American Hospital line is how to profit and run really rely on selling popcorn?

The profit mechanism of American Hospital line

For the main film screening of the hospital line, the most important source of revenue is naturally the box office income. However, as mentioned earlier, the layout of the film is arranged by the individual cinemas and the Distributor, and the Division of the box office is the same. Cinemas and distributors usually sign two agreements, one for long-term framework agreements and the other for individual "film leases" when each film is released. Such contracts will make different arrangements based on the screenings of specific films. But almost all film-screening agreements will include the following clauses:

1. Cinema Fixed Cost (house Nut): Refers to the theater's recurrent costs, including rent, maintenance, utilities, labor costs, equipment costs, insurance and so on. The amount of the projector will normally be agreed with the distributor for a fixed amount based on the location of the cinema, the number of screens, the number of seats and the broadcast of the movie trailer.

2. Film Rentals: The issuer's share of the box-office receipts, usually varies with the show time and provides for a guaranteed share.

3. Number of theaters: the number of theaters that will show the movie (also used to refer to the number of first-round cinemas showing the film).

4. Guarantee the number of weeks: the number of weeks the movie is guaranteed to be in theaters.

5. Zoning: Whether the cinema has exclusive right to release in the market.

In addition, because the cinema's box office revenue needs to split with the distributor, but the catering income is not necessary, so the projector than the distributor is inclined to draw a lower price to attract more viewers. As a result, issuers often require specific fares to be specified in the show contract and three different fares for different groups of people. Usually including adults, children (less than 12 years old) and the elderly (more than 60 years old) will also provide a maximum discount for special tickets, but because the provision of the minimum price in the United States is not legal, these prices are often provided by the projector, to circumvent the relevant laws. At present, the average price of American films is about 7.96 dollars.

In these terms, the most critical nature is that the projector and the issuer of the box office distribution scheme. In general, the projection of the box Office income division mostly take a ladder-type decline, that is, it deducted from the box office price fixed costs, and then in accordance with the proportion of the weekly decline to return the box office to the Distributor. In the first (or second) week of the major film release, the issuer usually gets 90% of the box office revenue, and the projector gets 10% or less, after deducting the projector-related expenses. Next, the number of box-office receipts available to distributors is reduced by 10% per two weeks, and the number of projectors increases by 10%, and the longer the show gets, the higher the percentage of box-office receipts. In addition, in practice, mainstream distributors usually ask for a guaranteed guarantee that the box office income per week cannot be lower than a certain percentage of the total box office (usually 70% in the first week and 10% per two weeks thereafter).

For example, suppose a US cinema requires a fixed cost of $10,000 a week for the first week, with a box-office income of $50,000. The distributor can obtain 90%x ($50,000-$10,000) =$36,000 in accordance with the 90/10 division after deducting the cost of the projector. According to the total box office 70% guarantee system, the Distributor can obtain 70%x$50,000=$35,000. Publishers then choose to settle in the first way, reaping 36000 of dollars in the box office. By the fifth week, box-office receipts had fallen to 30,000 dollars. At this time, according to deduct the projector cost after 70/10 partition system, the Distributor can obtain 70%x ($30,000-$10,000) =$14,000. According to the total box office 50% guarantee system, the Distributor can obtain 50%x$30,000= $15,000. The publisher then chooses to settle in the second way, reaping 15000 dollars in the box office.

It should be pointed out that the ratio of the box office distribution is not completely fixed, the projector and distributors need to rely on their own strength and the other game, if it is blockbuster release, distributors will usually prevail, or even to the projector to make some special requirements, such as early payment of a certain "margin." And some small publishers outside Hollywood's big companies will be at the bottom of the box office segment, at about 40% to 50% of the box office. Some of the art films that are shown on the arts court may be as low as 35% to 40% of the total box office.

Usually at least 3 months before the movie is released, the Distributor will be able to deal with the relevant issues, including the date and time of the release, the number of seats to be shown, the amount of seating available, and the proportion of the box office allocation. But these agreements are not monolithic, there is room for adjustment according to the actual situation, in the case of the box office allocation ratio, if the film at the box office is far better than expected or very bleak, the projector can ask the distributor to provide a certain "reward" or "subsidy", the distributor will usually agree, Because after all, they and the projector is the relationship between long-term cooperation, not "one-time." But this flexibility is also likely to cause some disputes, such as the 2004 Hollywood star Gibson from the group icon Company issued a large number of "The Crucifixion of Christ," the projector Regal Entertainment Line initially agreed to the Hollywood blockbuster standard split roughly about 55% of the box office to the issuer, But in the end they paid only 34% of the box office in accordance with films's standards, and the aggrieved Gibson initiated the lawsuit. Although the final two sides settled out of court, they can also gain insight into the complex interests of American film projectors and distributors.

