On Saturday night my wife and I went to see the latest Luc Besson film, 'Lucy'.  We went to a local cinema complex, which happens to be the same one I frequented as a  teen back in the 1990's.  We were going to a late session, so we decided to arrive early and have a coffee before the movie.

Sitting in the coffee shop, we noticed how different the place felt.  We were there on a Saturday night, and there were hardly any people around.  We did not expect it to be this quiet over the weekend.  This is quite a contrast from the days when the place was full of people moving in and out of movie sessions.

The night got me thinking about movie cinemas in general.  Is it possible that they are slowly fading away?  I decided to do some quick research Finance Guy style, to see how busy this particular cinema complex is.  First I looked at their screening schedule for next Saturday, which is shown below:

As we can see, they are showing a total of 20 screenings across 7 films.  Based on our assumptions of running times, no more than 4 screens are in use at any time.  At any time, 75% of the screens are switched off with empty theaters.  

This complex was built in a day where we went to the movies more.  It was  time when a summer blockbuster like the Ninja Turtles would screen every 30 minutes to a near capacity audience.  Times are changing, and cinemas are losing their appeal.

Then and Now

In the 1990's we used to get excited about the prospect of seeing a film on 'the big screen'.  The cinema offered a superior audio visual experience which gave the film an added element of enjoyment.

The cinema experience today is fairly similar to what it was 20 years ago.  This is not a bad thing, it's still the best way to see a film, but the 'big screen' advantage is not what it used to be. Advances in home entertainment systems has meant that we can now have a big screen, hi definition, surround sound experience from the comfort of our own couches.

In the past if we liked a film, we'd recommend it to our friends as 'worth seeing at the movies'. This was when the alternate was to wait almost a year and see it on VHS. Today the film is simply 'worth seeing'.  There is no urgency to see it at the cinema because it will be on Blu Ray soon.

An Unofficial Recommendation

A night in with a movie is replacing a night out to the movies.  We believe that a major reason, is the cost.  Adult tickets are $20 each, while a new release Blu Ray is $30.  Our trip to Lucy cost us $40.  If we waited a couple of months, we'd save $10 and have our own copy to watch over and over again.  

Having people over for a home movie is way cheaper than going out.  The more people you invite, the better it gets, as shown below:

When we want to see a movie, we have the choice of either going to the cinema or waiting for the Blu Ray release.  The cinema wins when it comes to the viewing experience, but loses on cost.  The difference in viewing quality, does not justify the higher price.

The Finance Guy believes in the Economics of Supply and Demand.  If cinemas want to bring back the crowds, they should consider a drop in ticket price.  At $20 per adult ticket, people are choosing home video.  If the price were to drop to $15 per ticket, I know I'd go to more movies, and I'm sure so would several others.  

My wife and I discussed how often we'd go to the movies at various hypothetical ticket prices (buying two adult tickets per visit).  The table below shows how often we think we'd go in a year:

From the above table, we can see that at the price falls, we are willing to go to the cinema more frequently.  For us the cinema makes the most money by charging $15 per ticket.  This table represents our personal decision curve which is shown in the graph below

Cinemas need to understand that they are in competition with home video, and they are losing the contest.  We believe that a drop in ticket prices would help make them more competitive and increase their profits.  

Our assumptions have not taken into account the cost of showing films but we assume that the benefits increased revenue would more than offset the costs involved with servicing more people and perhaps having to show more screenings.

What do you think? Would a drop in ticket prices get you to the cinema more often?

Do you need a quick get away?  How about a quick trip to the top of the Empire State Building?  Or would you prefer to explore The Colosseum in Rome?  What ever your preference is, the Marriott wants to bring it to you!

The Marriott is now the first hotel chain to enter the world of virtual reality.  They will provide Oculus Rift Technology to guests at select Marriott locations.  This will allow guests to virtually tour destinations of their choice, all without leaving the phone-booth style chamber located in your local Marriott.

Hold on a minute!  This is the Marriott, the service doesn't end with a set of goggles and some earphones.  The chamber is able to modify the temperature and create effects such as wind, giving some 5 Star touches to your virtual tour.  

First they put hotels all over the world, now they are bringing the world into their hotels.  If I get the opportunity, I would love to try this technology.  Maybe a virtual walk on the beach in Figi will convince my wife that we should go there for our next holiday.

