1.3 The impact of multiplexes: survey evidence
 
In this section we review the evidence from the research into the characteristics of multiplex cinemas and the determination of their success. The LE/BIPE survey of over 1,000 screens provides essential information about individual cinemas in Europe and manages to convey the characteristic features of the cinema sector with respect to different categories: single screen, multi-screen and multiplex. The analysis includes the results of a set of interviews with European multiplex operators. It also includes econometric analysis of the success of multiplex, with success defined as higher seat utilisation, and a breakdown of the costs of building a multiplex.
 
 
Characteristics of multiplexes in Europe
 
Table 13 shows the distribution of screens in all EU countries (with the exception of Luxembourg), produced from the LE/BIPE survey. Results from the survey have been corrected for the total number of screens in all countries and are therefore representative of the population. The data confirms the profile of cinema screens obtained from other sources. There are some inconsistencies, however, for Germany and Spain, largely due to changes in the exhibition sector in those countries(9). The different sources refer to different years (1992 for the MEDIA Salles Yearbook and 1993 for the survey).
 
Table 13 
Number of Screens per Cinema: Share of total screens
Country
1 Screen
2 Screens
3-5 Screens
6-7 Screens
8 + Screens
Belgium
22.1%
10.8%
36.6%
8.8%
21.7%
Denmark
34.9%
21.8%
36.7%
4%
2.5%
France
32%
13.5%
36%
13.5%
5%
Germany
36.8%
20.8%
37.3%
0.8%
4.6%
Greece
99%
1%
-
-
-
Ireland
17.2%
25.8%
36.5%
3.2%
17.2%
Italy
96.5%
2%
1.5%
-
- (1)
Netherlands
14.9%
21%
59.4%
4.6%
-
Portugal
76%
9.5%
8.5%
-
6%
Spain
56.4%
8.2%
22.4%
8.2%
4.8%
UK
18.2%
12.4%
33%
11.4%
25%
Total
51%
11.8%
25.9%
5.3%
6.1%
(1) In Italy the only cinema totalling more than 8 screens is Odeon in Milano (10 screens)
SOURCE: MEDIA Salles/LE/BIPE Conseil
 
The countries of Southern Europe (Spain, Portugal, Italy and Greece) are all characterised by a much higher number of single screen cinemas. Greece, in particular, has only single screen cinemas, with the exception of one two-screen site. In addition, most of the Greek cinemas are only open for a limited number of months in the year (either summer or winter). Also in Italy the majority of cinemas are single-screen. There is only one cinema totalling more than 8 screens: Odeon, in Milano (10 screens).
 
Table 14 shows the number of seats in screens belonging to five different types of cinema: the single screen, double screen, small and medium sized complexes (3-5 and 6-7 screens, respectively) and multiplexes.
 
The table shows that the average number of seats per screen is highest for single screen cinemas and progressively decreases with multi-screen cinemas. Multiplexes are characterised by a higher average number of seats than seven-screens (or less) complexes. As the more detailed distribution in the table shows, this is mainly because three to five screen complexes have more screens in the smallest classes. Multiplex cinemas also show a high share of screens with 150-249 seats.
 
Table 14 
Number of Seats per Screen
Type of cinema
<100
101-149
150-249
250-499
500 - 999
1,000+
Average
1 Screen
3.0
6.5
13.8
27.6
41.5
7.6
528.5
2 Screens
17.4
17.0
27.4
25.4
11.6
1.2
263.2
3 - 5 Screens
18.4
21.0
30.3
23.2
5.6
1.5
236.5
6 - 7 Screens
14.0
14.0
28.8
30.2
11.3
1.6
288.0
8 Screens +
10.6
18.2
38.0
23.2
4.8
5.2
316.3
Total
11.7
14.9
26.1
25.5
17.7
4.0
348.7
SOURCE: MEDIA Salles/LE/BIPE Conseil 
 
Table 15 shows the range of ancillary services available in cinemas across Europe. Sales of snacks or ice creams, be it in the auditorium or via automatic machines, is a common feature of all types of cinemas, particularly for small and medium sized complexes. Differences between the five types of cinemas become far more important with restaurants and other services. Over 30% of the multiplexes in the sample offer videos for sale and 33% have a poster shop. A similar proportion of multiplexes offer other types of services on top of this basic range. Also, the percentage of cinemas with restaurants is far higher among multiplexes. This trend is broadly confirmed when the range of services available in cinemas is analyzed on a country by country basis. Cinemas in Portugal offer the richest range of services: all cinemas have a bar or cafe counter and over 40% of the sites are also equipped with a restaurant (the highest percentage in the study) or bookshop, poster shop or video shop. The UK and Belgium also offer a range of services that tends to be above average. On the opposite end of the spectrum are Greece, where cinemas always have a bar counter but little else, and Italy, where the level of each ancillary service is below the all country average.
 