When the film is released, the projector needs to provide the Publisher with the box office data in time. But paying the publishers more slowly, usually 1-3 months after the movie is over, but in general, the projector will be honest to the issuer, the cover-up box office is relatively rare. Because most cinemas in the United States now belong to the large courtyard line, these lines are listed companies, supervised and investors closely monitored, the development of information technology has made it more difficult to conceal revenue, most cinemas have adopted the network of computer ticketing system. Publishers will not only appoint third-party companies to monitor these systems, but will also entrust some companies to sample the ticketing situation at some point. Such services are provided by the theater entertainment Services of TNS Media Intelligence Group (FDI), which send a secret to the cinema to check the number of viewers for a show at the publisher's request, after which the Distributor can compare this data with the numbers of tickets offered by the projector. See if there is a cover-up at the box office.

Data source: Movie ticketing revenue and advertising and beverage income data from the U.S. Bureau of Statistics (U.S. Annually according), advertising revenue data from the U.S. Cinema Advertising Committee (cinema advertising Council)

In an effort to boost box-office revenues, the US cinema industry has been working closely with Hollywood studios and distributors to provide viewers with a growing number of 3D films with higher average fares. When Cameron was ready to issue Avatar in July 2009, the United States had only 1600 3D digital screens, and when Avatar was released, the 3D screen reached 3000. According to the American Film Association, as of the end of 2012, the North American market has 14734 screens to show 3D films.

Outside the box office, the second largest source of income for the hospital line is food and beverage revenues, and as a result of this part of the income does not have to split with the distributor, and popcorn and soda and other profit margins are very high, can be up to accounted. Therefore, the food and beverage income actually became the main source of the hospital line profit. As shown in table 25.2, according to statistics, 2009 U.S. hospital line of food and beverage sales income of 3.8 billion U.S. dollars. And in order to further explore the profit potential of this area, in recent years, the United States courtyard line has taken a lot of new measures, such as the opening of more counters to reduce the queue waiting for the audience, the opening of catering self-service, the audience to choose the best food and beverage after the unified checkout. The more courtyard line begins to open a formal restaurant in the theater, instead of just setting up a canteen to sell some simple food. such as the largest hospital line Regal Entertainment in the United States, since 2007 has opened a restaurant with high-end cinemas, has opened 5, unified named Cinebarre lines, plans to develop into a high-end brand. The AMC line also plans to transform 10% of its 375 theaters into such theaters. According to data released by the American Cinema Association in early 2011, 400 theaters in its 5,750 theaters have restaurants that offer more refined and expensive food. The abacus of the cinema is, for the audience, can eat in the theater, is more time saving, if the price is appropriate, should be welcomed. Therefore, the price of food is not outrageous, such as the AMC Cinema restaurant and restaurants outside the food price is comparable, as far as possible to avoid the audience because of the price and retreat. The restaurant will be decorated with a very emotional, decorative artwork on the wall, popcorn is usually free, and often equipped with a bar.

Advertising is an increasingly important source of income for the hospital line. According to the report of the American Cinema Advertising Committee (cinema advertising Council, CAC), the advertising revenue of its member theaters in 2012 was about $636 million trillion. There are two forms of cinema advertising including screen advertising and screen advertising. Screen advertising refers to the commercial advertising before the film show, the 2011 screen advertising revenue accounted for about 90% of total advertising revenue. At present, the screen advertising business of cinemas in the United States is dominated by two companies: National CineMedia and Screenvision. National CineMedia, owned and operated by the United States ' first three compound lines and other partners, covered 19700 screens in the U.S. by the end of 2012. and Screenvision covered 14200 screens as of March 2013. By contrast, advertising outside the screen is richer, from popcorn, drink cups, to cinemas in the halls of the display, from the approval of the promoters into the cinema to the audience, to cooperate with other brands to hold business promotional activities, can become the source of advertising revenue of cinemas. But overall, the screen advertising revenue is relatively limited, accounting for only 9% of cinema advertising revenue.

In addition to the above three main sources of income, in order to cope with the downturn in the show industry, the hospital line is also trying to explore new revenue growth, such as the full use of the theater of idle time to lease the venue. For example, National CineMedia Corporation, which is mentioned above, works with churches around the world, renting theaters to be used as early as Sunday, and signing 180 churches by 2009. Overall, however, the size of such sources of income is still negligible compared to the previous categories.

Second, the U.S. official Hospital line management mechanism

As a free economic system of the country, the United States official business intervention in the general industry is very small, limited intervention is usually for two purposes, one is to ensure that the industry's reasonable competition, fight monopoly, the other is to protect the interests of vulnerable groups. The management of the hospital line industry mainly involves these two aspects.

