What Business Are You In?
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I went to the cinema yesterday, and while waiting for the film to start I got to thinking about the modern cinema as a business model.
How does a modern cinema make its money?
As far as I can see they have at least 3 streams of revenue these days.?They get paid to show films?This is the obvious and classic source of income for a cinema. People like me turn up and pay for the privilege of watching a film on a bigger screen before the DVD release.
??A simple business model:
* Fairly small cost of sale but a big chunk of overheads.
* They will do well at the weekend when its busy but probably don’t break even on a week night.
?They get paid for drinks and sweets?
Not immediately obvious but when you look around the room almost everyone was munching something and slurping a drink, all bought at prices way above what you’d pay anywhere else.
??Now this is better business model:
* Little or no overheads as they are all covered by the “showing films” business.
* Good passing trade with little or no cost of advertising
* Massively high margin on pretty much everything they sell. Hugely profitable!
They get paid to show adverts
?Less obvious since I wasn’t paying for the privilege myself but the cinema does get paid to show all those adverts and trailers at the start of the film. ?Again this 3rd stream is built on top of the original “showing films” operation but once you’ve got that captive audience trapped in a room I bet you can charge a fair sum of money to people wanting to advertise. ?Another nice business model:
* Negligible overheads on top of the original cinema set up
* Very little cost of sale as we all volunteer and indeed pay for the privilege of being advertised to.
So what do you think? Which business is the cinema really in these days when it comes to planning the profit? Given the choice I’d go for the sweets and drinks operation.??And what about your business? What opportunities have you got to add extra revenue streams to your business that build on what you’ve already got.How creative can you get?