Why have movie ticket prices and more so popcorn prices vastly outstripped inflation.
In: Economics
Fewer people are going to the movies and movie studies are taking bigger cuts of the box office on the first few weeks of releases. All while people have always had a fixed portion of their budget for entertainment.
So basically, no matter what, people will only spend the same fraction of their budget on entertainment. When cost of living rises and wages don’t match it, that means the proportion of money they can spend on entertainment goes down.
At the same time, entertainment has been really cheap, what with streaming services offering basically endless content at lower prices. Cordcutting is a big influence on this, but so is changes in the consumption of culture with more money going to live streaming and gaming. All of that is entertainment.
So the theaters have a conundrum. They want to grow at the same rate and meet their expectations as they always have, typically 5-10% revenue growth per year. But they don’t make content, they just are the endpoint for distribution. The only thing they can control is the ticket price and concessions.
TL;DR the theater is a slowly dying business model.
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