Sons of Anarchy is back on our screens for their final season.  If you watched the first episode, then you heard The Forest Rangers cover of Bohemian Rhapsody.   I liked it so much I thought I'd share it with you. Don't worry, the video is not a spoiler for the show:

Entertainers have always been good at recycling.  If something worked well in the past, there is a good chance we will see it again in the future.  I'm sure Queen wouldn't mind, after all they themselves found success with their cover of this Elvis Presley song.

Recycling isn't limited to musicians.  Michael Bay is so good at it that he turned a 1980's television show into four Transformers movies.  Now he's at it again with the Ninja Turtles.   Game of Thrones is an HBO 'original series', but before that it was a series of books. 

When film makers can't find an idea from a book or an old t.v show, there is always comic books.  Guardians of the Galaxy is the latest comic book to hit the big screen, but it certainly won't be the last.  We expect this list of comic turned to films to continue to grow for a long time.

Recycling is considered a less risky venture than creating new.  It's easier to adapt an existing story than write a new one.  Specially if you use a comic, which is in near perfect film script format already.  If a story was popular in the past, then there's a good chance that a new audience will also like it.

Then there's the existing fans, how many people saw the Harry Potter films because they had read and loved the books?  Existing fans can be hard to please.  We've all been to a movie and heard someone say 'the book was better'.   I said it myself after watching 'The Wolf of Wall Street'.  I enjoyed the film, but even three hours wasn't enough time to tell the full story.

A friend of mine is a comic book expert.  He spent 20 minutes telling me why Man of Steel, was flawed.  Apparently Superman has a strict code of behavior, which was contradicted in the film. Despite the flaws, he still bought it on Blu Ray.  Existing fans may prefer the original, but they will support the new format.

Recycling is a format that works, and we will continue to see it.  The only question is, what will resurface next?

My wife and I were recently watching an episode of the Real Housewives of New Jersey.  It started off as ‘watching one of her shows together’, but I quite enjoy watching the various versions of the show.  

The Real Housewives concept has created multiple reality television stars, using a very simple formula:  They find a group of ladies from upper class neighbourhoods, and simply follow them around with cameras.   Often the ladies have some connection to each other (either they are related or are either friends or enemies off camera). 

The ladies go on the show because they want camera time, and while most of them appear to have more dollars than sense, they all understand that drama leads to air time.  The show centres around social gatherings.  The ladies invite each other to their homes, to their charity events, to their businesses or anything else they want filmed for the international audience the show enjoys.  Alcohol has a strange way of being present at most of these events, and maybe this is fuels  some of the on screen drama.

The beauty of the show, is that the cast have the chance to become reality stars, rather than reality contestants.  There is no competition, and no prize for winning.  Nobody gets eliminated, and in most cases, housewives are on the show for more than one season.   It doesn’t matter how much weight they lose, or how well they sing karaoke, they get to come back week after week, they don’t even have to impress Donald Trump.

The ‘let the cameras follow you’ format of the show, has empowered many cast members to leverage off their reality stardom.  Thanks to the Housewife cameras, the cast have done everything from launch singing careers, to show off their brand new trampoline centre.  I now know that my toaster oven has more uses than fanciest of Swiss Army Knives.    

Air time is a very powerful marketing tool.    So powerful, that last Christmas, I was able to buy my wife a ‘Skinny Girl Margarita’, while holidaying in Mandurah Australia. That's 11,650 miles away from New York    Looking for a new set of high heels?  Have you considered the Maloof Hoof?

The Real Housewives is a powerful promotional tool.  Looking to buy or sell property in Beverley Hills, call Mauricio (unless you already called Josh Flagg ).  If I host a function in New Jersey, it’s going to be at the Brownstone House.  Next time I visit L.A, you know I want to stop by SUR for a meal with a side order of staff drama.

Bravo has also been quick to leverage off the stardom they have created with multiple spin offs.  My favourite being: Vanderpump Rules, let’s face it, Lisa Vanderpump was born to be on tv.  She is elegant, funny, and not afraid to speak her mind, what’s not to love?

Every season from every city has had their share of product placement.  The most unusual product placement I have seen, was on the current season of the New Jersey show.  Joe Gorga proudly took his wife (and the cameras) to see their new business venture.  If we were to look at this as a marketing campaign, it was a failure:

1.  All we saw was a plain blue truck, there was no mention of the business name, or how to contact them.  It’s all well and good that we know you have spent millions on a blue truck, but at least wear a hat with your new business name on it or something.  How are we supposed to use your service if we don’t know how to find it?
2. What has he actually invested in? From what we saw, it appears that the service is ‘document destruction’. The blue van comes along, takes your sensitive paperwork, and incinerates it.   Essentially they are burning papers so nobody will ever know they existed.   Joe tells the camera that he has ‘invested millions in this business’.    Joe, I have a brick barbeque pit in my back yard, I was going to tear it down to make more garden space for the kids, but if you give me just $1Million, I’ll let you burn paper in it.

