An interesting book, but the forward is terrible and almost made me put it down. (Grand claims about Evolutionary Psychology in an Economics books was a huge red flag. Fortunately, by the time I got to the final chapter, he turned out to be claiming less– I guess an edgy start was his marketing plan.)
He does a good job of introducing puzzling prices we encounter in our daily lives and offering interesting explanations (or a good hypothesis) for each. The various demand curve discussions a little murky in text, but often backed up with a sketch appropriate to the situation, so it would up being clear in the end. Even better were the additional facts that informed many of the specific issues.
The title issue was easy to see as soon as he introduced the fact that movie producers, rather than charging a flat fee for a movie reel instead charge a high percentage of the ticket revenues (often 70-95%). If 95% of ticket sales are going to the movie producer, then yeah, the theater has to pay for everything from something– and really, drinks and popcorn is what’s left. If they lose 70%+ of their ticket price, their incentive to hike admission rates should be small (since they get less than $1 per $3 increased)– but with most theaters showing $10+ movies already, it’s hard to imagine prices continuing up. Or at least it’s hard to imagine people still buying the theater’s popcorn when the cost of admission has eaten their whole entertainment budget.
2 replies on “Why Popcorn Costs So Much at the Movies by Richard McKenzie”
I didn’t know that 95% of all ticket sales go to the producer. That’s an interesting bit of trivia and does offer an explanation for the high price of theatre snacks.
I worked in the theatre industry for seven years. This is quite true. In fact, on certain big releases it was not uncommon for the film company to require a deposit of $3-5k just to secure a copy of the film (90’s prices). The film company would often take 90% of ticket gross for the first two weeks or even longer in some cases (Paramount and Star Trek films for example). A film had to be in the theatre for at least a month before the theatre owner was getting 40-50%.
The price of snacks and tickets is related to the amount of money that hollywood people make. So when big stars want millions per picture, we pay the price at the ticket window and the concessions stand. But much like professional sports, there wouldn’t be this situation if the desire for higher pay wasn’t also supported by the consumer (though baseball is out of control with no salary cap).