Table 15 
Ancillary Services Offered at the Cinema 
Percentage of Total Number of Sites
Type of cinema
Single Screen
2 
Screens
3 - 5 Screens
6-7 Screens
8 + Screens 
Average
Automatic drinks/snacks dispenser
10.7
19.3
31.5
59.4
22.9
24.6
Sales of ice creams, drinks in theatre
34.8
65.1
79.8
82.9
66.1
62.2
Bar, counter or cafe
69.6
61.1
66.3
61.0
73.7
67.8
Restaurant
3.4
6.6
5
-
17.3
6.7
Bookshop
5.3
10.8
5.8
0.2
16.1
7.7
Poster shop
9.7
14.7
10.1
5.4
33.0
14.5
Video shop
2.5
4.6
8.2
21.7
32.1
11.9
Other
6
8.3
5
1.2
30.9
10.4
SOURCE: MEDIA Salles/LE/BIPE Conseil
 
Table 16: 
Cinemas with computerised ticket counters
Type of cinema
1 Screen
2 Screens
3-5 Screens
6-7 Screens
8+ Screens
Total
% of total screens
7.1
30.8
50.4
62.3
90
42.5
SOURCE: MEDIA Salles/LE/BIPE Conseil
 
Table 17: 
Parking arrangements
Type of cinema
1
Screen
2 Screens
3-5 Screens
6-7 Screens
8+ screens
Total
No parking arrangements
75.3
55.8
71.3
65.0
15.3
60
Cinema's own parking
12.5
23.6
11.6
27.6
40.6
19.8
Free or reduced fare at nearby parking managed by others 
 
12.2
 
20.6
 
17.1
 
7.4
 
44.1
 
20.1
SOURCE: MEDIA Salles/LE/BIPE Conseil
 

While slightly more than half the small complexes have a computerised ticket counter, the proportion of multiplexes with such facilities is 90%. Clearly, for single screen cinemas it is not imperative to install expensive computer equipment, while for the multiplex it becomes almost essential. Also, over two thirds of the multiplexes have some sort of parking facility, as opposed to only a quarter of the single screens and a third of multi-screens.
 
The tables below show the main technical characteristics of cinema screens. More than one type of projection and sound equipment is possible for each screen, and therefore the totals add up to more than 100%.
 
Table 18 groups the five types of cinemas according to the size of their screens. The pattern is broadly similar to that of Table 14, as bigger screens command a higher number of seats.
 

Table 18: 
Screen Size
Type of cinema
< 15 m2
15 - 24 m2 
25 - 49 m2
50 - 99 m2
100 m2 and over
Average screen area
1 Screen
5.3
15.3
24.6
49.9
4.9
54.8
2 Screens
19
34
24.7
17.1
5.1
34.1
3 - 5 Screens
21.6
35
23.7
15.3
4.4
36.7
6 - 7 Screens
14.1
27.2
25.9
20.6
12.2
55.4
8 + Screens
18.1
16.6
39.1
20.4
5.8
40.6
TOTAL
14.8
24.4
27.2
28
5.6
44.8
SOURCE: MEDIA Salles/LE/BIPE Conseil
 
Table 19: 
Projection Equipment
Type of cinema
16 mm
35 mm
70 mm
VIDEO
OTHER
1 Screen
12.2
98.5
8.6
4.7
0.9
2 Screens
15.9
99.3
5
4.4
-
3 - 5 Screens
9.6
98.4
4.9
2.1
3.3
6 - 7 Screens
0.8
100
3.3
-
-
8 + Screens
3.8
100
4.4
2.7
-
TOTAL
9.1
99
5.8
3
1.3
SOURCE: MEDIA Salles/LE/BIPE Conseil
 
Table 20 
Sound Equipment
Type of cinema
DOLBY
THX
SR
OTHER
1 Screen
69.1
1.7
16
27.6
2 Screens
68.4
-
17.9
29
3 - 5 Screens
73.6
0.6
29.6
23.6
6 - 7 Screens
92.7
3.3
35.5
7.0
8 + Screens
78.2
6.4
49.1
17.7
TOTAL
74.6
2.3
28.7
22.5
SOURCE: MEDIA Salles/LE/BIPE Conseil
 
