Where Does the Money You Spend on a Movie Ticket Go?

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Two Movie Tickets In Front Of A Take Clapperboard And A Reel Of Movie FilmAs has become recent tradition, some friends and I decided to head to the movies and see Saw VI.  Even though I haven’t really liked the last 3 Saw movies that have come out, I feel compelled to continue to watch them, as if I’m addicted.  Well, Saw VI certainly lived up to my expectations, of which there weren’t any, and I considered another $10 well spent.

Then I got to thinking.  I remember when movie tickets were just a few bucks and a matinee was even cheaper.  Now, taking your family to the movies can cost a family of four $50, just for the tickets.  When you add up overpriced candy, popcorn and drinks, the night can easily add up to $100.  So why does it seem like movie ticket prices continue to increase far beyond inflation, and more importantly, where does that money go?

The general breakdown for a Hollywood movie gives the movie theater 45% of every ticket sold and the studio that created the movie 55%.  This means if a movie ticket is $10, the theater that shows the movie receives $4.50 and the studio, lets say Paramount, receives $5.50.  For the theater, the $4.50 pays for employees, maintenance, food and drink and other various costs while for the studio, the $5.50 can be further divided into the sub-categories below.

Advertising and Marketing: $2.11 – Usually, a high profile movie has a high profile marketing budget upwards of $100 million.  TV commercials, newspaper and radio ads, Internet ads and billboards are used to drive future ticket sales. When market research and preview trailers are factored in, a studio breeze through it’s budget.

Production: – $1.71 – This amount includes almost every cost other than the actors salaries.  Sets, costumes, permits, insurance, employee salaries and other various fees fall into this category. Almost every movie goes over-budget in this category as some movie scenes cost millions of dollars and need to be done more than once.

Movie Distribution: $1.00 – 10% of every ticket goes for distribution of the movie reels.  Seems a little steep simply to pay thousands of dollars per movie reel but sometimes these movies are so sought after they have to be shipped with an escort.

Actors and Actresses: $0.68 – This percentage varies from movie to movie and $0.68 represents a big cast film.  If a movie does not spend as much on actors and actresses, additional percentages are added to the other three categories.

The theater chain sets movie ticket prices, not the studios that create the movie. When costs rise for a theater, it is twice as difficult for them to increase revenue because they lose 55% of every ticket. The end result means an increased ticket price of more than it actually needs to be.  The average movie ticket price in 2008 was $7.18. While a 30 cent increase from year to year is expected, the average ticket cost in 2009 looks to be around $8.50. If you’re lucky enough to have a theater near you that charges less than $10 per ticket, take advantage now because it won’t last that way for very long.

And of course, you can always skip the movie theater and use Netflix or Blockbuster Online instead.

Published or Updated: April 20, 2011

Comments

  1. Craig says:

    Surprised the theater gets that much actually. Thought they got less and made all their money on food which is why the prices are so high.

  2. Hank says:

    I love seeing breakdowns like these. It is like a behind the scenes look. Very interesting!

  3. Hey Michael – Interesting insight. Just wanted to say I really enjoyed your guest post on Studenomics! Very good insight!

    FS

  4. Ryan says:

    Good break down. I enjoyed the read, thank’s.

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