Movie business and billionaire

Quote: Fleastiff

Might.

Well everything is a "might", but Sony has three turkeys so far this summer in White House Down, After Earth, and The Smurfs 2. It is highly unlikely that Elysium will make $115 million in domestic box office (it's production budget was $115 million). It's opening weekend was ranked #23, right ahead of #25 ranked "The Lone Ranger".

The studio's most recent modest budget movies like "Zero Dark Thirty" and "This is the End" have been very profitable.

Quote: Pacomartin

The point is that with the $225 million dollars budgeted for Men in Black 3, they could probably make 10 movies from talented newcomers. It might just pay off better in the end.

Yes, everything is a "might" but it was the same way with records. It used to be music companies would advance funds to bands for a tour bus or something just to position them better. Money was spread around and something usually popped to the top of the charts. Then music companies started focusing on the biggies and putting all their money on the top candidates only.

The problem is no one really knows what makes some movies absolute winners. You can go back and see the same thing in single records when a band got a hit but it turned out to be for a single's "B" side, which might not even have been their music.

I think the problem is lack of predictability. You've listed movies by title as Failures or at least as Not-Blockbusters... but in looking at those titles or even titles and stars, I can't figure out what is on the menu: espionage, adventure, vampires, space aliens, westerns.

The Lone Ranger was certain to flop since its title indicates an utter re-hash, but The Lone Ranger at Dead Man's Gulch might have been more acceptable since no one had seen that before.

Perhaps content is no longer relevant since movie tickets are really Baby Sitter Fees for Pre-Teens and Teens.

Movies make money in rental fees if its for "real" audiences...those who stop by grocery store vending machines to get a movie.

Quote: Fleastiff

Movies make money in rental fees if its for "real" audiences...those who stop by grocery store vending machines to get a movie.

I think a movie like Eternal Sunshine of the Spotless Mind March 19, 2004, may be a good example. The actors had all been in monster hit movies, but the production budget is listed as only $20 million. By this point Jim Carrey has been paid as much as $20 million to star in a movie.
Actors:
Jim Carrey (Dumb and Dumber)
Kate Winslet (Titanic)
Kirsten Dunst (Spiderman)
Elijah Wood (Lord of the Rings Trilogy
Mark Ruffalo
Tom Wilkinson
Director: Michel Gondry
Writer: Charlie Kaufman

It easily makes back it's production budget.
Total Lifetime Grosses
Domestic: $34,400,301 47.6%
+ Foreign: $37,857,825 52.4%
= Worldwide: $72,258,126

But since it thematically appeals to older viewers, and it has big names in the cast, and was well reviewed, the moviemade it's real money in DVD rentals and sales. Presumably most of the actors get a cut of residual sales.

Quote: Fleastiff

The problem is no one really knows what makes some movies absolute winners. You can go back and see the same thing in single records when a band got a hit but it turned out to be for a single's "B" side, which might not even have been their music.

This is what kills the big-studio model. Way way back the studios owned the theaters, so they could predictably push out whatever they wanted. Same as network TV pre-1980, if you wanted to watch you had to watch something. The justice department broke that up.

For years longer they kept the model of keeping stars under contract for years, making them take a script. Budgets could thus be kept under control. This eventually died out, and if you notice the concept of "Hollywood Royalty" ended with it--the stars of today are simply not the same kind of stars as we had back in the day. Tom Cruise is no John Wayne.

Today movie making is more hit or miss, and an opening weekend strike is one strike and you are out. While an indie shop can make a flick for <$5MM and take a chance, stockholders get upset when the surefire formula of taking a known franchise, dumping $100MM into it, and giving push fails.

Theaters are really disguised real estate plays. The only money the owner makes is from concessions. Sooner or later people will stop paying $10 for popcorn and it will all crash down.

Quote: AZDuffman

Theaters are really disguised real estate plays. The only money the owner makes is from concessions. Sooner or later people will stop paying $10 for popcorn and it will all crash down.

So are Fast Food restaurants and Storage Locker places.

Quote: AZDuffman

Theaters are really disguised real estate plays. The only money the owner makes is from concessions. Sooner or later people will stop paying $10 for popcorn and it will all crash down.

The problem with that statement is that it has been more or less true for 5 decades since the advent of color TV. We can presume that Gone with the Wind sold so many tickets largely because there was no TV, movies were cheap, and women watched the movie over and over because the movie house was cool, and it was romantic and an easy way to be entertained.

People (especially kids) need a place to go. Movies (even with overpriced soda and popcorn) are still much cheaper than live entertainment.

