Movie Theater Concessions--Justifiable or Not?
Gayathri Shankar
Mr. Reuter
Economics
14 October 2014
Movie Theater Concessions - Justifiable or Not?
Whether it’s with friends or family, movie theaters are undeniably, one of the most popular areas for entertainment. Movie theaters have three main sources of profit, and they include, the movies themselves, the pre-movie advertisements, and most important, the concessions. How many times have we all gone to the movies and just spend money on the ticket? Exactly. We’ve almost always bought popcorn, nachos, candy, or soda, and the fact is, concessions are basically an inevitable purchase. I know for a fact my brother’s main intentions at the movies is to scarf down an entire bucket of buttery popcorn, solely for the pleasure of it. Just thinking about the outrageous amount of money we spend on movie theater popcorn is alarming, but movie theaters thrive off of their concessions. So the question is, for us as consumers, is it justifiable or not?
First of all, let’s take a look at the statistics involved in movie theater concessions. Movie exhibition houses rely on their concession sales to keep their business successful. The bucket of popcorn we pay $5 for or more only costs the theater about 50 cents, and the $4 bottle of soda only costs them 10 cents, as an approximate. Is it possible to restrict ourselves to just that one bucket of popcorn? Not quite, as the saltier the popcorn is, the more you’ll need a giant soda to quench your thirst. Not only are these concessions harmful to our wallets, but also to our bodies. A large bucket of popcorn contains approximately 1,030 calories, a negative externality worth considering. In this case, the marginal benefit would not outweigh the marginal cost, as buying more and more would just become unhealthier and unhealthier. When a theater manager was asked about how he felt about their business, he replied, “we’re not in the movie theater business... we’re in the candy and popcorn business.” Andrew Smith, from the University of South Carolina Press, states, “In the 1930s, the best comment was, ‘find a good place to sell popcorn and build a movie theater there.’” Smith also states that, “the reason for a 15 cent bag of popcorn costing you $5 and an 8 cent cup of Coke is costing you an additional $4, it’s because the economy system is so weak that the concession stand is where theaters make most of their money, rather than from their ticket sales.”
It is known for a fact, that without the overpriced concessions, the theater doors would close for good, and there would no longer be a main house of entertainment for the public. The demand for concessions, especially popcorn, is so high that if it happened to be scarce, our hometowns would no longer house a theater. “The argument that pricing secondary goods, in this case, the concessions, higher than primary goods, the movie tickets, can benefit consumers has been circulating for decades,” says Wesley Hartmann of Stanford Business. The truth is, if you want to bring more consumers into the market, you need to keep ticket prices lower to attract them. “Theaters widely make up the margin by transferring it to the person willing to buy the popcorn bucket, the nachos, the candy, the soda.” The opportunity cost of large buttery popcorn would be possibly purchasing another movie ticket for continued entertainment. People who come to the movies in groups also tend to buy more popcorn, soda, and candy; these will most likely be teenagers and families. If that turns out to be the case, “theaters will want to run more family or adolescent oriented movies to attract a more concession buying crowd,” Hartmann also says. On the other hand, there are definitely possibilities that may damage the market and business as well. If people happen to stop buying concessions, theaters will have to increase ticket prices to keep up the profits. This will result in a decrease in daily attendee population, leading companies to fail in making profits. The repercussions of all this? The closing down of the theater. However, if theaters decide to stop selling concessions, ticket prices will again need to be raised, reducing the number of people that decide to go to the movies, which will undoubtedly generate a lower income for the theater company. This will result in people losing jobs, a plummeting employment rate, and automatically, the economy as a whole is affected.
Ultimately, would there really be any successful movie theater without popcorn? It’s almost as if the whole experience is incomplete without enjoying the pleasure of snacks. People accept the movie ticket price and look past the concession prices, justifying it as “necessary” for complete enjoyment. Compare it to Starbucks, many of us consume this overpriced coffee day by day just for the enjoyment of it. I can definitely attest to the fact that the concession stand is almost unavoidable and that I seem to always purchase a packet of candy or a soda. This goes to show that it is so simple to shell out money on snacks that I could easily avoid. So next time you venture off to the theaters, ask yourself, can I really justify spending this much money on a bucket of popcorn -- or snacks in general?
Sources:
0 Response to "Movie Theater Concessions--Justifiable or Not?"
Post a Comment