Ticket Sales + Concession Stands = POS Profits
Business soared 600% in 18 months for systems integrator and software developer EIMS, Inc. This $5 million company incorporates new technology, such as online ticket sales and smart cards, into movie theaters' point of sale systems.
There's nothing like seeing a movie on the big screen whether it's Mission: Impossible 2, Dinosaur, or American Beauty. Going to the movies is an experience. Think about it. Would you enjoy the movies as much without hot, buttered popcorn and an icy cold soft drink? Call it annoying, but the sound of crinkly cellophane candy wrappers is part of the show, too. The total theater experience kept more than one billion people coming back to the big screen last year. And this is despite the onslaught of satellite dishes, cable TV, and video rentals. While blockbuster movies get more press than popcorn, concession sales are what keep theaters in business.
Systems integrator and software developer EIMS, Inc. (Gig Harbor, WA) is dedicated to helping theater owners maximize their concession sales. EIMS was founded in 1982 as a software development company specializing in government applications. So how did this $5 million company move from the mundane government market to the more glamorous theater market? Quite simply, the move to a new market started with a customer's request. "The customer came to us for support," said EIMS President and CEO Michael Von Ditter. "The vendor wasn't supporting the product that was being used in the entertainment market." Von Ditter declined to name the product specifically. EIMS provided the customer with the required technical support, and customer referrals soon followed. In 1994, EIMS began to focus entirely on providing enterprise solutions to the entertainment industries. This market includes theaters, festivals, stadiums, and sporting events.
Step Right Up: Keep Concession Lines Short
So what do theater owners want? They want to keep people moving, not only inside the theaters, but outside, as well. In the theater business, timing is everything. "Theater managers keep traffic moving through the parking lot by staggering show times, "Von Ditter explained. "The goal of theater managers is to move customers into the theater, through the ticket lines, and then through the concession lines," explained Kevin Kendrick, EIMS vice president.
The movie industry uses a formula to determine the success of a theater's concessions. The concession per capita measures the amount of money each patron, on average, spends on refreshments. "A theater with a concession per capita of $2.15 is doing well," said Kendrick. "Anything over $2.50 is great. Some theaters have a concession per capita of $3." The per capita number can be a significant selling point for VARs moving into this market. People may not buy popcorn, candy, and soft drinks if they have to wait in line for more than three minutes. "A new POS station at a concession stand can pay for itself in about three months," noted Kendrick. "The cost of a new system is roughly equal to the cost of four large tubs of popcorn sold at every show over the course of three months. This system cost includes the labor needed to run the system."
What Kendrick and Von Ditter find frustrating is some theater managers' reluctance to add POS stations. "We recommend one ticketing station for every 400 seats in the theater and one concession stand for every 150 to 200 seats," explained Kendrick. "North American theaters are typically under-concessioned. One of our customers has only four concession stands for 2,300 seats."
Now Showing: Smart Cards, Kiosks, And The Internet
To keep lines moving, EIMS incorporates various technologies into its POS solutions. Smart cards and loyalty card programs, for example, are taking hold in the theater market. "Card applications are typically chain-wide," said Von Ditter. "There are many ways to set them up, from prepaid admissions and discounts to point systems and parental controls. For example, a prepaid family card can be used for admission to movies, regardless of their ratings. A child's card, however, can only be used at movies rated G or PG."
Self-ticketing kiosks are also gaining popularity in theaters. However, Kendrick doesn't predict that all manned ticket booths will close as a result. "There will still be movie goers who prefer to buy their tickets from a person," noted Kendrick.
Internet ticket sales are growing, and this is one area where EIMS specializes. "The Internet is an extension of the box office," said Kendrick. "One advantage of Internet ticket sales is decreased traffic in the parking lot. People aren't arriving too early when they've already bought their tickets online." The Internet played a big part in preselling tickets for the blockbuster Star Wars Episode One movie. "People bought tickets two weeks before the show opened, eliminating long lines at ticket booths," said Kendrick. The presales also help theaters add shows or move shows to theaters with more seats. "Theaters have the option of holding a number of tickets back to be sold strictly through walk-up ticket sales," noted Kendrick. "Going to the movies is still an impulse purchase for many people."
The key to Internet ticket sales is to tie the information back to the enterprise. "The executives running the theater chains aren't working in the evenings or on weekends when theaters are busiest," said Von Ditter. "They want their sales data at 8 a.m. when they walk into their offices."
To keep its place in the competitive theater market, EIMS has developed E-PIPE, an Internet tool for online ordering. "E-PIPE allows multipoint retailers, like theaters, to mix and match enterprise protocols," explained Kendrick. "For example, you can use virtual private networks (VPNs) and leased lines in the same enterprise. For the theater owner, this means selling tickets online, at kiosks, and at the box office." The system is proprietary to EIMS. However, the company plans to develop interfaces to other vendors' software products. Kendrick said there is more motivation to cooperate than to compete at this point.
That's not to say that EIMS isn't competitive. The company keeps a firm foothold in the theater market, where there are few VARs competing. Still, similar opportunities exist for VARs. Incorporate the Internet, kiosks, and card programs to give retailers a blockbuster solution.
Questions about this article? E-mail the author at LisaK@corrypub.com.