How to Start a Movie Theater
Are you considering opening a movie theater? Congratulations! All the necessary information, including the reality of the industry and how to start your own movie theater, are in this article. A movie theater is more than just a business; it is part of the culture. For decades, movie theaters have been one of the first choice centers of entertainment for both the young and the elderly.
The movie theater business today still uses many of the principles from the early days of giant-screen movie enjoyment. Movie theaters are a source of relaxation, and they can act as a bonding site as well. These days, many companies take their staff to movie theaters to have fun, relieve stress, and strengthen the closeness between members of the team and the management. Other organizations, including religious settings, make time for members to go out together as a group to watch a movie. Families see going to the movies as a way to strengthen relationships in the home, and it has proven successful in most cases. While the operation of a movie theater is pleasant news for the attendees, it also means more money in the bank for the owners. Both parties win, and everyone is happy. However, running a movie theater is no walk in the park, and opening one is no small feat either. What owners of movie theaters and those who intend to start this business would be glad to know is that a successful movie theater will be worth the trouble in the end.
How movie theaters make money pops up in the heads of a few curious people, especially those who are thinking about getting into the business. It is understandable to ponder it because if you don’t know what brings in the profits, you might start your company focusing on the wrong things. The biggest movie theaters rake in large sums of money primarily through the sale of movie tickets. This revenue-generating means is the first thing on the average person’s mind, and rightly so, given that it is the most obvious. With new movie franchises coming out, movie tickets sell at ridiculous prices, especially the most marketed ones. This direct sale of tickets will also lead to other forms of income generation for movie theater owners.
Opening a movie theater is profitable, but don’t expect to get millions of dollars coming in at once. The way it is usually done is this: the movie theater gets 45% while the movie production studio, for example, Marvel, gets 55% of movie tickets sold. That’s why movie theaters create other avenues to make sales. Movie theaters advertise products and services inside the theater, and that brings them money. These adverts are usually in digital; a short video file advertising goods or services is played before the movie starts proper. Both local and foreign countries will do business with your movie theater as long as it is packed. Another fairly common way you can make money while running this business is by creating room for the sale of foods and drinks. Movie theaters are known all around the world for their popcorn. Popcorn with a fizzy drink in the middle of an exciting movie is one of the things people look forward to at the movies. If you can, make a food and beverage stand and run it. You don’t have to do the work yourself; rent out space within the premises of the movie theater and let outsiders pay for a spot.
Sides to consider before opening a movie theater
Starting a movie theater will ultimately bring in a profit, but it depends on how well you “count the cost” before going for it. There are some vital factors to look at before launching your establishment. If you wish to start and maintain a thriving movie theater, consider these few aspects.
The size of the movie theater
The goal of launching a movie theater is to have a big one and make a profit, but there’s a need to hold that thought. Not every movie theater has to seat hundreds; what’s the use of having a 300-seater movie theater if only less than 50 will show up? The number of air conditioners, seats, speakers, among other amenities, will be more in a 300-seater movie theater than in a 50-seater. It would cost close to three times the amount of the latter to get the former done. Why should you waste money without considering how many people you would be expecting on a typical movie night? Sometimes, your niche can determine the number of attendees to expect.
In some cases, your budget might also mean that you go for a smaller movie theater. If you manage a small movie theater that only seats 50, you will make a profit. And if you don’t correctly handle the one with 300 seats, no matter how much you make, you might fail in the end.
The competition
Sometimes in business, the best lessons are learned through the experiences of others. Although there are cons to starting an industry where there are other establishments of the same kind, there are merits too. No matter how confident you are that your business will progress regardless of the competition, don’t open a movie theater where there are already too many. The location might be great, and that can make it tempting for anyone to want to open such an establishment there, but it could be a dangerous move. Most of your potential customers would have already become loyal to your competitors, and you might need to spend extra to up your marketing strategy. After you must have studied the environment and are convinced that you can handle the competition, see what you can learn from them. Some places seem to have the potential to rake in hundreds of movie theater attendees but don’t. You can quickly tell if you study the competition. Are they making it? If the answer’s “no”- why? If you have answers to these questions and think you can crack the code, go ahead. By looking at them, you can decode secrets to running a successful movie theater where they are failing.