In antitrust terms, American officials are based mainly on the principles established by the 1948-Year-old Paramount decision. Prior to the big Studio era, the American film owners were controlled by eight companies, including Paramount, MGM, 20th Century Fox, Warner Brothers and Lightning China's five production, distribution, screening of large-scale integration of large companies the most powerful. In the 20th century 20 to 40, they produced about 95% of the most blockbuster productions and controlled 70% of the first-round theaters. They have joined together to form an oligopoly that has developed a number of strategies to limit competition and boost profits, creating enormous pressure on independent studios, distributors and projectors. In the projection industry, cinemas outside the five major companies want to show their production and distribution of films, not only to accept the lower proportion of film income, often must accept the packaged purchase (block booking) and the blind sign (extrudes bidding) unfair treatment.

The decision to put an end to these unfair competition rules requires that publishers and projectors in the US film market will be required to negotiate separately for each film, and that the issuer must show the film to the buyer in advance. The theaters under the line must also be negotiated separately from the distributors, and not in a uniform line. More profoundly, the paramount decision required the five companies to split the lines of their homes, disrupting Hollywood's vertically integrated industrial structure. After the decision of Paramount, the Hollywood studios have split their lines companies that took over the lines were also severely restricted, and were asked to buy new theaters only after selling cinemas, instead of buying new theaters to expand directly, unless they could convince district courts that the acquisitions would not limit competition. Before they buy theaters, they need to have hearings in the District court. Applications for the acquisition or construction of cinemas in areas where they have not previously entered will be approved, as this will help to compete.

It can be said that these antitrust rules in the decision of the paramount change the structure of the American film industry, which is still used by independent projectors to check the power of the courtyard line to control the market.

As in 2006, flagship theatres, the flagship theater company that runs only one theater in California, sued the U.S. third yard line, Cinemark. The flagship theater thinks its own Palme d ' Or 10-plex has been unfairly treated in the first round of the competition with local Cinemark theaters. Although Palme theaters offer Hollywood issuers more favorable terms, they are often rejected, and the publishers choose to bid less than Palme's Cinemark theaters century ' 15-plex. The flagship cinema sees this as the result of the Cinemark's use of its own size to pressure the issuer, a "yard deal" that violates the "paramount decision" in which the cinema bids must be "separate" for each movie in the cinema. Because the current blockbuster is a widely distributed model, and distributors in order to make their films to maximize the distribution, need to do good relations with the courtyard line. Because the courtyard line has a large range of cinemas, including many areas without competitors. And the hospital line in theory can use these advantages to require the issuer in other independent cinemas or small yard competition in the region, to its own cinemas exclusive film, and other theaters do not get blockbuster films. In 2011, the California Court of Appeal ruled against Cinemark and found that it had restricted competition.

In addition to antitrust, protecting the rights and interests of vulnerable groups is another key point for American officials in the management of the hospital line. such as the Disability Act of the United States (Americans with Disabilities Act), there is a clear requirement for the seating for wheelchair-handicapped persons in cinemas. The theater should not only be reserved for wheelchair seats, but also to arrange accompanying seats, and the location of the seat to be convenient to arrive, and to provide the disabled with the ordinary audience is the same view of film and television Kok, otherwise it will be sued by the United States Federal Court. As in 1999, AMC, the second yard of the United States, was sued by U.S. courts. Accused of placing wheelchair seats in the front row of cinemas, they were unable to provide comfortable viewing lines for people with disabilities. After 11 years of experience, AMC finally agreed to rectify the situation by placing wheelchair seats in the middle of the theater. Many other U.S. hospital lines have also encountered similar lawsuits, such as Cinemark, Apollo Hospital line, and finally to the hospital line agreed to rectify the end.

Conclusion

Throughout the American Hospital line management system, there are several experience is worth China's academic line learning.

First of all, the formation of American Hospital Line is based on the capital of the link, the hospital line for its cinemas are holding, so that the courtyard line can be truly integrated into a brand, effective self-management. But China still has more joined the courtyard line, the courtyard line to its movie theater lacks the control power, more difficult carries on the unified brand construction.

Second, the United States hospital line to build a diversified profit mechanism outside the box office, with various means to open up the catering, advertising, venue leasing and other sources of income, the strategy is still heavily dependent on the box-office income of the Chinese cinema industry learning.

Once again, industry organizations play an important role in coordinating and managing the overall interests of the American show industry, from establishing industry standards, conducting policy lobbying, organizing crackdown on piracy to organising exhibitions, conducting industry research and providing various kinds of assistance, and the functional setting of the industry organizations in the American Academy is worth emulating by Chinese authorities

Finally, unlike the Chinese official regulations for commercial operation of Cinemas must join the hospital line, the U.S. authorities do not require cinemas to join the line, instead of encouraging the existence of independent cinemas, to promote market diversification. U.S. officials have also less interference with the operation of the hospital line, but in the antitrust and protection of the rights of vulnerable groups have made stringent provisions, it is worth the Chinese film authorities for reference.