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Why Are Movie Tickets So Expensive

Why Are Movie Tickets So Expensive

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Published by Francesca Brumm

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Published by: Francesca Brumm on Sep 20, 2012
Copyright:Attribution Non-commercial


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 Why are Movie TicketsSo Expensive?
Mr. T in DC / Flickr source
Twenty-five cents.That was the average cost of the whole movie-goingexperience—bus fare, ticket, and popcorn–in Wisconsin inthe 1930’s. Granny Ginny never failed to remind my brotherand me of this fact as we readied ourselves to head to thetheater, a ritual that usually also involved shoving plasticbags of popcorn and Hershey’s minis down the fronts of ourStarter jackets.This was 1995, when the average ticket price was a measly$4.35. I can only imagine what Ginny would say if faced withthe average $7.83 it now costs to see a movie in the USaccording toNATO(An attack on one theatergoer’s wallet isan attack on all).Here in Hollywood’s home court, I parted with twice that tosee
The Amazing Spiderman
. It was a painful separationthat left me wondering what warranted such outrageousprices and whose pockets my money would be lining.
With any other product we could follow markups and costsbackward to answer these questions. Movies are a differentstory; they aren’t like any other product because Hollywoodisn’t like any other industry.Studios’ magical bean counters can pull off feats of creativeaccounting that would make grown auditors weep (
Harry Potter 6
grossed $1 billion but convenientlylost money) andstudio execs are notoriously tight lipped about moneymatters anyway.Still, a look at the costs of producing today’s effects-ladenblockbusters would seem to uphold the basic logic thatmovies are expensive to see because they’re expensive tomake.
The Avengers
, for example,
supposedly had a productionbudget—including story rights, crew, actors, equipment,locations, sets, editing, VFX, etc.—of about $220 milliondollars. This doesn’t even approach the total amount Disneyspent on the film.For that figure you’ve got to factor in P&A—“prints andadvertising”—which includes cost of making the physicalprints of the film and launching a full-scale marketing assaulton the general public to ensure long lines on openingweekend. P&A tacks on another 50% of the productionbudget, bringing our (theoretical)
grand total to
$330 million.A fair chunk of change, but don’t go cueing the sad violins forDisney (or any other studio) just yet.First, consider that many films recoup a portion of their costsbefore they even open thanks to government grants and taxbreaks (ever wonder why they shoot everything inLouisiana?), as well as product placement and certainlicensing deals. Already the studios aren’t hurting quite asmuch as you’d expect.Next, look at the way studios and distributors (which areoften owned
by the studio anyway) split ticket revenue withtheaters. It varies, but considering theaters still rely on their900% markup on popcornto make a profit, there’s nomistaking who gets the raw deal.Lucky for theaters, there are cases like
The Avengers
andits $1.5 billion worldwide ticket revenue that fatten everyone’spocketbooks significantly (especially that ofsavvy dealmaker Robert Downey Jr.), though they’re few and far between.Theaters still facefalling demandfor movie tickets andcompetition from VOD and Netflix, both of which cause themto jack up prices and lose customers. It’s a vicious cycle thathas many predicting gloom doom for theaters.For a second and hopefully less depressing opinion, I turnedto Mike Neelsen, who managed theaters for both Marcus

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