What Happens To The Money Spent On Movie Ticket?

Spending | December 8, 2009 at 1:10 am

It’s a fad. It’s a source of entertainment. It’s fake. It’s fun. That’s how we think about Hollywood movies. The fact is it’s a big business.

We have seen experts talking about economy, stock market, mortgages, credit cards, debts, etc. Let us discuss today about some interesting topic. What happens when you spend a dollar on movie tickets? Of course, it’s a loss for you and you have a dollar less than what you had. But where does this dollar go? Who are the owners of this dollar? Enough questioning; let me come to the point.

Let us consider a movie ticket costs around $10 per person and let’s say in theater XYZ. Out of this $10, 45% or $4.5 goes straight to theater XYZ, which than spends this $4.5 to pay its staff, bills, maintenance, etc. What about the remaining 55%? Oh, there are many people and department among which this $5.5 is distributed. Let’s see what and who are they.

Marketing and advertising: $2.11

There are two reasons why I have out this owner on top. First, it grabs a major part of the remaining $5.5 and second, it the most important factor affecting the success and failure of the movie. This cost is used to bear the expenses paid for advertising in newspapers, TV promos, internet, radio ads, and posters. A high profile movie probably spends more than $100 million on such activities because they know the importance of advertising.

Production: $1.71

This cost is used to spend on expenses like costumes, sets, staff salaries, insurances, and such countless other stuffs. In short, it covers all the expenses incurred from the start till the end of the movie making process. To avail more profit, it’s important for movie makers to cut down expenses in this category. However, most of them overspends as many scenes in many movies worth millions of dollars and it has to be shot many times to make it a perfect scene.

Movie Distribution: $1.00

Movie distribution is not like distributing goods all over the city. It involves carefulness, secrecy, punctuality, security, etc. And money spent per movie reel is also quite big.

Actors and Actress: $0.68

I cannot say this is the exact amount spent on paying the actors. It totally depends on the type of actor acting and type of movie being made. So the percentage of expenses in this category keeps varying. However, $0.68 is the amount paid in big budget films. If less is spent in this category, the remaining amount is divided in other three categories (not equally but according to the needs).

The price of a movie ticket is fixed by the theater and not the producers. Whatever the cost may be, they get only 45%. Now, if there is any increase in the overheads, they get less profit. Or they have the option to increase the price of the ticket. But increasing ticket price cannot be done frequently.