Ever wondered how movie theatres, also known as cinemas, make money? Did you know that movie theatres don’t make most of their money from ticket sales? In fact, in some cinemas, around 80% of the revenue from ticket sales are given to the original movie studio, leaving less than half of the profits for the theatres. However, other cinemas, such as the ones in Indonesia, have a 50% split for both movie studios and ticket sales, but this source is not the main source of profit for theatres.
Snacks & Concessions
Instead, movie theatres earn most of their revenue from the sales of their concessions. These concessions, such as popcorn, sodas, candies, etc., are sold at ten times their original cost, resulting in huge revenues for the cinemas. Since cinemas ban outside food and drinks inside each theatre, they take advantage of the situation to upsell their concessions to customers as customers would rather spend a higher than normal price for some snacks rather than feeling hungry while watching the movie. This is also why cinemas will always advertise their popcorn and candies in advertisements.
Advertisements
Speaking of advertisements, theatres earn a part of their revenue from these. Whether it’s an ad from a shopping app or a teaser trailer of the next big movie coming, these advertisements come from movie studios and companies that pay these theatres a hefty sum to advertise their upcoming products. In some cinemas, the on-screen ads can cost up to $2,500 if companies want the ad to be seen for a four-week run.
Contrary to popular belief, movie theatres may not earn money in the most visible ways; they instead rely on more vicious, sneaky methods to fish money out of their customers without being noticed. I mean, don’t you think the snacks are a little overpriced? But whatever, we still buy them anyway.
