Monthly Archives: December 2013

Is the movie business a tenth the size of the TV business?

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How much do movie tickets cost (on average)?

$8.38 at the theatre.  However we also have to watch ads, which account another for 7% of revenue ($.61), so $8.99 total. At 110 minutes per movie, movies cost  $4.90 per hour.

However unlike TV, only 13% of us watch a movie in a theatre every month. In the USA+Canada 1.36B tickets were sold for $10.8B. With a potential audience of 332M, that’s 4.1 tickets per person per year. The average USA/Canadian spends $3 per month on movie tickets. The average frequent (1 or more movies per month) moviegoer spends ~$12 per month.

Question: Is the movie business one-tenth the size of the TV business?
Answer: No*. In the USA we spend $10B on movies and $140B on TV so it’s only 7%.

*However, if we add in movie rental, sales and subscription service revenue … [future post]

Interesting that movies ($3 or 40 minutes/month) get so much Media attention and TV (~100 hours and $50/month) so little…

Bonus question: I can get a season pass to the ballpark. Why can’t I get a season pass to the movie theatre?

Since all-you-can-eat (e.g. Netflix) is the optimal (maximal revenue) media business model, why don’t theatre owners offer it?

With the typical theatre holding 225 seats, a fraction of the 20,000+ of a sports stadium, theatre owners must ration seats and spread out demand over several weeks. Unlike the steady demand for sports tickets, movies draw the largest audience in the first weekend and smaller audience after that. Theatre owners would like to increase revenue through (all-you-can eat) subscriptions, but keen movie fans don’t want passes that deny them from watching when the movie is most in demand. Nor do wall-sized movie displays offer any advantage to the closest seats, unlike live performances.

Over the past 100+ years, theatre owners have learned to optimize revenue with all-you-can-eat soda and popcorn, but don’t sell the tickets to seats this way, as the number of seats (unlike soda and popcorn) can’t be super-sized at near-zero cost.

Answer: Despite the problems listed above, MoviePass is trying to offer ‘Unlimited Movies” for $29.99 per month, a safe 10x ‘normal’ ARPU (average revenue per user).

What costs more, a cigarette or a TV show?

smoking

Part one of a series on what every media reporter and executive should know, but probably doesn’t.

What is more expensive, playing Batman or watching it? What is the real cost of watching TV or surfing the Internet on your smart phone? If you hate video ads or Facebook ads, how much should you have to pay to remove them? How much should it cost to be able to play everything, watching everything, listen to everything?

In the next series of posts I’m going to cover the cost of

  • TV
  • Movies
  • Books
  • Music and Radio
  • Games
  • Magazines & Newspapers
  • Phone service
  • Other services

Unlike many harried journalist I have reliable data sources for my many stats…

First, how much do Americans spend to watch TV?

We pay for TV in 3 ways:

  1. We buy a TV (or other hardware)
  2. We subscribe to a TV service
  3. We watch ads (or buy/rent a DVR)

How much do our TV’s cost?
We buy 37.1 million TVs at an average TV costs of $704. However it’s replaced only about once every 7 years. Per viewer (in the USA there is slightly more than 1 TV per person) this works out to $97/year, plus another $25/year in electricity. That’s a total of $122/year or just about $10/month per viewer.

How much does our TV service cost?
289 million viewers (USA) combine to spend $76B/year, or $22/month per viewer.

And what is the cost of those TV ads?
We watch $64B worth of Ads or $18/month per viewer.

The cost of TV + TV service + TV ads
$10 + $22 + $18 = $50/month.

For this we watch ~3 hours of TV a day or ~$.50/hour. That’s cheap entertainment!

Why ~3 hours a day and not ~5 (what Nielson reports)?

Nielson

I use Bureau of Labor Statistics (BLS) data and then add 10%. I chose the BLS because Nielsen adds ‘background’ time; when the TV is on but we’re not in the room, when we’re in the room but not watching since we’re sleeping, playing a game, reading, surfing, cleaning, talking on the phone, …

Multitasking-While-Watching-TV

My 10% addition to the BLS estimate represents my estimate that one third of this multitasking time (we spend 30% of our TV hours multitasking) we’re focusing on the TV.

Question: What costs more, a cigarette or a TV show?
Answer: About the same:

  • Since Americans spend $77B for 327B cigarette equivalents that’s $.24 a cigarette. At $.50/hour (above) that’s $.25 for a 30 minute show. So a cigarette ($.24) costs about the same as watching a TV show ($.25). 
  • Since a typical cigarette lasts about 6 minutes, smoking is 4x more expensive per minute than watching TV.  
  • Per month, Americans (on average, smokers and non-smokers combined) spend $34 on Tobacco, a bit more than the cost of the TV, TV service and electricity ($32/month per viewer), but less than the cost of TV service plus TV ad revenue ($18/month, or a total of $50/month). Of course as ‘only’ 44 million Americans smoke, our non-smokers spend $0 and our smokers spend $240 a month to smoke!

Bonus question. Which is worse for you, smoking or watching TV?
Answer: They are equally bad. Either watching a (half hour) show or smoking a (six minute) cigarette will shorten your life by 11 minutes.

References

  • 317M people in USA
  • 2.6 persons per household

More on TV

Electricity Stats