Watching this segment left me  so confused, that I took the internet in search of answers.  As always Bravo did not let me down, their website hosts a blog written by Melissa herself.  I did not get any clear answers from reading Melissa’s blog, but here is my take from the information:

• The first thing I read was ‘The Gorgas are going green!’ – How is burning paper green?  Isn’t burning things what caused all these environmental issues in the first place? You could put it in a blender with some water.  The ‘sensitive information’ would be transformed into an unrecognizable blended pulp.  The pulp can then be recycled.
•  She went on to refer to it as an investment in ‘cutting-edge technology’.  Not sure where the cutting edge is when it comes to burning paper.  I’m not saying that Joe Gorga is a caveman, but they are saying ‘cutting-edge’ and I am seeing : Fire: - Man’s first discovery!

·         Melissa tells us that the truck was ‘only a small part of the overall business’.  According to her, the venture involves ‘plasma technology’ and turning garbage to energy and reducing the need for land fill.

After discussing this blog with everyone at TFG, we are assuming that the Gorgas have invested in a plasma gasification business.   This would be a green investment, and is related to waste management.   On screen, Joe pulled out a handful of what looks to be ash, which he refers to  as ‘millions of dollars’. 

After some brief research on plasma gasification, it is plausible, that what we saw, was not ordinary ash.  The process of turning garbage to clean energy involves applying extreme heat in a highly controlled and contained environment.  This turns the solids to dust, but the process is not combustion, so technically the paper has not been burned.

Here at TFG, we think the Gorgas have every right to be proud, clean tech is a noble investment.  We’d love to live in a world where clean energy is a viable replacement for fossil fuels.   We have many sources of clean energy, but they can’t seem to compete with coal when it comes to cost of production.

If, as Melissa implies, the Gorgas are investing in Plasma gasification then the operation would involve a lot more than a fleet of blue trucks.  It would have a substantial processing plant, and would accept all sorts of garbage, not just ‘sensitive documents’. 

The show would be a great way to raise publicity for their operation and bring awareness to plasma gasification.  The technology is interesting, a tour of the plant would make better viewing than a plain blue truck.

One theory is that the truck we saw was located a car dealership.  It is alleged that the Gorgas were given a free used Mercedes in exchange for filming the scene at the yard.  If this is true, then the owner of the car yard must be feeling a little disappointed.  The scene was conveniently shot with a lot of close up camera angles ensuring that the viewers did not see the name of the car yard, or anything other than the truck.  There was also no mention of a car yard, you'd think Melissa would ask why they were going to a car yard.  If the scene was filmed at a car yard, then Bravo obviously decided to edit the scene so that the yard was not on the show.

The free car theory is pure gossip, but in the world of the Real Housewives, gossip is good.  A juicy story makes us pay attention and builds star power.  The housewives thrive on gossip, the juicier, the better.  If it offends another cast member and causes conflict, even better.

At this stage we are not sure what the Gorgas have invested in.   Hopefully we will see more of this business with better explanations in future episodes.  Based on what we have seen on our tv screens, they have spent millions to offer a service which, can be offered by anyone who has a box of matches, and a safe place to burn paper.

Shameless promotions are part of what make the Real Housewives great.  Here at TFG, we are wondering if advertising companies will catch on and offer housewives official sponsorship deals.  As it becomes easier and easier for us to skip the commercials, advertisers are going to need to find new ways to promote products to us.  Reality TV specially shows depicting every day life, are ideal.  

Any product can essentially be promoted on the show simply by a housewife either endorsing it, or filming themselves using it.  Our only advice to any companies considering this, is to include Bravo in the deal, or risk having the products creatively edited out.

The US House of Representatives voted 231-192 in favour of the Heck-Perlmutter-Lee-Rohrabacher amendment to H.R 5016 spending bill.  The changes, known as ‘The Heck amendment’, was voted in on Wednesday July 16th

For those in the legal marijuana industry, the Heck amendment could potentially remove the problems they experience when dealing with banks and other financial service providers.  Marijuana is a schedule 1 drug under federal law. 

This means that profits made by licensed operators are considered ‘proceeds of crime’ under federal law.  Banks fear that they can be prosecuted for dealing with anyone in the marijuana industry, even if they are operating legally on a state level.

