How does Hollywood make money? Popcorn

Hollywood's business model is broken; prepare for the fall of the movie industry:

When a movie like Avatar makes $2.8 billion in under a year, it seems perverse to say that the movie industry is in trouble – but I’m going to go ahead and say just that. Not only are studios like MGM going bust, but even worse, the number of people going to the cinema refuses to rise – and, in the US, it’s dropping.

What happened? Could Hollywood’s century-long grip on the world’s entertainment spending finally be loosening, and why? The answer lies in three very different places: popcorn, the internet, and old-fashioned TV.

Now, if you’ve ever been to a cinema, you may have guessed that they make a killing from selling popcorn and drink; after all, it doesn’t really cost £3 to make a bag of popcorn. All the popcorn sounds like a great bonus to have on top of all the ticket sales they must make – but, in fact, popcorn is where much of their profit comes from, especially since they have to pay part of box-office sales back to the movie studios.

The massive profit margins provided by popcorn and drinks mean that cinemas want to pack in and move as many people as possible. The worst nightmare of a cinema owner is a screening with no punters and no popcorn sales, so if a film underperforms on its opening night, they’ll try and remove it as fast as they can.

All of this makes it vital for studios to create movies that get massive opening nights, otherwise they’re at risk of being shut out.

Who goes to cinemas on opening nights? Young people. And who buys popcorn and drinks? That’s right, young people. So that’s who blockbusters are made for.
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Even movies that aren’t based on an existing franchise – like Avatar and Inception – aren’t quite as risky as they seem. The “foreign” box office (i.e. ticket sales outside of the US) is becoming increasingly important, and movies that work well, particularly in non-English speaking countries, tend to share two features – they have lots of explosions, and a minimum of talking. It’s no surprise, then, that Avatar and Inception made most of their money outside the US.

But it’s not working. Movie ticket sales are basically stagnant in both the US and the UK, despite their increasing population; people are just staying away from cinemas and doing something else, whether that’s watching TV, surfing the internet, or playing games. The only reason this downward trend hasn’t been spotted is because overall box-office takings have been artificially buoyed up by expensive tickets for 3D movies – but that’s hardly going to last forever.

I haven't been to a movie theater in years because, the last time I went, the sound was so loud it gave me a head-ache and the time before that I could hear the movie being played in the postage-stamp "theater" next door.