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Young Entrepenuer. 13 Mar 2004 10:52 #7700

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OK, I have now been reading for 3 hours solid, and first of all, thank you to the board and all the experts that post. After 2 weeks of constant research, i found that the cinema industry is tough to break for info. So this site is truly a blessing.

I am a 19 year old student, with a life long (well, since my first job at 12) passion to own my own business. I have considered a small 3 screen theatre in my local area. Sure i want to make money and need the entrepreneurial experience, but it derived form the countless weekends of having to take dates 36 miles away for a movie, and my peers and i not having much to do. For this reason i believe an want it to be successful. But i have already read all the variables and factors that determine the industry.

I will continue to read as many postings and acquire as much knowledge i can before i begin the questioning. The initial info and research will be used for a business plan assignment for college, but i DO hope it could turn into a life changing experience. With that, i just wanted to introduce myself and thank "yall" (that is how we talk here) for the board and info.

-BIG ROB
BIG ROB
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Re: Young Entrepenuer. 13 Mar 2004 11:16 #7701

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First Question:

I have read the following terms constantly in the postings.

Can you please give me a current movie title for each of the following classifications? And how are they determined?

1) First-Run
2) Second-Run
3) Discount
4) Arthouse

Thank You.
BIG ROB
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Re: Young Entrepenuer. 13 Mar 2004 12:33 #7702

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1) First-Run:

a) Your theatre opens the picture the same day as every other theatre in the country. You also get to pay the same percentage rent that they do as well. In fact as a little guy, the big guys will do all the negotiating and you will pay what they pay.

b) You open the film a week or six after it opens in the big cities and you get to charge your top rate for it and pay the same percentages as if you had opened it day and date. Sometimes you get lucky and can open it at a lower percentage.

Percentage rent: The first week you play a film you might pay 70% of your box take back to the film company. The second week you pay 60%, third week you pay 50%, fourth week 40% and fifth week on you might pay 35%. This encourages you to hold the film over even as the attendance drops. Every film has a different yet similar schedule rate.

2) Second-Run:

The big theatre in town has run the film and is now getting rid of it. So you pick it up and try and eek some revenue out of it. The good news is that you will start out by paying the bottom rent for the film, usually 35%. The bad news is that everybody in town will have seen the film, be waiting for the DVD and you won't have any customers. Typically the same guy who owns the first run house owns a second run house and it is just a cheap place to play off a film. Not a wise business decision.

3) Discount:

Like a second run house except that you know that people have seen the film so you try a hook. How about all films for $2, then people will flock to my theatre and you can still charge them top dollar for concessions. This was very big in the '80s and whole chains developed using this concept. Then the distributors and studios conspired to kill off the business by shortening the video release schedule. Now films are released to video as early as 4-months after general release and that leaves no room for the discount house.

4) Arthouse or Specialty Cinema:

Play films that tell a story. They can be foreign or domestic. Sometimes they are produced independently and sometimes a studio produces them. Think Miramax, Fox Searchlight, Newmarket and Sony Classics. These are films typically aimed at thinking adults instead of horny teenagers. There is usually a lot less explosions and a lot more dialogue. Some good Art House titles recently were My Big Fat Greek Wedding, A Mighty Wind, Amelie, Winged Migration, Monster, Triplets of Belleville, Lost in Translation, The Dreamers, The Cooler, Girl with a Pearl Earring, The Fog of War and In America. The Art House type theatre is a growing business. Baby Boomers are getting older and this is their type of film. You want a quiet type establishment with clean bathrooms and interesting concession items. The staff must be knowledgeable about film. A nearby university or retirement community is a good sign. But remember these films typically make much less money than the mainstream films, that's why the megaplexes ignore them. Those buildings cost way too much to show a film to those few people. Most Arthouses are repurposed older cinemas. There have been a few successful new builds but that takes major financial backing and a 20-year payoff schedule.


[This message has been edited by Large (edited March 13, 2004).]
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Re: Young Entrepenuer. 13 Mar 2004 13:00 #7703

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WOW! thanks Large. That was very informative.


...STILL READING ARCHIVE!!! LOL.

big rob
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Re: Young Entrepenuer. 14 Mar 2004 19:00 #7704

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Ian/ Large is the man! This get's posted in the "read this first!"

Michael Hurley
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Re: Young Entrepenuer. 15 Mar 2004 07:01 #7705

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thanks once again for the info base. i have one more question for now...

After trying to research the industry for two weeks and finding very little, can anyone give me insight on why you think the theatre biz is so..."hush-hush"???
BIG ROB
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Re: Young Entrepenuer. 15 Mar 2004 11:17 #7706

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...because the studios/distributors/actors/directors/etc. don't want the public to know they take all the proceeds?
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Re: Young Entrepenuer. 15 Mar 2004 12:00 #7707

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It's an odd little industry. Try breaking into the diamond biz in NYC. Or the art gallery world. Or NASCAR racing. There is no school for these interesting things. You have got to dive in and the best way is to get a job. That you can always do. Or buy-lease-start a theatre. That'll do it!

Michael Hurley
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Re: Young Entrepenuer. 16 Mar 2004 12:04 #7708

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BigRob, the "Hush-Hush" practice is common to many industries, stemming from the simple fact that our Free Enterprise system of economics is based on competition, and so, only fools will gladly help more competition to start by telling them the ways and means of the business. This practice of "hush-hush" as you call it, has been around for centuries, even since the days of the first guilds of craftsmen during the middle ages where it was punishable by death for a guild member to divulge the 'secrets' of the trade to anyone outside the local guild. It was this very practice which caused Benjamin Franklin to start the Patent Office in this nation, in order that valuable secrets of a trade would not be lost with the death of one or more members of a guild, as had happened in Europe. The legal term "Letters Patent" means 'Ideas Made Obvious' to the public, as is done whenever a patent is issued with the legal right of only the patenter to be able to use his patent for the period prescribed by law, after which anyone can, in theory, use the ideas of the patent so that they are not lost with the death of the inventor.

Where an industry deals more with a service than a product (though if you read up on the early Motion Picture Patents Company you will discover more of the product side of this industry) as is the case today, you will find few patents or other disclosures since it is not financially rewarding to the owners of the services (Distribution, Exhibition, etc.). Competition is said to be the foundation of free enterprise, but few entreprenuers want more competition! The rapid advances in communication beyond the written word have now caused more people in more areas to be able to share their love of a business (often after they have retired) such as by the Internet, and now there is a new awakening of spreading information for the sake of both personal pleasure, as well as a cross-fertilization of ideas in this 'information age.' Many of the 'old boys' clubs of generations ago are now disappearing in the face of new technology and global competition, so 'secrets' are now more difficult to keep, and rapid advances in technology are making them obsolete overnight, as it were, so even patents are now less desireable as a way to keep a 'secret' secret for a limited time, yet in other areas it is considered Public Spirited to share what one knows of an industry in the view of helping all mankind.

[This message has been edited by jimor (edited March 16, 2004).]
Jim R. (new E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) member: www.HistoricTheatres.org
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