Golden Corral goes to the movies

[Bronzeage]

From AMC and MoviePass, a Film a Day for a Monthly Fee


For those who don't have a Golden Corral restaurant in your area, it's one of those mile long all you can eat buffet places. It sounds like a great deal, but halfway through the first plate, you realize there's nothing that tastes good enough for a second helping. There's not much to tempt you to get a second plate of anything. It's just there and you already paid, so why not get some more? It's a fine balance between "worth the $11.99," and "just barely good enough to get you to come back."

This is a tricky business model. The idea is to get enough people to eat less than $11.99's worth, to make up for those who pile the plate high with the prime rib(which will put you off prime rib for a while).

Now the AMC movie theater chain is trying to expand the all you can eat business model to their theaters. How does "a movie a day, for one monthly fee," sound. Sounds crazy to me, because I know that in the history of the motion picture industry, going back to Thomas Edison, there has never been a month in which 30 movies were playing at the same time. It's not possible to see 30 different movies on a big screen, at any price.

So, right from the start, they are selling something they don't have, but at $45 a month, it only takes 5 or 6 movies to break even. I don't have that kind of time in my life, but maybe someone does. Of course, the movie a day is actually a practical limit in a theater with 12 screens. You have to come back tomorrow to see the film in the next room. Of course, you buy more popcorn and another $6 drink.

A movie theater is a strange business. The cost of operations has no relation to the number of tickets sold. It costs the same to show a film to an empty house, as it does for an empty room. This makes it a "zero marginal cost" business. This means each additional customer comes with no extra cost of doing business. Once the expenses are covered by ticket sales, each additional ticket is 100%. It's great when it works. It might also open theaters up to more low budget(low appeal) indy films, simply because the need to fill as many seats as possible would be relaxed a bit.

So, the question becomes, how much would you pay for a movie a day? How many movies would you, or could you view? You might see the same film at home on a small screen, so is the experience worth $25 a month? Maybe $35?

 

[Sarpedon]

I've recently been thinking about cancelling my netflix account, simply because movies I want to see are not being created at the same rate that I am watching them. My queue has bloated up to around 130 titles, but very few of them are things I am dying to see..they are all, 'hey, that looks like it could be good,' kind of movies.

I say that because the competitor for theaters are things like netflix. If netflix is coming close to not meeting my $15 dollar/month expenditure + minimum amount of effort, why would a theater be worth $45 dollars/month + greater effort and inconvenience, without the extra choices?

 

[DrJim]

If netflix is coming close to not meeting my $15 dollar/month expenditure + minimum amount of effort, why would a theater be worth $45 dollars/month + greater effort and inconvenience, without the extra choices?

Because the theatre has popcorn at only $.01 per kernel.

 

[Sarpedon]

I can make my own snacks for cheaper and with more choice. Does the theater serve delicious cremed parsnips and beer? NOOOOO!

 

[Bronzeage]

I've recently been thinking about cancelling my netflix account, simply because movies I want to see are not being created at the same rate that I am watching them. My queue has bloated up to around 130 titles, but very few of them are things I am dying to see..they are all, 'hey, that looks like it could be good,' kind of movies.

I say that because the competitor for theaters are things like netflix. If netflix is coming close to not meeting my $15 dollar/month expenditure + minimum amount of effort, why would a theater be worth $45 dollars/month + greater effort and inconvenience, without the extra choices?

I am thinking the theaters need to forget Golden Corral and go with the Planet Fitness business model. PF gives a healthclub membership for $9.98/month. Other full service gyms can sell the same membership for anything from $45 to $120, but Plantet Fitness is still profitable. The reason is simple. They have discovered a number which people will pay, even when they don't use the service.

 

[TV and credit cards]

I wouldn't pay a recurring fee. If I could at any given time walk up and plunk down $XX and it's good for the next 30 days, perhaps. But where they constantly ping your credit card every month until you get around to canceling, no way. I don't let any corporation automatically charge my card or stick their fingers in my checking, save for my auto insurance.