The demography
Business is what real democracy should be- about the people. Every successful business grows by meeting the demands of their customers. For example, Guinness is an Irish brand that is known all over the world and sold in many countries. With time, the makers started making other variants (and affordable prices) that are in line with the taste of locals globally. Likewise, in the movie theater market, you must have the people in your thoughts before doing anything. The moment you sort out where you want to site your movie theater, the culture of the people there, and what appeals to them comes next. Take time to figure the neighborhood out. Look at different aspects of their way of life; language, moral standard, reception to foreign concepts, and more. If you site a movie theater in a location where they don’t fancy imports, you will run an empty movie theater if you don’t go local. Some environments perhaps don’t speak English but love foreign movies; make subtitles available in all the movies you will show. And in cases where the people hold strong moral or religious values, some movies might seem offensive to them. What is appropriate in one part of the world might be the opposite elsewhere, and one could get into serious trouble for it. The financial capacity of the people will also influence the way you set up your movie theater. The standard of living will tell a lot about how much is too much or too cheap in terms of pricing. If you are opening a movie theater in an environment that is struggling financially with a low standard of living, you may not need to spend too much. A high society environment might require more expensive and sophisticated cushions, food, and extra services to entice them.
Location
Movie theaters are a big deal, and the difference between people taking it seriously and just disregarding it is the location. Where you intend to site your movie theater is nothing you should rush into concluding. Look at your options and think about what area you would be comfortable opening a movie theater. The more comfortable you are with the location, the more you are invested in the idea. Another factor that can drive people to set up a movie theater is the economic potential of the place. Regardless of whether your motive is purely for money or you want to make a connection with the neighborhood, the location must pass some tests. Is the place you intend to open a movie theater open and centralized? Is it a safe environment? Are you aware of zoning laws in the area? Is the building you have found good enough for what you want to achieve? You might get a perfect location, but the best places to open your theater might need a lot of renovations. The cost of the upgrades might be too much for you to bear. And if the area is not safe, who would want to risk it? Can you afford to provide extra security (which would cost you more) for attendees? Make sure you do the math because if you spend too much, you will end up charging too much.
When you finally find a suitable location, you must mind zoning and environmental laws, which will demand that you run a safe business. A movie theater will be noisy, and there’s only so much you can do in that situation. You can’t possibly tell attendees to keep their voices down, seeing that it would kill the mood. Will you be willing to take extra measures and spend more money to soundproof the place, possibly?
While some communities embrace nightlife, others go as far as forbidding it. Some places have strict rules like curfews, which would prevent people from staying out for long. Movie theaters don’t depend on day sales to keep their businesses afloat because most people would have gone to work. Since nighttime is when you will expect to make huge profits, you have much pondering to do in this regard. Will you open your movie theater somewhere you won’t make sales at peak periods, or would you instead look somewhere else?
For a small business that won’t cost a lot to start, an aspiring business owner can go on all by themselves. In the case of more significant projects like these, it is not that simple. The cost of setting up a traditional movie theater is the reason why one should consider partnering with an already established name in the market. The equipment, building, security, license to air movies, and other expenditures could burn a hole in one’s pocket if not looked at carefully. Since famous movie theaters have already made a name for themselves and don’t have to start their marketing strategies from scratch, your business would benefit from theirs. Beginning a movie theater is not the biggest problem; getting the seats filled is. To do that, a new enterprise like yours would have to advertise fiercely to keep up. And even though this marketing strategy works, it could take longer than you expected. For these reasons, it is only fair to take a step back and go over your options again. A franchise will save you time and get your movie theater seats filled up faster than you know it. It also means that you will be learning from a top competitor in the industry. The tricks to the trade that you learn will be useful to you when you go solo. It would cost less to buy a franchise than start on your own, but there are a few reasons why you shouldn’t dive into it. You will almost totally lose your say over the business. Your movie theater franchise will follow some strict regulations by the franchiser, and that will make you forgo all your bright ideas throughout your contract. You’ll be running a thriving business in no time.
Starting a movie theater
Opening a movie theater is a process; certain necessary moves are made to get the business from paper to brick and mortar. The highlighted steps to take in order to launch your movie theater are crucial but straightforward.