Table 21 
Air Conditioning
Type of cinema
Air conditioning
No air conditioning
Intermediate system
1 Screen
34
49.1
16.9
2 Screens
48.8
37.6
13.6
3 - 5 Screens
54.1
30.3
15.7
6 - 7 Screens
74.5
5.9
19.5
8 + Screens
87.7
12.3
-
TOTAL
55.3
31.1
13.6
SOURCE: MEDIA Salles/LE/BIPE Conseil
 
Multiplexes and medium sized multi-screen complexes have superior technological features in both projection and sound equipment. Whereas 6-7 screen cinemas are also more likely than any other cinema type to have a very large screen in the site, multiplexes show superiority over other types of cinema in sound equipment, by offering more THX, SR and other sound systems.
Nearly 90% of multiplex screens have the comfort of air conditioning, compared to 54% of three to five screen complexes.
 
In general, there is clear evidence that multiplexes offer a range of facilities unmatched by the other types of cinemas. They have better technology standards than either the smaller complex or the single screens. Access to most multiplexes is made easier by parking arrangements and computerised ticketing systems. In a multiplex, viewers have a greater choice of shopping and catering facilities.
 
The main feature of multiplexes, however, is the fact that the more expensive and up-market overheads can be shared among a greater number of screens. Lower costs per screen combine with a more flexible use of screen capacity to increase the profitability of the cinema. However, the survey did not pick up sufficient financial information to provide evidence for this well-known proposition.
 
Since the price of admissions varies significantly between countries, irrespective of the number of screens, capacity utilisation is a better measure of the performance of the cinema. Table 22 shows the number of admissions per seat in each of the five type of cinemas hitherto discussed. The figures in the table are based on the admissions reported for each screen during the week of the survey.
 
Table 22 
Number of Admissions per Seat per Week
Type of cinema
<1 admission per seat
1 - 2.99 admissions per seat
3 - 4.99 admissions per seat
5 - 9.99 admissions per seat
Over 10 admissions per seat
Average admission per seat
1 Screen
48.9
32.2
11.1
6.4
1.4
1.9
2 Screens
43.8
32.6
15.8
6.7
1.2
2.0
3 - 5 Screens
34.3
31.3
16.4
12.7
5.3
3.3
6 - 7 Screens
13.6
39.9
14.9
19.1
12.6
4.87
8 + Screens
11.1
19.3
19.2
22.8
27.6
7.73
TOTAL
34.7
31.3
14.9
12
7.1
3.4
SOURCE: MEDIA Salles/LE/BIPE Conseil
 
Nearly half the single screen cinemas recorded less than one admission per seat during the week of the survey, and the proportion of cinemas with this level of capacity utilisation decreases when the number of screens increases. More significantly, the average level of capacity utilisation for multiplexes is over three times as high as that for single screens and significantly higher than that of smaller complexes.
 
Overall, the survey illustrates the differences between single screen cinemas, multi-screen cinemas and multiplexes. The differences in terms of facilities and equipment are fairly marked between these types. The number of seats and the size of screens is generally smaller for the multiplexes which have a large proportion of their screens in the 150-200 seat category with a 25-49m² screen. Multi-screen cinemas with 6-7 screens do not appear to differ very markedly in terms of facilities and equipment from the category of multiplex cinemas which are defined here as cinemas with more than 8 screens.
 
 
Multiplexes in Europe: the views of the UK industry
 
London Economics undertook a small number of interviews with companies in the exhibition and distribution sectors in the UK to seek their views on the impact of multiplexes on the industry, and the likely development of multiplexes in other countries in Europe. London Economics spoke to representatives of Warner Brothers, MGM Cinemas, Mayfair (a company which distributes what it calls "specialist" films), and UCI. This section presents a synthesis of the discussion in these interviews, highlighting the main issues raised.
 
 
Defining "Multiplex"
 
There was approximate consensus regarding the optimal formula for a multiplex cinema. One view was 8 screens and 2,400 seats (average of 300 seats per screen); 6 screens in less densely populated areas was another. With 5 screens, a cinema was said to face problems with the distributors, because it cannot keep films on for long enough. A site with 7 screens or more is more attractive to distributors. Another view was that the 14- and 18-plexes which were built in Germany are too big. The latest German multiplexes have 10 screens. In a 14-plex, 60% of revenue comes from 3 screens; the other 11 add little.
 
