February 25, 2008

Why Is Popcorn So Expensive At The Theater? So We Can Afford To See The Movie!

Any movie lover with a dash of common sense would probably have guessed it's true: movie theaters charge an arm and a leg for popcorn and other concessions in order to keep ticket prices relatively affordable. But now we Ph.D's telling us it's true.

Researchers at Stanford and the University of California, Santa Cruz, looked to answer whether it's better to charge a premium on a primary item (the movie ticket) or a secondary item (the popcorn) and found that by charging a premium on the popcorn and keeping the tickets a little cheaper, more price-sensitive consumers would hit the theaters and those with a little more cash would still pig out on the profitable concessions.

It's important for theaters to attract as many viewers as possible for their screenings as profits are split with movie distributors and without viewers, movies will be played elsewhere. But concessions, which account for 20% of movie theaters' gross revenues, actually account for a full 40% of their profits because 100% of concession revenues stay with the theaters.

Count your lucky stars because it looks like those movie theaters that we complain rip us off are actually doing us a favor!

Via physorg.com