I've gone back to renting from the local video store. What was old is now new again for me. They have a deal for about $7, all new release movies are half off for the following 30 days. It starts whenever you put your money down, is not recurring or tied to the calender. It works for me as I'm good for usually three movies a week.

I haven't been to my local theater for about five years now. I saw District 9. The theater smelled of BO.

 

[bilby]

I used to work in the cash room for a big bank in the UK. My job was to count the bulk cash deposits from retailers, confirm that the amount in the bag matched the deposit slip, and pass the deposit slip to a clerk who updated the customer's account balances.

One big customer was the local multiplex cinema, and they had separate accounts for ticket sales and for the 'concessions' - soft drink sales, and snack foods

The concession account brought in more money than ticket sales, by a very large margin; typically concessions takings were around seven to ten times ticket sales.

It seems obvious to me that (at least in the case of that one cinema), getting people to come in and buy popcorn is more valuable than making money on ticket sales. So giving out very steep discounts on ticket prices to get more bums on seats would seem to be a good plan. Of course that doesn't take into account the cost side of the equation; Ticket sales have almost zero marginal cost, while popcorn, despite being very cheap to produce - and therefore high margin - nevertheless does have some marginal cost associated with it.

 

[Bronzeage]

I used to work in the cash room for a big bank in the UK. My job was to count the bulk cash deposits from retailers, confirm that the amount in the bag matched the deposit slip, and pass the deposit slip to a clerk who updated the customer's account balances.

One big customer was the local multiplex cinema, and they had separate accounts for ticket sales and for the 'concessions' - soft drink sales, and snack foods

The concession account brought in more money than ticket sales, by a very large margin; typically concessions takings were around seven to ten times ticket sales.

It seems obvious to me that (at least in the case of that one cinema), getting people to come in and buy popcorn is more valuable than making money on ticket sales. So giving out very steep discounts on ticket prices to get more bums on seats would seem to be a good plan. Of course that doesn't take into account the cost side of the equation; Ticket sales have almost zero marginal cost, while popcorn, despite being very cheap to produce - and therefore high margin - nevertheless does have some marginal cost associated with it.

That's the reality of the theater business. It's sort of like a bar that lets the band put a guy at the door to collect $5 from everyone who comes in. The band gets all of it and the bar sells drinks.

AMC is desperate to put asses on seats. When the stadium seating style theaters became the standard, the industry greatly overbuilt. They did not anticipate how much the internet and scoreboard sized tv's were going to affect their business. Right now, there are 3 shuttered stadium seating theaters in my city. There's only one old style theater remaining and it makes it's money off second run films and $2 tickets.

 

[Underseer]

I used to work in the cash room for a big bank in the UK. My job was to count the bulk cash deposits from retailers, confirm that the amount in the bag matched the deposit slip, and pass the deposit slip to a clerk who updated the customer's account balances.

One big customer was the local multiplex cinema, and they had separate accounts for ticket sales and for the 'concessions' - soft drink sales, and snack foods

The concession account brought in more money than ticket sales, by a very large margin; typically concessions takings were around seven to ten times ticket sales.

It seems obvious to me that (at least in the case of that one cinema), getting people to come in and buy popcorn is more valuable than making money on ticket sales. So giving out very steep discounts on ticket prices to get more bums on seats would seem to be a good plan. Of course that doesn't take into account the cost side of the equation; Ticket sales have almost zero marginal cost, while popcorn, despite being very cheap to produce - and therefore high margin - nevertheless does have some marginal cost associated with it.

The difference between concessions and ticket sales is greater than you think. Movie distributors screw over those theaters so that they get very little from ticket sales. Most of what you were counting from ticket sales went to the studio/distributor.

This is why I'm willing to pay exorbitant prices for something as cheap as popcorn: it's basically the only money the local theater owner gets.