Under the Heck amendment, the SEC and the Treasury Department will not be able to spend money prosecuting banks for ‘working with pot businesses that do not break state law’.  Under these changes, pot will remain a schedule 1 drug, but when it comes to banking, the Federal Government is agreeing to turn a blind eye.

With banks refusing to deal with them, operators have been forced to run on a ‘cash only’ basis.  Dispensaries are accumulating large sums of cash which can’t simply be deposited into a bank account.  This means that licensed dispensaries, are being treated as financial criminals, and are effectively having to ‘launder’ their profits. 

Most agriculturalists would dream of having a literal cash crop, but dealing only in cash does have its down side.  Think about how you bought your car.  You might have used check or a loan, but you probably didn’t show up with a bag full of small bills.  If you did, hopefully the cash didn’t have the overwhelming and instantly recognizable smell of weed.

The cash problems don’t end with trouble spending the money.  Everyone knows that dispensaries have large amounts of cash, including thieves.  It’s like having a flashing light saying ‘come rob me’.  As profits grow, so does the mound of cash.  Protecting that cash, and those around it, is becoming a growing security problem.

The benefits of the Heck amendment aren’t limited to market participants.  One of the biggest winners from the changes will be… the government.  The Federal government may not be willing to legalize marijuana, but they are willing to tax it.  Opening the doors to conventional banking, will make the industry easier to monitor and easier to tax. 

The data on marijuana varies greatly, and depending who you speak to, Americans spend anywhere from $10 - $140 Billion per year on weed. Several states have legalized medicinal marijuana, and recreational pot has been legal in Colorado since January and in Washington State since July, yet economists are not sure how much is actually being spent on pot.

In the upcoming November elections, voters in both Oregon and Alaska will be able to choose their side in the legalization debate.  Activists on both sides of the debate are using Colorado as an example of both the successes and failures of legalization. 

Studies of the marijuana industry have produced varying and at times contradictory information.   Legalization is less than a year old in Colorado, and in time we will see what effects it has had on usage, crime rates, tourism and tax revenue for the state.

Whether you are for or against legalization, there is no denying that there is serious money going up in smoke, and legal or not, people who want it, can find it fairly easily.  It’s naturally occurring, does not require complex processing, and the plant can be grown in conditions where other crops would fail.  

The demand for pot is very real and appears to be here to stay. As long as there is a demand, there will be a supply. Just like, as long as there is money to be made, someone will come and make it.  The Heck amendment will allow states to experiment with legalization legislation without fear of federal interference.  Hopefully this will cause money that is currently going toward criminal activity, to flow into the legitimate economy.

Americans spend $75 Billion per year on cigarettes, and $99 Billion on beer.  Whether or not the market for marijuana  will reach these levels is as uncertain as the legalization road itself.  The future of marijuana may look hazy and confusing, but we will do our best to keep reporting on this

Have you ever wondered how well high school prepared you for life?  What skill learned in high school, do you use most in your day to day activities?  I would say 'touch typing' I spend hours on the keyboard, and am touch typing right now.

Over the last ten years, the OECD has been running the 'Programme for International Student Assessment' (PISA).  It's goal is to evaluate how well schools equip students with 'the skills to achieve their full potential'. 

The results of the 2012 PISA survey have just been released.  Over half a million 15 year olds from all 65 OECD member and partner countries were surveyed.  Maths formed the largest part of the survey, with reading, science and problem solving all having smaller roles.  Making an appearance for the very first time in the survey was.... Financial Literacy

China was reported to have the most financially literate teens, however this result may have been influenced by the fact that the survey was limited to Shanghai, so did represent the entire nation. 

Adjusted relative performance showed that the Czech Republic, Australia, Russia and New Zealand, have the most financially savvy teens.  The survey found evidence that teens who held a bank account scored better than those who did not.

The survey covered a broad range of financial problems such as reading payslips, understanding invoices, and interest rates work.

Only 10% of OECD teens accurately answered advanced problems, such as calculating the balance on a bank statement.  Some countries include financial literacy in their curriculum, but this is usually on a limited basis.   Even in Shanghai, only 42% of kids were able to tackle 'level 5 problems'.

Here at the TFG, we hope that the 2015 PISA survey shows a marked improvement in financial literacy around the world.  After all, promoting literacy is one of our goals.

