LOS ANGELES (AdAge.com) -- Suddenly, in Hollywood and sticky-floored movie theaters across the nation, "corn" really is a four-letter word. Thanks to the inflating cost of popcorn, the price of movie tickets is expected to skyrocket by as much as 30% this year, according to Ricard Gil, a University of Santa Cruz economist who studies the business. "You're going to see a one- to two-dollar increase in the price of a movie ticket," he said. "And that's being conservative."
Roughly 25% of the price of a movie ticket is subsidized by popcorn, soda and candy sales. According to an Agriculture Department report, next year's corn stocks are expected to plunge to a 13-year low and, as a result, corn-futures contracts have soared to an all-time high. This can be attributed to the demand for ethanol, which will claim 40% of next year's corn crop, munching away at the margins of theaters that rely on concession sales for as much as 45% of their revenue. "They're going to lose some of their customers," Mr. Gil said. "Some of them are just not going to go to the movies." This is terra incognita for the movie-theater business. Ticket sales had been insulated for the past 30 years from both inflation and recession. (Adjusted for inflation, tickets today cost less than they did in 1977, according to the Motion Picture Association of America; the National Association of Theater Owners notes that in five of the past seven recession years, box office and admissions actually increased.) Subsidizing ticketsThat's in part because angst-riddled consumers sought relief from financial woes in the dark of the cinema, but also because roughly 25% of the price of admission is subsidized by popcorn, soda and candy sales -- a discovery Mr. Gil published in a landmark joint study with Stanford University's Graduate School of Business in February. (Popcorn accounts for an average of 32% of concession sales in the theater industry.) In an interview with the Los Angeles Times in March, Mike Campbell, CEO of Regal Entertainment, the nation's largest theater chain, conceded as much: "If we didn't charge as much for concessions as we did, the tickets to the movies would cost $20." (According to the MPAA, last year's average movie-ticket price was $6.88.) But while ticket prices have more than quadrupled since 1970, per-capita spending at concessions has only a little more than doubled in the same period. This year's popcorn crop is down roughly 10%, said Larry Etter, chairman of the National Association of Concessionaires. In the past 18 months, the cost of coconut oil used for popping corn has risen 24%. And the price of the paper pulp to produce popcorn tubs has jumped 40% in the past 36 months, making the tub more expensive than the corn inside it.