On the subject of screen size, one view was that it is preferable to have one very large screen (say 500-600 seats) than two or three large ones (say 300-400 seats), given the formula for the "nut" component of rental charges, which is based on the number of seats in the screen. The nut is the level of box office revenue that goes to the exhibitor before revenue is shared with the distributor.
 
The smallest screen should have not less than 125 seats according to one view. Any fewer seats, and it is not possible to generate an atmosphere of excitement for the film. Another view is that small screens should have 75-90 seats. This is helpful to distributors, especially independents.
 
 
The impact of multiplexes in the UK
 
The general view was that multiplexes had helped to reverse the decline in cinema-going in the UK, but that they were by no means the main agent of change. The demographic change had been a factor, with an increase in the number of 15-24 year olds. Multiplexes appeal to older members of the public, because, with their guaranteed parking, they cater for people who drive a car. Improved quality of facilities in general, and an increased interest in film, following the rapid growth in the video market, and more coverage on television, had also contributed to the increase in admissions.
 
However, the view of the UK chains in general is that attendance in the UK will not reach 200 million per annum, which would be the total figure if the average person went to the cinema as often as citizens of the US. There are a number of reasons why this might be the case: the cinema-going culture is less strong in the UK than in the US; cars, the transport for which multiplexes are well suited, are more widely used in the US; land is more expensive and it is difficult to find sites in the more densely populated UK; and it is more difficult to obtain planning permission for development outside the city centre in the UK than in the US.
 
On the cost side, multiplexes provide economies of scale. A purpose built multiplex has usually only one projection room, in the centre of the screens. This means fewer projection staff. Also, multiplexes can take advantage of showing one print in more than one screen. A big release is often shown in more than one screen in a multiplex. In the UK, for example, Jurassic Park was shown in as many as four screens in some locations.
 
 
Multiplexes in Europe
 
There was a view that multiplexes would not be as successful in the rest of Europe as they have been in the UK. One of the large chains expressed the view that expansion into Italy and France would be little short of disastrous, and that companies that were following this strategy were only following some dogmatic, short-sighted policy. This is not, however, a view which is shared throughout the industry. The reason the American chains had targeted the UK for multiplex development is the common language, and relative similarity in business cultures. Progress elsewhere in Europe was seen as fraught with the difficulties both of language and of breaking into the existing tightly knit exhibition sectors. However, one of the major multiplex operators is proposing to go ahead with multiplex development in France and Italy.
 
Another problem with the northern countries in Europe is that many, for instance Holland, Germany and France, have firm policies regarding development of their cities. Authorities are opposed to the building of multiplexes on the outskirts of cities, on the grounds that this would attract people to the suburbs, thereby increasing the ongoing economic deterioration of the city centres. This is both an economic and a social policy.
 
Expensive film hire is another straightforward economic factor which dampens the enthusiasm of the US chains for expanding in Europe. The UK has the lowest hire rates in Europe, due to the bargaining power of the exhibition duopoly, albeit diminished in recent years by the arrival of greater competition. In Germany, competition between the five circuits enables distributors to charge more. Film rental is about 42% in Germany, compared to less than 40% in the UK - a significant difference. Why should a US company, already doing well as a distributor in Germany, with high rentals, expand into the unprofitable exhibition sector? In France, the three largest French exhibition chains, Gaumont, UGC and Pathé, were said to have an inherent advantage over any potential US or other foreign competitors in the form of the political leverage which they enjoy.
The other basic economic factor making the rest of Europe less attractive is cost, both of building and operating multiplexes. In mainland Europe, legal requirements on new buildings are more stringent than in the UK. Salaries are also higher in continental Europe than in the UK.
 
 
Specialist films
 
The UK chains' view of specialist, or art-house, films is that where they are a commercial possibility they will be exploited. One chain has what it calls a "Director's Chair" evening show in a few selected screens where specialist films are shown. From the point of view of a distributor of this type of film, multiplexes help to expand this market segment, by increasing the number of small screens which are potential outlets for films where the audience is likely to be smaller than average. However, the US distributors have large numbers of films which they want released. Where they are vertically integrated in exhibition they will usually prefer to keep their own films on rather than show an independent specialist film on which they earn a lower margin.
 
 
Econometric analysis of the success of multiplex cinemas
 
The discussion of the typical characteristics of cinemas of different screen sizes suggest that multiplexes are on average built to a much higher standard and offer more facilities for customers. Table 22 also suggests that multiplexes achieve far higher utilisation levels. Average admissions per seat in a two weekly period was much higher in cinemas with six or more screens than in single screen cinemas. The same appears to be true for cinemas with 2, or even 3-5 screens.
 