Want to see how well your teen would have done?  Try these sample questions  from PISA

Well another tax year has passed, and I hope FY14 was a prosperous one for everyonel.  While our personal tax returns may not be due until October, those of us expecting a refund may be tempted to lodge earlier, and get that refund into our bank accounts as soon as possible. 

If you're anything like me, then the first thing that pops into your mind when you get your group certificate, is "I wonder how much I'll get back this year?"  

Want to estimate your return? Try this Calculator

Or if you are half of a couple, use this version

Estimate how much you can deduct for your car here

One of the greatest challenges during tax time, is remembering and finding records for all our allowable deductions.

For those in the organized minority, a tax return is as simple as opening a file, and matching deductions to tax invoices.  They are probably divided into categories for work expenses, charitable donations, education expenses, etc.

For those of us who form the disorganized majority, lodging a tax return is a more stressful process.  The process usually starts with a nostalgic trip through the last 12 months worth of our bank statements.  This helps us find the dates and amounts of our deductible expenses (or at least those we successfully identify).  The fun then continues as we spend hours on the phone with call centres while we request duplicate copies of our tax invoices to be emailed or posted out.  We then pray that the call centre person will actually send out the statement, as they often tell you it's on the way, just to get you off the phone.

Fortunately for us disorganized masses, our employers will be giving us group certificates with our next payslip, so that is one document we might not lose before we lodge our returns.  However, there are some other expenses which we can estimate without having receipts....

You can claim up to $300 in business expenses without having to show records.  This can include up to $150 for cleaning work clothes.  (which is great because I've lost all my dry cleaning receipts) 

Do you use your own car for work purposes? Didn't keep a log book, well not to worry, you can claim up to 5,000 Kilometres as deductible expense without providing records, (driving from home to work and back not included).  These kilometres are converted into a deductible expense.  This is called the 'cents per kilometre method'.

Want to estimate your deductible car expense? Try This Calculator

Happy FY15

In 2013, Forbes named him the 46th most powerful person in the world (see list).  He can speak to Dolphins, he's best buds with Dennis Rodman, he is the youngest head of state in the world, and now, he has devised the greatest marketing strategy of all time. 

When it comes to Hollywood, the difference between a box office block buster and a flop, often comes down to marketing.  Producers go to great lengths to find promotional strategies that will turn their films profitable.

Some promotions are simple, such as ' a sequel', 'a movie based on an 80's tv show', or 'a superhero film'.  Indirect strategies include 'rumors off off screen romances', use of the name 'Adam Sandler' or, 'Having A List stars voice an animated feature'.

In marketing, 'tried and tested' usually wins against 'bold and new'.  People would rather trust what has worked before than try something new.  Now, thanks to The Supreme Leader, 'threat of war', has entered the realm of Hollywood promotional strategies.

Seth Rogen and James Franco are about to release their latest film 'The Interview' which is a parody about Kim Jong Un.  A spokesperson from the North Korean foreign ministry has said "If the US administration allows and defends the showing of the film, a merciless counter-measure will be taken"

If that doesn't make you want to see the film, then check out the trailer:

I'm not sure why this film would upset Kim, after all, appearing in Hollywood parodies did wonders for his father, whose popularity soared after this:

Back in 1989, the world was introduced to Doogie Howser.  Before his 11th birthday, Doogie had already graduated from Princeton.  By the time he was 14, he was the world's youngest licensed M.D.  He grew up to be,'Legend... wait for it... dary'.  Doogie was the epitome of role models, he made bookworms cool 18 years and 5 days before The Big Bang Theory hit our screens.  I am willing to say 'Doogie, is smarter than Sheldon Cooper'.

The deliberation over Doogie vs. Sheldon, would be as enthralling as Spiderman vs Wolverine. The message is clear, the key to success in life, is either hit the books, or obtain meta-human abilities. For us mortals, the path to greatness is limited to: Study hard, do well in school, succeed in life.  

What if t.v was wrong?  Imagine if, the real secret to success, was 'go outside and play'. Jaden Newman is not a child genius, and she does not have meta-human powers (to the best of our knowledge).  Jaden is a real life 9 year old girl.  Despite being in the fourth grade, she is the point guard for Downey Christrian High varsity basketball team, with 12th graders aged 16 - 18.  

With averages of 15 points and 8 assists per game, it's no surprise that she's already being serenaded by scouts from the University of Miami. Jaden has scored 63 points in a single game, but that was against boys, so we're not sure if it counts. 

Think you could beat a 9 year old?  Think again!

Magic had Bird, Federer had Nadal, Ali had Forman, who will rival Jaden?