Monday, October 15, 2007

In-theater advertising revenue increases - why not drop concession prices?

The Hollywood Reporter says, "in-cinema advertising grew into a $455.7 million business in the U.S. last year, 15% better than in 2005 and far outpacing boxoffice growth during the same frame."

This is not surprising, as we have definitely seen more ads and people have grown more accustomed to them. I must admit I'm past the point of complaining about all commercials in general, though I certainly appreciate going to theaters that still refuse to do any advertising (or at least blatant on-screen advertising). I used to complain about commercials before films every time I went to the theaters - now I just complain about how many there are, or how bad they are (the Forest Whitaker cell phone commercial is one of the worst commercials ever conceived by man).

We all know that theaters make only small margins off box office revenue, and a good chunk of their revenue comes from concession sales (note that $38.3 of that $455.7 million number is off-screen advertising, such as ads on popcorn bags, lobby stands, etc.). As non-movie advertising continues to grow and theaters start making more of a margin, perhaps it is time for them to experiment with lowering concession prices?

After all, they might have been scared about experimenting with concession prices in the past because one bad mistake could severely hurt their bottom line (though I'd say that's stretching it, too), but do they really make optimal profit by selling popcorn for $6 a bag? If they sold popcorn for $4 a bag, I would think a lot more people would buy the popcorn and overall revenue numbers would increase, with costs increasing not nearly so strongly. Of course, maybe the business guys have already calculated the cut even price for concessions, but I sure as hell would be inclined to toss a lot more money their way if they dropped concession prices just a bit.

Okay, so I went on a tangent here, but it's my movie blog!

No comments: