Inside Nigerian Cinemas: How Ticket Sales Are Shared, Profits Made

Nigerian cinemas run a layered business model that draws income from multiple sources, with earnings shared among several stakeholders, including government agencies, cinema operators, distributors and film producers.

An overview of the system shows that cinema revenue is built around structured income streams and a defined sharing formula that determines how money from movie tickets is ultimately distributed.

Key Revenue Streams

Cinemas in Nigeria depend mainly on three sources of income. The largest comes from box office ticket sales, which drive earnings, especially when blockbuster films attract large audiences.

Another major source is concessions, as sales of snacks, food and beverages at premium prices contribute substantially to profits.

In addition, advertising displayed on cinema screens before movies and during breaks provides extra revenue.

How Ticket Revenue Is Shared

Proceeds from ticket sales are distributed through what industry players describe as a “cash waterfall.”

The first deduction is for taxes, with about 10 per cent of gross ticket revenue taken off, split equally between the Federal Government’s Value Added Tax (VAT) and state government entertainment tax.

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What remains is referred to as net box office revenue, which is then shared between cinema operators (exhibitors) and distributors. For Nollywood films, the sharing follows a sliding scale: in the first week, revenue is split evenly at 50 per cent each; in the second week, distributors receive 45 per cent while cinemas take 55 per cent; from the third week onward, the ratio shifts to 40 per cent for distributors and 60 per cent for cinemas.

For Hollywood releases, the terms vary depending on contracts, though they often follow a similar sliding structure.

From the distributor’s portion, further deductions are made before producers are paid. These include distribution fees, usually between 10 and 15 per cent, and withholding tax of about 10 per cent.

After these deductions, producers typically end up with roughly 30 to 40 per cent of the total box office gross.

High Cost of Operations

Behind the scenes, cinema operators contend with heavy running costs. These include rent and maintenance of buildings and equipment, staff wages, and high electricity expenses, with many cinemas relying on generators and fuel to maintain steady power supply.

Audience and Film Performance

The cinema market in Nigeria is largely driven by a growing urban middle class with disposable income, with cities such as Lagos accounting for a major share of box office takings.

Hollywood blockbusters tend to draw consistent crowds, while Nollywood productions often see stronger performance during festive periods and peak holiday seasons.

Together, these factors shape how Nigerian cinemas earn, share and sustain revenue in a competitive entertainment industry.