Quote: AZDuffman

Today movie making is more hit or miss, and an opening weekend strike is one strike and you are out. While an indie shop can make a flick for <$5MM and take a chance, stockholders get upset when the surefire formula of taking a known franchise, dumping $100MM into it, and giving push fails.

That point is very true. There are a ridiculous number of seats in movie theaters today. Some of us of a certain age can remember ticket lines going around the block for Jaws and Star Wars. Frankly theater operators should charge a $1 premium for the first three days a film is released. It won't scare people away, but it would probably make the difference in their survival.

The guy in Santa Barbara who ran all the movie
theatres in town was a customer at my bar. He
gave me so many free passes I never paid for a
movie for 3 years. He told me the concession
is the entire profit for a theatre. The admission
pays for the movie rental and the candy and
popcorn pay for everything else.

Quote: Pacomartin

People (especially kids) need a place to go. Movies (even with overpriced soda and popcorn) are still much cheaper than live entertainment.

Cheaper and closer, particularly since the live entertainment is likely to be liquour-licensed 21plus crowd.
Too many seats? Smaller screen complexes have been built. Mall footage is not expensive, I guess. Too many malls are empty or missing their anchor tenants.

Quote: Evenbob

He told me the concession is the entire profit for a theatre.

Judging by the financial statements from Carmike Cinemas (caters to small cities) concessions do more than just pay profit. Ticket revenue doesn't even come close to covering the day to day expenses. Carmike sells less than 4% of the movie tickets in USA & Canada and is the 4th ranked circuit by Natl. Assoc. of Theater Owners.

Circuit Headquarters Screens Sites
Regal Entertainment Group Knoxville,TN 6777 548
AMC Entertainment. Inc. Kansas City, MO 5336 378
Cinemark USA, Inc. Plano, TX 3825 293
Carmike Cinemas, Inc. Columbus, GA 2268 242
Cineplex Entertainment LP Toronto, ON 1347 130


Now Carmike is lower than the ticket revenue per person of AMC or REGAL. But even including concession prices, they bring in less than $11 per person on average. While it may cost just as to send two people to the movies every week as a cable TV subscription, two people for $22 is still cheap compared to live entertainment, Even if live entertainment is free, it usually assumes you are old enough to drink (and you must pay for drinks).

Year ended December 31,2012
Average theatres . . ... . 236
Average screens . . . . . . 2,286
Average attendance per screen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,032
Average admission per patron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.85
Average concessions and other sales per patron . . . . . . . . . . . . . . . . . . . . . . $ 3.91
Total attendance ................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,357,000
Total revenues ............... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $539,324,000

($’s in thousands) 2012
Film exhibition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $186,016
Other theatre operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . $211,746
Concession costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,239
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . $ 24,547
Severance agreement charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 473
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,370
Loss on sale of property and equipment . . . . . . . . . . . . . . . . . . . . $ 968
Write-off of note receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ —
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,253

The statistic that amazes me is the 22,032 average attendance per screen. If you figure 5 shows a day that works out to an average of 12 people per screening. There must be an awful lot of shows with only a few people.

So bottom line is (per customer)
$6.85 for ticket
$3.91 for snacks
$10.76 total without including gas
$3.69 amount of money that goes to movie studio for film exhibition

Universal Pictures "Tower Heist" planned a test to rent the movie to home viewers for $60 a showing three weeks after its debut in theaters. They backed down because Cinemark said they would boycott the film.

Boxoffice-mojo estimates 7.41 tickets were sold for the film in the first three weeks, after that point 2.44 million tickets were sold. My guess is very few of those 2.44 million people would have opted to pay $60 PPV to watch it on TV (even smaller would be the number of large groups of people who would sit around a TV).

I think that theater owners are simply afraid of the movie studios getting data. They may find that $40 after one week makes more sense.

Quote: Pacomartin

Sony has three turkeys so far this summer in White House Down, After Earth, and The Smurfs 2. It is highly unlikely that Elysium will make $115 million in domestic box office (it's production budget was $115 million). It's opening weekend was ranked #23, right ahead of #25 ranked "The Lone Ranger".

The studio's most recent modest budget movies like "Zero Dark Thirty" and "This is the End" have been very profitable.

It looks like Elysium will probably take in $80-$90 million, which means it is less of a failure as the other three movies. "The Mortal Instruments: City of Bones" is being released next week, but I doubt that the billionaire will lose his argument on this movie.

Latest blogs indicate that Sony will probably split the company.