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Topic: Movie theatre sued over high snack prices

Louis Bornwasser
Film God

Posts: 4441
From: prospect ky usa
Registered: Mar 2005

posted 03-06-2012 09:10 PM

It is possible that Michigan law is somehow different.

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Mike Blakesley
Film God

Posts: 12767
From: Forsyth, Montana
Registered: Jun 99

posted 03-06-2012 10:07 PM

Our local TV station has put this same story on their website and of course, asking readers for comments which unleashes the usual barrage of people bitching about cinema prices and it's too expensive to go to the movies. (Which they are typing on their $400 phones, no doubt.)

I don't understand why the cinema industry gets dumped on by the media for its prices. Where is the furor over HP charging $3500 a gallon for ink, for example?

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Frank Cox
Film God

Posts: 2234
From: Melville Saskatchewan Canada
Registered: Apr 2011

posted 03-06-2012 10:28 PM

Theatres are a target for many things due to their visibility.

Same reason why a gas station can have a rack of DVD's for rent in the back and nobody cares if he's renting a restricted movie to a 12-year-old, but the balloon goes up if the same 12-year-old manages to watch the same movie in a theatre.

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Justin Hamaker
Film God

Posts: 2253
From: Lakeport, CA USA
Registered: Jan 2004

posted 03-06-2012 10:44 PM

I really would like to see one of these major news show - 60 Minutes, Rock Center, etc - do a report on theatre prices. I would like to see them explore the accounting on concession prices, as well as how today's prices compare historically along with wages. Most people would be absolutely shocked to see the results.

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Scott Norwood
Film God

Posts: 8146
From: Boston, MA. USA (1774.21 miles northeast of Dallas)
Registered: Jun 99

posted 03-07-2012 12:24 PM

I'm surprised that no one has posted this:

Michigan Consumer Protection Act

Section 445.903 (z) appears to be relevant here: "Charging the consumer a price that is grossly in excess of the price at which similar property or services are sold."

I don't really see why this should be illegal, but it apparently is in Michigan.

In any case, the relevant comparison should be the prices charged for snack items at other out-of-home entertainment venues (baseball parks, carnivals, etc.), not the price that 7-Eleven charges for the same snacks. If one made that comparison, it would probably turn out that movie theatre prices are in line with (or possibly slightly cheaper than) the prices at other entertainment facilities.

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Chris Slycord
Film God

Posts: 2986
From: 청주시, 경북도, South Korea
Registered: Mar 2007

posted 03-07-2012 01:06 PM

That is, if you consider myself and Jeff to be "no one" (granted, I paraphrased it; he quoted it). [Razz]

And as he pointed out, it's to make it a crime to do "price gouging." Like you call for a locksmith to their house and he charges $1000 because they know you're desperate when anyone else would charge ~10X less than that.

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Mike Frese
Master Film Handler

Posts: 465
From: Holts Summit, MO
Registered: Jun 2007

posted 03-07-2012 06:43 PM

quote: Mike Heenan
Maybe I missed it, but I didn't see anything in the article stating the reason for high concession prices, which we all know is due to the fact theaters don't make much money off of the films themselves.

This is an absolute lie. AMC in their most recent SEC filings show a film exhibition cost of 53-54%. Which inline with what other operators pay. Karma????

AMC makes a gross margin of 85%+ on their concessions. Buy for $.15 sell or $1.

It has not helped that those theater sized candies that many theaters charge more than $3 for can be bought at Wal-Mart/Dollar Stores/Grocery stores for $1.

But we should not care right? All is well in the theater business. Oh wait.......The number of theater admissions is down 20% from a high in 2002.

Yes the lawsuit is a piece of crap. But so many people agree with the overall topic that prices are too high. One poll attached to this story showed approx. 2/3rds agreeing that prices are too high.

Read the comments associated with these articles? not much love for the industry there.

Theaters that are charging less than the national averages are outperforming the national averages. Coincidence? Karma?

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Chris Slycord
Film God

Posts: 2986
From: 청주시, 경북도, South Korea
Registered: Mar 2007

posted 03-07-2012 07:19 PM

quote: Mike Frese
This is an absolute lie. AMC in their most recent SEC filings show a film exhibition cost of 53-54%. Which inline with what other operators pay. Karma????

Not exactly. From my calculation, it seems the 53% you're coming to is looking at it as if "making money from the movie" is "making a profit when you ignore all costs that aren't film rental."

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Mike Frese
Master Film Handler

Posts: 465
From: Holts Summit, MO
Registered: Jun 2007

posted 03-07-2012 07:33 PM

quote:
quote: Mike Frese
This is an absolute lie. AMC in their most recent SEC filings show a film exhibition cost of 53-54%. Which inline with what other operators pay. Karma????
Not exactly. From my calculation, it seems the 53% you're coming to is looking at it as if "making money from the movie" is "making a profit when you ignore all costs that aren't film rental.

Chris,
It has been a common practice to let the idea that the studios get all of the ticket money perpetuate. Of course there are other costs associated with operating a theater. But that is not what people are talking about.

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Marcel Birgelen
Film God

Posts: 3357
From: Maastricht, Limburg, Netherlands
Registered: Feb 2012

posted 03-07-2012 07:35 PM

quote: Mike Frese
This is an absolute lie. AMC in their most recent SEC filings show a film exhibition cost of 53-54%. Which inline with what other operators pay. Karma????

I didn't look at any SEC filing myself, but either the numbers are being misinterpreted or AMC has far better agreements than many other exhibitors.