To test the empirical significance of these findings we undertook an econometric analysis of the survey data. We created a sample of screens which contained all the information which could be considered relevant in determining utilisation levels in cinemas. These include location specific factors, and site specific factors as well as information about the films that a cinema typically shows.
 
The variables analyzed are outlined in Table 23 below. A full description of the variables and the modelling can be found in section 2.5 on methodology.
 
A word of caution is required before looking at regression analysis such as the one presented in section 2.5 and reported here. For a one week period when exhibitors are largely committed to showing a particular film, it is largely the success of that film which will secure high capacity utilisation levels. Other factors come into play as a secondary influence on admissions. There is, however, no measure of the quality or appeal of the programme included in our regression. This does not invalidate our analysis but serves as a warning that it is the pipeline of good and bad films which is responsible for the commercial success of an exhibitor. And this should not be forgotten when discussing the role and impact of multiplexes.
 
The dependent variable is the logarithm of Admissions Per Seat (APS), and this is regressed on a number of country dummy variables and screen and site characteristics.
 
 
Table 23 
Variables used in regression to explain admissions per seat.
Number of Screens This is to capture the effect of multi-screen and multiplexes, which may inherently have higher admissions per seat than single screen cinemas.
Number of Performances This is the number of weekly performances in a particular screen of all movies shown in that screen.
Country Dummy  There are 10 country dummy variables included. Germany is the base case.
Population Dummy  There are 8 population categories ranging from catchment areas of less than 25,000 to catchment areas of more than 1 million, distinguishing between town centres and suburban areas.
Ancillary Services There are 7 dummy variables for ancillary variables ranging from the availability of a coffee bar to a video shop.
Share of Domestic/US Films in Programme There are two variables, one the percentage of domestic films, the second the percentage of US films in the screen's programme.
Parking  There are two dummy variables, the first for the availability of reserved parking for the cinema's customers, the second for the availability of free or cheap parking.
Booking Facilities There is a dummy variable for the availability of an advance booking facility.
Years Since Modernisation This is the number of years since the cinema was modernised.
 
 
Results
 
The results from our preferred specification are shown in Table 24.
 
Table 24 
Preferred Specification of Model of Admissions per Seat
Variable
Co-efficient
T-statistic
Base
-1.309
-9.331
Ln(Screens)
.204
5.065
Ln(Performance)
.790
16.526
Spain
.337
4.461
France
-.193
-2.306
Ireland
.643
3.883
Italy
-.198
-2.153
Town Centre, Pop. 1m plus
.325
4.653
Restaurant
.333
2.183
Poster Shop
.238
2.606
Free/Cheap Parking
.130
2.457
Ln(Years since Modernisation)
-.093
-2.903
R2= .404 Adjusted R2=.397 Standard Error = .728
 
Taking Germany as the base, the presence of the other variables will then increase or decrease admissions per seat, relative to Germany, depending on the sign of the co-efficient.
 
From Table 24 we can infer: What emerges from this preliminary analysis is that those features traditionally associated with multiplexes do indeed appear to affect capacity utilisation levels. However, as the simple tables shown in the previous section indicated, these facilities are by no means unique to a multiplex. The fact that the origin of films did not show up as being significant tells us either that exhibitors follow a completely rational policy when choosing their programme or that the origin of film did indeed not matter. Much more likely is that it is the quality of films that matters when it comes to filling cinemas.
 
 
Multiplex versus multi-screen cinemas
 
We also tested whether it was possible to distinguish between the success of multi-screen cinemas and multiplex cinemas. The survey did not allow for a precise definition of multiplex cinemas because it did not ask whether the cinemas was purpose built with more than 8 screens. Short of this precise definition we have to use a definition which is based solely on the number of screens (8+). A second regression was undertaken which, instead of the number of screens, used an indicator that distinguished between single screens (base case), multi-screen (3+) and multiplex (8+). This second regression (detailed in section 1.5) confirms the success of multiplex cinemas.
 
A number of other variants of these models were used, but the same variable remained significant. From the results we can infer that there is clear evidence for the beneficial effects of multiple screens, and the "multiplex" effect for cinemas with 8 or more screens. The 3+ dummy says that capacity utilisation is significantly higher in cinemas with 3 or more screens. The 8+ dummy says that there is a benefit from having 8 or more screens, over and above the benefit of having more than 2 screens.
 
