Movie prices to climb on corn shortfall
byMay 19th 2008 11:30AM
According to an expert quoted by Advertising Age, we can expect a buck or two bump in movie prices in the next year. This time, the villains aren't fat cat producers or overpaid talent, but a small grain kernel. Economist Ricard Gill say that the projected shortfall in corn production is wiping out one of the film industry's most important profit centers.
Blame for the corn shortage can be put squarely on the shoulders of ethanol. Making this alternative fuel requires vast amounts of corny goodness. With the congruent boom in wheat and soybean prices, farmers are also expected to plant considerably less corn this year. This double whammy has boxed the ears of the box office.
Concession sales provide around 32% of the average theater's net revenue, and apparently, theaters believe that the price they charge for popcorn is less elastic than the movie price. This is reflected in past pricing, as tickets have increased fourfold since the 70's, while concessions have 'only' doubled.
The article also points out how this is especially problematical for small theaters, which already face the cost of gearing up for a switch to digital projection.
The industry has reason to hope that this will not be a Pyrrhic increase. During previous recessions, people have flocked to the cinema, perhaps to escape their woes for a couple of magical hours. Magical, that is, unless the film is Pirates of the Caribbean III.