Cinema: contribution per screening falls fourfold

“For twenty years I was taught that a cinema lives on tickets. It turns out it barely survives on tickets. What it lives on is popcorn”

Lesia Kovalchuk runs a two-screen cinema in Sumy. The building is old, the seats were replaced four years ago, the projector last winter on credit. Fourteen staff counting the cleaners, and half of them have worked here longer than Lesia.

The books are set up the way everyone sets them up. Box office by film, the distributor's share, the bar on its own line. It all adds up, it all gets filed, and the tax office has no questions.

The problem is not that the accounting is wrong. It is right, complete, and filed on every form. It just answers the question “how much did we earn”, not “which of this was worth doing”.

Last autumn Lesia tried to count one film from start to finish. Not the box office — the contribution. And she found that the third week of a run works almost for nothing.

Not at a loss. For nothing. The difference between those two words turned out to be the main discovery of that evening.

What a cinema sells

A cinema does not sell films. The films are not its own — it takes them on hire and hands half the takings to the people who shot them. What it sells is a seat for two hours.

The seat costs the same whatever happens. It takes up the same floor. The same system heats it, the same person cleans it. Whether anyone sits in it changes the costs by nothing.

This is where all the arithmetic of the business starts.

The cinema buys the right to show a film. It pays with half the box office and hopes the hall fills up. It does not really choose the film either — the programming schedule is dictated by the distributors. The only things a cinema truly controls are how many weeks it holds a film and what it does with the people in the foyer.

One film, three weeks

Lesia took an ordinary mid-range comedy — not a blockbuster, not arthouse. Films like that are the backbone of the schedule, and where a cinema actually earns its money.

Blockbusters come a few times a year and hand the distributor the biggest share. Arthouse brings in little. Mid-range is the bread, and the programming schedule is built out of it.

The film ran three weeks, thirty-five screenings every week. A ticket cost 180 ₴ for the whole run, with no discounts and no promo days. Lesia picked a run without promotions on purpose, so the numbers would not get tangled.

Seven thousand viewers over the run. Box office — 1 260 000 ₴. On paper the run looks like a good one, and in the chain's report that is exactly what it was.

The fall in attendance is normal and predictable. It is almost identical for every film of this calibre, and distributors plan the schedule around it.

Lesia knows that curve by heart and can call the second week to within ten percent. What she did not know was what the same curve does to contribution once you lay it over a cost per screening that never moves.

How the box office splits

The distributor takes a percentage of the box office, and that percentage falls with every week. At the start it is highest. That is when the film brings in the main money, and when the cinema needs it most.

Fifty percent in the first week. Forty-five in the second. Forty in the third. After that a film usually comes off — the scale simply stops going down.

The scale is written into the contract. It is the same for every cinema in the chain, and it is not up for discussion. Lesia sees no injustice in it. The film really is not hers, and she really does risk less than the studio.

The studio put money into the shoot and may never see it back at all. The cinema risks one week of its schedule. That is exactly what the sliding scale reflects: the further from the premiere, the smaller the distributor's part in the fact that people came.

“You don't haggle with a distributor. It is like haggling with the weather — you can, but only in your own kitchen”

The first week

The first week brought 693 000 ₴ of box office. Half went to the distributor, half stayed with the cinema — 346 500 ₴ each. Straight down the middle, exactly like the textbook.

A hundred and ten viewers a screening. For a two-screen cinema in a regional city that is a good number. Lesia is happy with a week like that and never had any reason to dig deeper.

The second and the third

By the second week attendance nearly halves — down to sixty viewers a screening. The box office falls with it, but the distributor's share comes down only five points, so the cinema is left with 207 900 ₴.

The third week gives thirty viewers a screening. That is under a third of the first week, and a hall built for a hundred-odd people sits almost empty.

The screenings meanwhile run on the same schedule. Nobody cuts the showings down to two a day: the grid is approved a week ahead, and changing it mid-run is awkward for everybody. The posters are printed, the box office is selling in advance, the staff are on the rota.

The cinema is left with 113 400 ₴. The sliding scale softens the fall a little, but it does not rescue it: forty percent of a small box office is still small money.

The scale softens by ten points over two weeks. Attendance over those same two weeks falls by more than seventy percent. The second outweighs the first so heavily that you can almost forget the scale exists.

35 screenings and 30 viewers

The numbers are almost the same, and in conversation they get mixed up constantly. The first is how many times a week the hall works. The second is how many people sit in it in the third week.

The hall costs the same

Every screening costs money no matter how many tickets were sold. Electricity for the projector and the climate, cleaning between shows, a cashier and an usher in the hall, licence payments for the screening itself.

Lesia boiled all of it down to one figure: 1 400 ₴ a screening.

• Electricity for the projector and the climate
• Cleaning the hall between shows
• Cashier, usher, projectionist
• Payments for the right to show

A hundred and five screenings over three weeks. 147 000 ₴ together, and that sum does not care whether a hundred and ten people are sitting in the hall or thirty.