 
The profitability of multiplexes
 
The interviews with key people in the exhibition industry highlighted a lack of consensus over the issue of costs and profitability of multiplex cinemas. The total investment required varies with the building costs, price of land and regulation requirements in each country, thus making a general assessment of multiplex profitability a more difficult task.
 
Nevertheless, we estimated the costs of a "typical" ten screen multiplex in the UK, by using indicative data on building costs and requirements obtained from one of the UK's multiplex operators and data on average costs and admission levels from both the MEDIA Salles' Yearbook and the LE/BIPE survey. All values are expressed using 1992 prices and exchange rates.
 
The capital costs per seat include: The capital costs per seat are then annualized (spread) over 12 years, assuming an economic rate of return of 9%.
 
The operating costs are: Table 25 below shows the profitability of UK multiplexes under various assumptions.
 
Three types of multiplexes were looked at: type one in a central location in the capital, type two in a central location in another town and type three in an out-of-town location.
 
 Table 25: 
Typical 10 screen multiplex (UK)
 
Type 1
(Capital)
Type 2
(Other town centre)
Type 3
(Out of town)
Capital cost per seat (ECUs)
674
427
417
Film rental 
(as a % of GBO)
40%
40%
40%
Labour costs (1) 
(as a % of GBO)
9%
9%
9%
VAT 
(as a % of GBO)
17.5%
17.5%
17.5%
Overhead costs 
(as a % of GBO)
5%
5%
5%
Total operating costs 
(as a % of GBO)
72%
72%
72%
Break even point assuming average admission price of 4 ECUs  

(expressed in admissions per seat per annum)
591
374
366
(1) These costs are exclusive of the labour costs for concession stands.
 
According to the BIPE survey, the average number of admissions per seat per year for a ten screen multiplex was 367. Therefore, given the average European admission price of 4 ECUs, cinemas in most town centres are making small losses and cinemas in out of town locations would just break even at average admission levels. However, due to the extremely high price of land in Central London, multiplexes located in the capital would be making a substantial loss if they charged, on average, only 4 ECUs. Multiplexes located in London need to charge a significantly higher price given the number of admissions in order to become profitable or earn additional revenues from concessions and advertising.
 
In Table 26 below, we have analyzed the profitability of these three types of multiplexes under various assumptions about ticket price. Profitability was examined by comparing the number of admissions per seat per year needed to break even with the average number of admissions of 367. The level of profitability for each scenario is indicated by the number of pluses or minuses (see key below table).
 
Table 26: 
Profitability of multiplexes
Ticket price
Type 1
(Capital)
Type 2
(Other town centre)
Type 3
(Out of town)
5 ECUs
- -
+
+
4 ECUs
- -
-
+/-
3 ECUs
- -
- -
- -
++ = profitable (break even point more than 20 admissions below average)
+ = marginally profitable (break even point just below average)
- = marginal loss (break even point just above average)
- - = loss making (break even point more than 20 admissions above average)
 
Table 26 emphasises the point that multiplexes located in the capital need to price tickets at a level which is substantially higher than the European average in order to remain profitable. Multiplexes in out of town locations, on the other hand, can afford to set prices at the average admission price observed in Europe.
 
Alternatively, assuming an average ticket price of 4 ECUs, Table 27 shows profitability levels at varying levels of admissions.
 
Table 27: 
Profitability of multiplexes (admission price: 4 ECUs)
 
Type 1
(Capital)
Type 2
(Other town centre)
Type 3
(Out of town)
300 admissions per seat per annum
- -
- -
- -
400 admissions per seat per annum
- -
+ +
++
Key as in Table 26

 
Clearly, if ticket prices are fixed at the European average of 4 ECUs, multiplexes located in London would need to attract a far greater than average number of customers in order to remain profitable. In fact, Central London multiplexes would need to attract nearly 600 customers per seat per year in order to make a profit on ticket sales.
 
However, it is important to note that revenue from ticket sales is far from being the sole source of income for a multiplex. Ancillary activities, such as advertising, tend to generate substantial revenue for multiplexes. A multiplex who appears to be making losses when one looks solely at its primary activity (that is selling tickets for films), may, in fact, be making very healthy profits when revenue from all operations is taken into account.

(9) In its survey of European multiplexes in 1991, Screen Digest reported plans for 5 new multiplexes in Spain for 1992, and six more in Germany.
 
(10) In Central London we used a figure of 2,099 ECUs per square meter to represent the capital value of land (including building cost and fit out cost). For other town centres and out of town locations we used figures of 159.3 ECUs per square meter and 108.4 per square meter respectively to represent the land price only.