Movie studios get a percentage of ticket sales. How do they know that cinemas, especially small independent ones, are reporting their ticket sales correctly? Couldn’t a cinema just claim that a screening had 20 paying viewers when in reality they sold 300 and keep the entire extra revenue for themselves? Or do cinemas have to pay per screening regardless of how many people are in the cinema?
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Ticket sales are also part of business earnings. If they underreport earnings, that is tax fraud. It’s not just royalties they’re misreporting there. Huge discrepancies between profits and royalties would be obvious.
The movie studio might not know. The IRS, though? Yeah, have fun explaining to them how you have the income of 300 tickets, but only paid the share for 20.
Back when the Lord of the rings was being released, I had a temporary job, going into movie theaters and counting the number of people in the theater. I got to see the lord of the rings the Fellowship of the Ring, like 100 times. Each time it ended, and everybody said, “that’s it?” I got a chuckle.
Been working in cinema for 13 years. Worked at a cinema, a film festival, and now I work in distribution.
The short answer is that they don’t. There is a lot of automatic reporting solutions out there. However there’s nothing stopping a cinema from running a movie “manually”, that is, bypassing any theater management system or ticketing software by just loading up the movie in a projector and running it. The projector is designed to work offline, so as long as you have a valid decryption key the movie will play. The projector does no reporting back.
I’ve never heard about a cinema getting caught fudging their numbers. However, quite often a cinema will put up free screenings without consulting us. Like the cinema is 100 years old, so they celebrate with a free screening for the kids. Stuff like that. Since we get paid a % of the ticket price, this is obviously not OK. So part of my job is finding out about these screenings and invoicing cinemas.
Great story here:
Worked at a theater. When at the door position, it was always imparted on us to make sure to do you actual job, take the stubs, put them in the box. At the end of your shift you had to bag up the stubs, add date and position in case we were audited for ticket sales. These were the audits that ensured we were paying studios.
Well at the same time a couple coworkers in the box had this great scheme of charging everyone for a child’s ticket, knowing the correct change for what would have been given for correct tickets, and pocketing the remainder. It was something like a $2.00 difference, so if three of your party were adults, you slid $6.00 into your pocket and gave them the rest. The customer facing screens were flipped pointing into the booth as to not indicate what was happening.
Sure as shit we got audited and the company wanted to know why our auditorium for opening night of 8 Mile was filled with 150 children and no adults.
Many people, including managers who clearly should have caught this, were canned. I think some charges were filed.
Similar question could be asked for virtually any agreement where a rev-share is involved but where there isn’t any easy to track the sales with absolute certainty.
In a lot of places it’s a mixture of good faith with the occasional spot check to keep people honest.
Movie studios also hire 3rd party auditors where they not only count physical receipts and tickets, but also send a person who counts people in the theatre for a given release and they match up. That was my first job out of college. The auditing part, not the fun part.
It used to be way worse. Now that it’s all digital projection, they use security software to only allow x theater to play back X movie X amount of times per day: they can even constrain the time window. They’re called digital cinema players.
While I was at school, I had a weekend job working in a UK cinema chain. Best job for a young kid to have.
We had 3 ticket booths where staff would use a computer to issue tickets. So all of the ticket sales would be recorded and sent to the head office automatically. Presumably the head office would then pass over the numbers and percentage of the profit to the distribution studios.
However, one of the ticket booths always seemed to be broken. A couple of the managers would always work on that booth if it was busy, record sales by hand, write down customer names and issue paper tickets. They wrote down customer names for safety reasons. If there was a fire, they needed to know how many people were in the cinema at any point in time. So it is actually in the best interest of the cinema to have an accurate count of movie goers.
“What is to stop them from throwing away that piece of paper at the end of the day?”.
Good question. Such a good question that 3 of the 6 managers decided to do just that. Throw away the paper and keep the profits for themselves. Now, I’m no lawyer, but that seems slightly criminal. It turns out, the police also thought it was criminal. One quiet day when the 3 managers in question were working, the other 3 arrived with police to arrest them.
So the reason they usually have the correct numbers are…
1- It’s mostly digital nowadays.
2- For safety reasons, the cinema also wants to have accurate numbers
3- If they don’t, they will probably be arrested for what I presume is embezzlement.
this isnt the 1940s. sales are computer based. contracts are VERY tight. Breaking a contract would be theft and thus illegal. It would likely be discovered (if only by an underpaid employee who got pissed off at the manager), and would end that theater’s ability to show movies. n
its also worth noting the DCPs can only play at very specific windows pre-determined with the studios, otherwise they wont decrypt. So its not possible to run extra shows or even screen a movie for your buddies after hours.
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