. Theaters can make big money on running trailers. When a film comes to a theater house, it comes trailer and commercial free. Other studios, and businesses, will pay theaters to add their trailers and commercials to the beginning of certain films. They provide the theaters with the same size film, to splice in. You see, individual films are maintained by the theaters, and adding on a trailer is a process that uses little more than a small splicing machine, and a bonding material that resembles scotch tape. This is what we can learn from this tidbit!:

• Why some theaters have in upwards of 10 minutes of previews and commercials. Movies usually don’t bring in blockbusting numbers, and these trailers help offset that fact.
• Why the blockbusters tend to have the most trailers. Ironically, these are the films that make the theaters the most money because they bring in so many people. Theater companies will be able to generate more profits by offering trailer space on these reels. Much like TV, where commercial spots vary depending on what show you purchase a spot in. For example, Monday Night Football, and the Super bowl will bring in more in commercial spots, then other football games in the same season.
• Why when you see a movie more than once in a theater, or the same movie in different theaters, the previews are different. Theaters generally don’t have the same advertisers so movies will generally have different trailers in the beginning of the same film. At the very least, the trailers will be in different order. For example, if you watch an episode of the syndicated Seinfeld show on one station, and the same episode plays on a different station, the commercials will be different.
• Why when you see a movie with a long theater run, late in its life span, it occasionally has skips and is in poor shape. The longer a movie is in theaters, the more wear and tear on the reel. Occasionally, damaged film cells will require a theater to have to cut out some of the film. There are so many cells in each individual film, that a theater can cut 12 to 18 inches of a film (Or add, for those you who were big on Fight Club), without affecting the movie. When done correctly, even if you have seen the movie 100 times over and know it scene for scene, you wouldn’t notice a difference. However, films that have been played often, also suffer other forms of degradation. Stretching occurs from being pulled from start reel to the exit reel and then back again on rewind. Constant exposure to intense light can also fade a flick. These problems were more of an issue back in the 80’s before the new age multiplexes. Nowadays, newer projector technology is easier on the films which means it’s easier on the theaters investment. Theaters can’t just replace heavily worn films that still have more life span left in them.
• As I mentioned earlier, films no longer come on two different reels any more. On reel, movies are quite large and bulky. In the early 80’s, projector technology involved two projectors per screen. After the first reel was done, the next one would start automatically... or at least it was supposed to. I think we have all sat in on a film back in the day, when that second camera would fail to start, and we would see white screen for a few minutes until it got going or repaired. New projector technology now requires that movies only come on single platters. It then plays through a maze of reels without any interruption, and unlike their predecessors, doesn’t require the film to be rewound to a start reel.

Check For Grubs In The Grub

Nowadays, movie theaters make so much money on the candy they sell that they commonly joke that they are in the candy business, not the movie business. A family of four can go to a theater, spend $29 dollars in tickets, and over $50 in popcorn, sodas, and candy. I know, I just went to see Jungle Book 2 with the family. And you better believe people are buying the candy! I don’t think that's anything you didn’t know. But did you know that:

• Unlike candy, movie theaters don’t really charge customers for the popcorn they eat, or the soda they drink. Movie theaters charge you for serving materials. Theaters couldn’t possibly keep track of every popped kernel, or every ounce of soda you drink, so they keep track of our drinking cups, and popcorn bags/buckets.
• Ever notice how there is usually only a quarter difference between different sized cups of soda or popcorn? It’s a bit of a psychological scam to get you to upgrade to the largest bag of popcorn. An extra 50 cents per customer mean a lot to a theater.
• We used to eat out of buckets, and now we eat out of bags. A bit of a downgrade, but fact of the matter is, theaters pay less for stores of bags and charge more for the popcorn. Bags can also be easily printed with an advertisement which just means more money for the theaters. These bags also take up less space in a dumpster, again saving theaters lots of money.  Better yet, these bags save us from the old "Rinse-Resale" scam. Because theaters keep track of cup and bucket sales and not popcorn and soda sales, less scrupulous concession stand persons used to really give my gag reflex a work out. After a movie lets out, these persons would look for left behind cups or buckets, and resell them. They would then pocket the cash because the cup was already paid for. It took me a couple of years to be able to eat popcorn or drink soda from the theaters when I first saw this plan in action. Especially when you find out that some people actually used their cups as spittoons. YEUCH!!!!! And by the way, I don’t by bags of pre-filled of popcorn, I ask for a new one.
• Just because theaters don’t keep track of popcorn kernels, doesn’t mean they aren’t frugal with the cob. Popcorn is oil popped for flavor, but it is air warmed to maintain that fresh taste. At night, when theaters close out, they place the leftover popcorn in large plastic garbage bags. When they come in for a new day, they dump it out into their serving bins, and turn on the air warmers. If you catch an early movie, and you don’t see them popping popcorn, chances are your eating day old popcorn.
• Remember in high school when the janitor would wax the floors with a liquid that came out of that large, industrial looking, gray metal bucket? Well, that’s what movie theater butter comes in. And it isn’t even yellow to start, it’s pink and its consistency resembles Vaseline. It doesn’t turn to liquid, or turn yellow until after it warms in the butter pourer.
• Sour Patch Kids? Gummi Bear brand Gummy Bears? Ever wonder why movie theaters carry dated brands of candy, or candy in year old wrappers? Well stop wondering because theaters buy candy in bulk, and with one expiration date, it will stay in storage until it’s sold.
• Here’s a final tidbit of information about concession stand grub and it will be in the form of 2 questions. Ever go to a restaurant, and see its cleanliness rating proudly displayed on a wall when you first walk in? Ever see a sign like that behind a concession stand?

Yes, I certainly learned a lot the year or so I worked at my local cinema duplex. I saw lots of free movies, ate lots of free popcorn, gagged on the exhibition of movie scams, and loved every second of it. The theater biz is more involved than most people know. The cost and overhead is growing, but as I have always maintained, it is one of the most enjoyable things you can do on any given day, if you know how to do it right.

George W. Horta III

Source: www.cnn.com