That is why a fall in attendance hits harder than the box office makes it look.

“A screening for thirty people costs the same as a screening for a hundred and ten. I always knew that. I just never multiplied it by the number of screenings”

Contribution per screening

Lesia worked out the one thing no report had ever held. How much each screening brings in once the distributor is paid and the show itself is covered. With the bar included, because the bar arrives with the very same viewers.

From 15 606 ₴ to 3 778 ₴. Almost four times less in three weeks. Lesia stared at that row longer than at the whole rest of the table.

Attendance over the same stretch fell by less — about three and a half times. Contribution falls faster, because the cost of a screening stays where it is, and out of a smaller sum it eats a bigger share.

When a cost is fixed, a fall in revenue always hits profit harder than it hits revenue.

The cost of a screening does not divide by viewers

This is the main trap in cinema accounting. Cost per ticket gets worked out by dividing the expenses by the number of seats sold. At thirty viewers it comes out three times higher than at a hundred and ten.

That is why an average cost per ticket explains nothing. It mixes the first week with the third and shows a number that exists in no actual screening.

The bar nobody looks at

A cinema bar is traditionally treated as an add-on. It stands in the foyer, two young women run it in shifts. In the books it sits on its own line. As if it were a neighbouring business that happens to rent a corner.

Lesia never tied it to a particular film. Popcorn sells — fine. The monthly bar report lived in a separate tab that got opened once a quarter.

In fact the bar sells to exactly the people the film brought in. Average spend per viewer is 95 ₴. It barely shifts from week to week: popcorn gets bought by the same people in the same proportions.

That makes the bar astonishingly predictable. Give Lesia the number of viewers and she will name the bar's takings to within a few percent — long before the film even opens.

The bar margin is sixty-eight percent. Popcorn, drinks and snacks have a cost price that is embarrassing to say out loud. That is exactly why they cost what they cost in a cinema.

Everything sits inside that margin:

• Corn, syrup, cups and bags
• Wages for two bar staff on shifts
• Electricity for the machines and the fridges
• Write-offs on whatever did not sell by closing

“For ten years I thought of the bar as a service for the viewer. If I am honest, the viewer is a service for the bar”

From a hryvnia of box office and a hryvnia of bar

Lesia put two numbers side by side, and they explained everything. Two simple percentages she could have worked out on any day of the past twenty years.

Out of every hryvnia of box office the cinema keeps 53 kopiykas — the rest goes to the distributor. Out of every hryvnia at the bar it keeps 68.

Inside the cinema itself, the bar is better business than the films. By a third on every hryvnia. And that is with the whole place built around cinema, not around popcorn.

Lesia does not conclude from this that she should shut the halls and sell snacks. Without a film nobody walks into the foyer at all. The conclusion is different. If the viewer is already here, everything sold to her in the foyer costs the cinema less than what is sold in the hall.

95 hryvnias and 68 percent

The first is what a viewer leaves at the bar. The second is how much of that stays with the cinema. Mixing them up is not allowed: 95 ₴ is revenue, and the contribution out of it is around 65 ₴.

The run, added up

Over three weeks the film brought in seven thousand viewers. Box office 1 260 000 ₴, of which 592 200 ₴ went to the distributor and 667 800 ₴ stayed with the cinema.

On those same viewers the bar made 665 000 ₴ of revenue and 452 200 ₴ of margin.

The cost of the screenings — 147 000 ₴. Contribution for the run all in: 973 000 ₴. That is already after the distributor, after the bar and after the show.

Fixed costs are not in there yet. They are identical every week and depend neither on the film nor on how many people came.

The cinema's fixed costs over those three weeks — rent, wages, utilities, the loan on the projector — came to 759 000 ₴. Net result: 214 000 ₴.

The bar in revenue and the bar in contribution

The bar's takings are 34.5% of all revenue for the run. In contribution the bar already weighs 40.4%. By eye the gap is small, but it means popcorn earns more than the films do on every hryvnia put in.

The question about the third week

Then Lesia asked a question that had simply never come up. Why hold a film for a third week at all?

The third week's contribution is 132 230 ₴. The weekly share of fixed costs is 253 000 ₴. Rent, wages and the loan on the projector do not ask how many people are in the hall.

The third week does not even cover its own share of the fixed costs. It falls 120 770 ₴ short.

So the third week is not loss-making in itself — it brings in real money. It just brings in less than a week of the cinema's existence costs. The difference between those two statements is precisely what the report never showed.

“I held films into a third week because everybody did. And nobody ever asked what it cost”

Why the answer is not obvious

The first reaction is to drop the third week and put something new in. The first week gives 546 210 ₴ of contribution against 132 230 ₴ in the third. A difference of 413 980 ₴ a week looks like an obvious answer.

The trouble is that premieres do not come out every week.