Take a look here: http://www.cgu.edu/include/at_the_movies.pdf

Actually, a margin of about 40-55% would be far more reasonable, it's not like this margin accounts to direct profit for the theater...

quote: Scott Norwood
Section 445.903 (z) appears to be relevant here: "Charging the consumer a price that is grossly in excess of the price at which similar property or services are sold."

Not that it is directly relevant right here, but several countries outside of the US have similar laws to protect customers from abusive overpricing. Yet, most of those laws will only come into effect if there is some form of pressure involved and nobody forces you to buy a bag of popcorn at $5.

But I guess, in many cases, concessions are really way overpriced, especially considering the price of movie tickets in general. Customers do not know anything about the underlying economics and you cannot blame them.

So, customers are essentially right when they're starting to complain. Going to a movie with your family shouldn't be something that will set you back like $100.

I remember something like a small revolt in Belgium a few years back. The largest national cinema chain (Kinepolis Group) got quite some exposure in the local press after they raised prices to a certain breaking point. It all started as a rant on a Facebook page, but ended with the CEO personally offering apologies.

But, in the end, nothing really happened, prices didn't go down. [Wink]

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Chris Slycord
Film God

Posts: 2986
From: 청주시, 경북도, South Korea
Registered: Mar 2007

posted 03-07-2012 08:10 PM

quote: Mike Frese
Chris,
It has been a common practice to let the idea that the studios get all of the ticket money perpetuate. Of course there are other costs associated with operating a theater. But that is not what people are talking about.

But that *is" what people are talking about here inside this forum.

Or did you miss the post directly after the one you initially quoted?

quote: Justin Hamaker
I'm extremely irritated that the article doesn't even talk about the economics of running a movie theatre. Anyone who understands accounting would understand that the price of snacks at a movie theatre has far more associated costs than the cost of the raw ingredients.

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Paul Linfesty
Phenomenal Film Handler

Posts: 1383
From: Bakersfield, CA, USA
Registered: Nov 1999

posted 03-07-2012 08:21 PM

quote: Marcel Birgelen
I didn't look at any SEC filing myself, but either the numbers are being misinterpreted or AMC has far better agreements than many other exhibitors.

But that article seems to be quoting industry standards and figures from the 90's. My understanding is that today, most contracts are an aggregate (a consistent percentage for the life of the run) with the 90 percent of the net (after a house "nut" is deducted), is a thingn of the past. And I've seen Regal quote a similiar percentage for first run engagements from the majors (and somewhere around 37 percent for indie companies...I think this infor came out over a dispute over what percentage Regal was going to pay for LAST TEMPTATION OF CHRIST, considering it an independent). While there a lot of operating expenses a theatre has in addition to film rental, exhibitors used to like to throw out that 90 percent figure to the public without explaining how it was calculated, as though it was a straight percentage.

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Mike Blakesley
Film God

Posts: 12767
From: Forsyth, Montana
Registered: Jun 99

posted 03-07-2012 09:00 PM

quote: Marcel Birgelen
Going to a movie with your family shouldn't be something that will set you back like $100.

And why not? Where else can you get professional entertainment for four or five people outside the home for two hours for anything less than that (unless you enjoy walking in the park and that kind of thing)?

I just don't get why people are so fired up when it's STILL one of the lowest-priced options for going out on the town, and all the while it keeps getting more and more expensive to run a theater.

Perception is the problem here...people just don't understand the business. If the auto industry had the problem we do, people would be writing letters to dealerships and filing lawsuits demanding new cars for $9,000.

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Mike Frese
Master Film Handler

Posts: 465
From: Holts Summit, MO
Registered: Jun 2007

posted 03-07-2012 10:01 PM

quote: Chris Slycord
But that *is" what people are talking about here inside this forum.

Or did you miss the post directly after the one you initially quoted?

Chris

If you read the articles and the comments of the people, you will see the claim that we do not make any money or very little off of the tickets sold. And that is why theaters have to charge such high prices for concessions. The public thinks that. The industry has used a lie to justify high concession prices.

Mike B.
You are not in the class of theaters people are complaining about. Large corn and large soda for $5.75 right? Why do not you raise your prices to what the bigger chains charge? A family of 4 can get quite a bit of snacks and tickets for less than $50 at your theater. And I bet you admissions have gone UP year after year.

Here are the facts folks:
National admissions
2011 1.29 billion
2010 1.339
2009 1.414
2008 1.341
2007 1.4
2006 1.401
2005 1.376
2004 1.484
2003 1.521
2002 1.57
Source NATO

If you read the comments from the over 250 news articles on this story online, you will see that the majority think we charge too much. Most also think it is okay to "sneak" their own drinks and snacks in.

The industry has a serious perception problem. But that leaves great opportunity for operators who do not choose the gouging strategy.

I want my customers to come to the theater at least once a month. They are not going to concerts 12 times a year. Or minor league sports 12 times a year. Right now people are coming to the theater on average less than 5 times a year.

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Jonathan Goeldner
Phenomenal Film Handler

Posts: 1360
From: Washington, District of Columbia
Registered: Jun 2008

posted 03-07-2012 10:16 PM

quote: Mike Blakesly

Our local TV station has put this same story on their website and of course, asking readers for comments which unleashes the usual barrage of people bitching about cinema prices and it's too expensive to go to the movies. (Which they are typing on their $400 phones, no doubt.)

I don't understand why the cinema industry gets dumped on by the media for its prices.Where is the furor over HP charging $3500 a gallon for ink, for example?

let alone the high price of razor blades for some of us who shave every day. [Big Grin]

in regards to the douche... er I mean Joshua Thompson, why complain about the concession prices, when he can eat BEFORE going out to the movies and not have the appetite to indulge - it's not like someone is pointing a gun to his head to buy popcorn and/or a soda.

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