Where the money from your movie ticket really goes
What percentage of your movie ticket do you think movie theatre companies like Cineplex make a profit from?
None of it.
That's according to Cineplex executive vice-president Michael Kennedy. He explained where the money really goes when he took part in a panel discussion at the Whistler Film Festival's industry conference, the Summit, on December 6.
"The interesting thing about the movie-going experience is…for every movie ticket you buy, about half of goes to the studio that made the movie, the other half we use to pay our expenses," he said. "If we only showed movies, we wouldn't make any money at all. We make money basically off selling popcorn and drinks and showing you commercials and stuff like that. The actual process of showing you a movie does not drive our business."
So in other words, if you're not buying anything from the concession stand, the theatre isn't making any money off of you.
What helped the company change the game a great deal was the launch of their loyalty program.
"We'd be running our business pretty much the same way for 80 years," he said. "We sat around in a room one day and said…we should really have a relationship with our customers to find out what they want….The loyalty program really gave us the ability to do that because we can look at audience behaviour and we can now have communication with our customers and that was a big deal for us."
He stated that the VIP Cinemas is one of the most successful programs they've had, and it's particularly popular with baby boomers.
He added that Canada is one of the best markets for 3-D. In the U.S., he said 3-D market penetration on an average movie is about 25 to 30 percent whereas in Canada, it's 65 to 85 percent.
But one of the biggest threats to the movie theatre industry that keeps them on their toes is in-home entertainment.
"I've seen…models of what would happen if people could watch the same movie in their living room as opposed to having to leave their house and go to theatres," Kennedy said, "and the numbers are kind of scary…."