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Gift card breakage in cinemas
Breakage is the part of gift card and voucher value that is never redeemed. For a cinema it is real revenue — but how and when it can be recognised is governed by accounting and consumer law.
Also written: breakage · unredeemed gift cards · voucher breakage
Why it matters more than it looks
Gift cards are one of the strongest seasonal lines a cinema sells, concentrated in the weeks before Christmas. A card sold is cash received but not yet revenue: the cinema owes a future film to whoever holds it. Some of that value is never claimed, and that unclaimed part is breakage.
The temptation is to treat breakage as a profit line. It is a poor one. A card that is never redeemed is a customer who never came back, and redemption visits bring concession spend and often a second ticket for a companion.
The rules that shape it
| Area | What applies |
|---|---|
| Accounting (IFRS 15 and US ASC 606) | Expected breakage is generally recognised in proportion to redemptions, where the business can reliably estimate it — not all at once when the card is sold, and not simply at expiry |
| US federal law | The Credit CARD Act of 2009 prevents most gift cards from expiring within five years of issue or of the last load |
| US state law | Some states restrict expiry and fees further, and unclaimed-property laws can require unredeemed value to be handed to the state |
| UK | No statutory minimum expiry, but terms must be clear and fair under consumer law |
Summary only. Take accounting and legal advice for your own jurisdiction.
What to do with the insight instead
The useful number is not breakage but redemption rate and time to redeem. Cards that sit unused for months can be nudged: a balance reminder, a suggested film, a push notification to a known cardholder in the app. Every one of those converts a liability into a visit — which is worth more than the breakage it replaces.
Frequently asked questions
What is gift card breakage?
The value of gift cards or vouchers that is never redeemed by the holder.
Can cinema gift cards expire?
In the US, most gift cards cannot expire within five years of issue or of the last load under the Credit CARD Act, and some states go further. Rules differ in other countries.
How is gift card breakage accounted for?
Under IFRS 15 and ASC 606, expected breakage is generally recognised in proportion to the pattern of redemptions when it can be reliably estimated, rather than when the card is sold.
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