Why are Movie Theater Concessions So Expensive? (The US v Paramount)

TL;DR

Movie theater concessions are expensive because theaters rely on them to make a profit, as ticket sales alone are not enough.

Transcript

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Key Insights

• 💦 The Supreme Court's decision in 1948 changed the way movie distribution and exhibition work in the U.S.
• 🎭 Studios and theaters currently split gross profits, with theaters getting a smaller share as the movie's run progresses.
• 🥺 Theaters have little leverage in negotiations with studios, leading to high concession prices.
• 🎭 Some argue that ending the prohibition of studio ownership of theaters could lead to more targeted releases and shorter theater-to-home release times.
• 🤑 Theaters have to find other ways to make money besides ticket sales, which is why concessions are expensive.
• 🎥 Studios have a strong incentive to make movies with built-in demand, which contributes to the dominance of superhero and franchise films.
• 🎭 Theaters have limited leverage in negotiations, especially for small theater chains.
• 👻 The current system allows theaters to focus on the buying power of customers rather than the overall volume of customers.

Questions & Answers

Q: Why were Hollywood studios and distributors considered a monopoly before 1948?

Hollywood studios and distributors had nearly all the control over movie theaters, deciding which movies would be shown and setting admission prices.

Q: How did the government try to limit the studios' power in the 1920s and 1930s?

The government filed antitrust suits and sought to break the trust that the studios had. However, due to the Great Depression, the enforcement of these decisions was delayed.

Q: Why did the independent movie producers form the Society of Independent Motion Picture Producers (S IMPP)?

They formed S IMPP to fight against the consent decree that allowed the studios to keep ownership of theaters but inhibited block booking.

Q: How do theaters make money besides ticket sales?

Theaters charge high prices for concessions, which make up a significant portion of their revenue.

Summary & Key Takeaways

• In 1948, the Supreme Court ended the monopoly of Hollywood studios and distributors over the U.S. movie market, allowing independent producers and distributors to enter the industry.

• Prior to this, a few major companies controlled movie theaters, deciding which movies would be shown and setting admission prices.

• The studios and theaters currently split gross profits, with theaters relying on concessions to make a profit.