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582 HARVARD BUSINESS REPORTS
It was evident from such differences that, unless gross receipts fluctuated in approximately the same proportion as total film cost, there would be wide variations in the percentage relationship of rentals to gross for different programs exhibited by the theater.
In spite of this difficulty the manager believed that such percentage figures were valuable guides to future buying. He, therefore, combined the film cost of both features and all short subjects used in each program and found the percentage which this figure bore to total receipts during the run. Examples of percentages of this type appear in column 7 of Exhibit 2.
The manager believed that such percentages provided a definite measure of the drawing power of his theater's programs. He minimized the objection that such percentages did not secure an evaluation for both features separately, by stating that in his opinion the featured picture was the one which brought a majority of patrons to his theater. He believed, therefore, that the percentages as used constituted a check upon former prices paid for feature pictures and in particular indicated the box office attraction of the featured productions. As shown in Exhibit 2, the percentages ranged from 21% to 78% with a majority falling between 25% and 55%. Film cost for a vaudeville house was estimated to average approximately 20% of gross receipts, while for a motion picture theater using a single-feature program 25% to 30% was considered as typical. The manager stated that, with the double-feature programs of the quality he exhibited, a film cost of around 40% was not excessive. Percentages greatly in excess of that amount indicated that film prices were high in relation to gross receipts.
The percentages themselves could be checked by viewing the pictures and observing the reaction of the audience to individual programs. This check enabled the manager to detect the weaker picture of a program whose rental costs had yielded high percentage relationships. It was necessary also to examine the gross receipt figure before arriving at a final decision. High percentages of rental to gross indicated that too much had been paid for one or both features. They did not reflect the real reason, however, why too much had been paid. For instance, an exceptional picture might be purchased at a price which anticipated a gross in excess of the normal amount. If this gross was not realized, the fact would not mean that the picture was not