When it is initially produced, a film is normally shown to audiences in a movie theater. The first theater designed exclusively for cinema opened in Pittsburgh, Pennsylvania in 1905. Thousands of such theaters were built or converted from existing facilities within a few years. In the United States, these theaters came to be known as nickelodeons, because admission typically cost a nickel (five cents).
Typically, one film is the featured presentation (or feature film). There were "double features"; typically, a high quality "A picture" rented by an independent theater for a lump sum, and a "B picture" of lower quality rented for a percentage of the gross receipts. Today, the bulk of the material shown before the feature film (those in theaters) consists of previews for upcoming movies and paid advertisements (also known as trailers or "The Twenty").
Originally, all films were made to be shown in movie theaters. The development of television has allowed films to be broadcast to larger audiences, usually after the film is no longer being shown in theaters. Recording technology has also enabled consumers to rent or buy copies of films on video tape or DVD (and the older formats of laserdisc, VCD and SelectaVision—see also videodisc), and Internet downloads may be available and have started to become revenue sources for the film companies. Some films are now made specifically for these other venues, being released as made-for-TV movies or direct-to-video movies. These are often considered to be of inferior quality compared to theatrical releases. And indeed, some films that are rejected by their own studios upon completion are dumped into these markets.
The movie theater pays an average of about 55% of its ticket sales to the movie studio, as film rental fees. The actual percentage starts with a number higher than that, and decreases as the duration of a film's showing continues, as an incentive to theaters to keep movies in the theater longer. However, today's barrage of highly marketed movies ensures that most movies are shown in first-run theaters for less than 8 weeks. There are a few movies every year that defy this rule, often limited-release movies that start in only a few theaters and actually grow their theater count through good word-of-mouth and reviews. According to a 2000 study by ABN AMRO, about 26% of Hollywood movie studios' worldwide income came from box office ticket sales; 46% came from VHS and DVD sales to consumers; and 28% came from television (broadcast, cable, and pay-per-view).
Contributed by: Mohinder Pal Singh
Date: March 15, 2010