Create an online platform
These days, every movie theater has a website where people can see what they have on their list. An official website is not a luxury; it’s a necessity. It is where you can leave vital information for your prospective guests to access. The schedule of each movie you have will be posted there, including the times, the ticket price, and the movie hall where they will be shown. Apart from having vital information about the movies to be displayed on the website, other important details about your business will be there. Your website must have sections where people can buy movie tickets.
You can also use your website for advertising for other businesses. Your business is one that draws in a large number of people on a regular basis, and that is good for marketing. Different establishments will pay you to advertise on your website, and you will get paid for it. Also, social media is a must for your company. Social platforms are where people find it most comfortable to comment on the experience. Your social media presence will help bridge the gap between your movie theater and the audience. Information will be easily shared online, comments, reviews, and other forms of feedback will flow.
What you need to purchase and other things you need to pay for could prove too much for you to bear alone. To start, a small standard movie theater would cost at least $400,000. The top movie theaters in the world cost millions of dollars to construct and equip. The amount you have budgeted for the business could make you change some aspects of the company, which could prove too much of a sacrifice. If you are looking to buy a property for your business, then you need to make more effort into sourcing funds. Keep in mind that you will buy the equipment that will make the company run smoothly, like high-quality surround sound speakers, air conditioners, movie theater seats, and more. The giant viewing screen costs between $130,000 and $300,000; some more exotic cinema screens cost close to a million dollars. You have to pay your staff for the hours of work they put in. Therefore, you should have that in mind, before coming up with the total amount you need to start your business. If you can afford to cough out a few million dollars, then you may not need to seek assistance elsewhere. On the other hand, you should look at going to the bank for a loan, if not. Another option is to seek investors who have a record of funding other people’s projects for returns. Meet with these potential investors and banks, sell the idea convincingly, and you could get the assistance. Also, look out for grants and loans from the government or private organizations that give out financial aid with more reasonable terms.
Licensing
In the case of movie theaters, you won’t be getting a license from the government alone. There are two essential bodies that you need to get a license from before showing anything. As mentioned earlier, the government must be aware that you are starting a movie theater before going ahead. Establishments such as these can be beneficial to residents of the area, but they also come with some cons. The government must know that you are going to make sure to keep the peace so that the neighbors would not go through any inconveniences. This reason and a few more is why you must locate the government bodies responsible for granting businesses in your field licenses to get a permit. The second group that you’ll need to get permission from is the distributor of the movie you intend to air. These movies are big-budget movies with copyright privileges. Therefore, airing them without permission could ruin your business. There are different ways to get in touch with a movie distributor, an effortless way being through IMDb. The Internet Movie Database (IMDb) is the hub for professionals in the movie industry where the contact information of movie makers are uploaded. Think of IMDb as the LinkedIn of movie stars; every major and minor player in the industry has a professional profile. Join IMDb, get in touch with those who have the copyrights of blockbuster movies, and negotiate with them. Apart from negotiating movie proceeds, they could give you rules regarding how you should air the film. You must meet all their demands to avoid being sanctioned.
Make a business plan
The importance of having a business plan before launching any business cannot be overemphasized. Making a concrete business plan is not just for show; it is what could determine the fate of your establishment even before you take any other step. In your feasibility studies, all the essential areas that could affect your venture will be examined. Vital questions will need answering, and these answers could either be a green light or a red flag. Going into this business, what do you expect to achieve at what time? What will you need to bring into this new movie theater to make it work? How much would it cost you to get everything you need? Who would be the most qualified to help you manage the movie theater? Where do you think it will be the best place to open the movie theater, and why? These questions and more will make you know how to go about the feasibility studies for the movie theater business. In case you find out that you will need financial assistance, the business plan will help. Investors and banks will need to see a plan; an adequately crafted business plan means you have done your homework.
Conclusion
Owning a movie theater is a responsibility; you have an obligation to make people have fun. The moment you launch your establishment, start marketing it, knowing that there are already other quality movie theaters around. As long as you’ve taken these vital steps, you’re on the right path; if it weren’t profitable, no one else would do it.