In the mid-range the schedule rests on, a premiere turns up once every two or three weeks. You can only put one in place of a third week when there is one. In the off-season there is not.

There are weeks when there is simply nothing to put on. Then the choice is not between an old film and a new one, but between an old film and a dark hall. A dark hall does not even bring in popcorn.

The second problem is that the sliding scale works against a fresh film. The first week gives a bigger contribution, but it also hands the distributor fifty percent instead of forty. Swapping an old film for a new one every week would mean sitting on the worst share permanently.

The third week is not always a waste

If there is no alternative, 132 230 ₴ of contribution beats an empty hall. The fixed costs get paid either way, and a partly covered week beats one that is not covered at all.

That is why Lesia did not take the third week out of the rules. She took it out of the autopilot: it is now a decision made every Friday, not a habit that runs itself.

First move: contribution, not attendance

Lesia changed the headline figure in the weekly report. Attendance used to stand there — how many people came. Now contribution per screening stands there, and attendance has moved one column across.

It is the same information in a different unit, but it answers a different question. Attendance tells you whether the film is working. Contribution tells you whether it is worth holding.

Both figures are needed, and Lesia removed neither. It is just that the headline row now holds the one decisions get made on. Not the one that is nicer to show at the chain's meeting.

The report is put together by the administrator, the formula in the spreadsheet never changes, the job takes ten minutes on a Monday.

The report now has three rows for every week of a run:

• What is left from the tickets after the distributor
• The bar margin tied to that particular film
• Contribution per screening after the cost of the show

“Attendance is a figure for the poster. Contribution is a figure for the decision. I spent twenty years confusing one with the other”

Second move: the bar in the schedule

The second decision looked petty and turned out to be the most profitable. It cost not one hryvnia and needed nobody's agreement.

The bar gives 68 kopiykas out of a hryvnia, the film gives 53. So anything that keeps a viewer longer in the foyer works for the cinema. So Lesia pushed the screenings in the schedule ten minutes further apart.

That cost one evening of work on the grid. Not a single screening had to go — the evening shows simply moved a quarter of an hour later. The last screening now ends ten minutes later, and in a year exactly one person has complained.

The queue at the bar stopped running into the start of the film. People who used to wave it off and walk into the hall now had time to buy. The bar staff stopped working in a panic, and that mattered too.

“Ten minutes in the schedule. I was afraid I would lose a weekend screening, and I did not lose a single one”

Average spend at the bar went up, and it was the only measure all year that cost nothing.

Why this works in a cinema in particular

The viewer has already arrived, has already paid for a ticket and has ten free minutes with nowhere to put them. No other retail has an audience like that.

A shopping centre fights for the attention of a passer-by. A cinema already holds a person who is in no hurry and cannot leave. The gap in conversion between those two situations is enormous, and Lesia spent twenty years not using it.

What to do on Monday

Lesia boiled it all down to three actions, and not one of them needs new equipment or a new accounting system.

• Work out contribution per screening for each week of a run, not box office by film
• Tie the bar's takings to the particular film instead of keeping them on a line of their own
• Before holding a film over for another week, compare its contribution with the weekly share of fixed costs

The first two get done once and then live on in the same spreadsheet. The third is a question before every programming decision. Ask it on Friday, not on the Monday after.

On Friday the decision can still be changed. By Monday the week is already paid for: the grid is approved, the staff are rostered, the advertising is placed. The report that lands on Monday describes money nobody can get back.

A hall with thirty people in it costs exactly as much as a hall with a hundred and ten.

When a film is worth pulling early

When its contribution has dropped below the weekly share of fixed costs and there is at least something to put in its place — a re-run, a special screening, an event. An empty hall saves nothing.

Money does not vanish — you just do not see it

Almost nothing has changed at Lesia's cinema. The same two halls, the same projector on credit, the same bar in the foyer and the same two young women on shifts.

Two things changed. In the weekly report, contribution per screening stands where attendance used to stand. And the screenings in the schedule are ten minutes further apart.

Because of that, the programming looks different. So does the third week of a run. So does the popcorn, taken for twenty years as an add-on to the films.

Lesia still picks films with her heart. That is as it should be — without it there is nothing to do in a cinema. It is just that now a table lies next to the heart, with one figure per screening.

How to see this at your own cinema

Everything above rests on one row: not box office by film, but contribution per screening for each week of the run — with the distributor's share, the cost of the show and the bar margin tied to those same viewers. As long as attendance stays the headline figure, you see neither that contribution falls from 15 606 ₴ to 3 778 ₴, nor that the third week misses its share of fixed costs by 120 770 ₴. When the same data is collected automatically, it becomes visible which week pays for the hall — which is exactly why owners of small and medium businesses use Finmap: to see the financial picture rather than assemble it at the end of the month.

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Topic foundation: Management Accounting Explained: What It Is and Why Owners Need It