A Better Movie Theater Business Model

I have always enjoyed SciFi and superhero movies. My three favorite movies until I was in high school were Superman, Star Wars and Raiders of the Lost Ark. Since then I have learned to appreciate the art of finer cinema, but I still l will go back and watch each of these three movies at least once each year.

Superman Returns starts today but I probably won't go see it. I would love to take my family to it, but it would cost our family $36 if we sneak candy in.

Once we are in the theater we have to figure that at least two of the kids will need to use the restroom during the movie and so we will likely only see 110 minutes or less of a 120 minute movie.

I have a hard time believing that a theater has to charge high ticket prices to make money.

I think someone just needs to come up with a better business model. Here are a few of my thoughts:

• Charge more for new releases – Video stores do it, I think it could also work well for theaters. Charge moviegoers who see a movie in the first two weeks of its release $12-$16 per ticket. This will cover those who must see a movie as soon as it opens.
• After the first two weeks, cut the price in half. After six weeks cut the price in half again. If you have ever gone to see a movie that has been out for more than two weeks you will notice that there are a lot of unfilled seats. Isn't it better to fill every seat at $4 each than it is to fill less than a quarter of the seats at $6-$10 each.
• Provide significant "value added" features. I have been to Costco and Sam's Club, I know how much it costs for a 24 carton box of Jr. Mints. I know that there is a 250% markup on the theater candy. If the theater plans on keeping the prices high, why not throw in a free box of candy and a 24 oz. drink with every ticket. Each cup of pop costs less than $.15.
• Allow moviegoers to stay for a second showing. This will not prevent them from paying to see it a second time, most people see a film once at a theater then wait for it to come out for rent. By being able to stay and see the film again more people will pay to see a film at a theater if they know they can get their money's worth.

Hollywood is leading a huge campaign against movie piracy (downloading movies from the Internet) because it keeps people from paying to see the movies. Any movie fan will tell you that you can't beat the big screen experience and any movie pirate will tell you that the quality of downloaded movies doesn't even compare with the high quality of sound and picture found in movie theaters.

The movie theater industry is suffering because no one is going to movies, but people aren't avoiding theaters because they are downloading pirated movies on the Internet. People are avoiding theaters because they don't think the value of seeing a movie in the theaters is worth the cost.

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2 Responses to “A Better Movie Theater Business Model”

1. Anonymous says:

   October 25, 2007 at 5:35 am

   hi,

   good comments – i’m from the uk and apparently more people are seeing movies at the cinema for a long time – can’t think why though – maybe it was just a few good blockbusters – but your points were all good ones…maybe someone could take those points and open up there own movie theater…

   http://www.a-2-z-business-plans.com/business-plans/Movie-Theater-Business-Plan.html

   Reply
2. Anonymous says:

   January 14, 2008 at 8:58 pm

   You have some good ideas , my family opened a theater here in texas .. It is a drive in family theater , the good thing about it is you get 2 new not yet released movies for less than the price of one at a walk in theater. Its so much fun that the whole family can enjoy and the value is great !! http://www.tylerdrivein.com

   Reply