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MoviePass cut the cost of its service to $9.95 a month & AMC is not happy

08.16.2017

As streaming giants like Netflix, Hulu and Amazon make it easier to stay at home, snuggle up and eat a barrel of ice cream while you watch your favorite movie, the number of people flocking to the movie theater is declining. Every year it seems fewer and fewer people are shelling out to see a movie on the big screen, and the industry is in need of a serious pick-me-up. Enter MoviePass, a company that has just made a drastic decision by offering movie tickets for as little as $9.95 a month, in hopes of getting more people on their ship and back into the movie theaters.

As of Tuesday, anyone who signs up for the pay-by-the-month service will be able to go see one movie a day (excluding 3D or IMAX) at your local theater for the low, low cost. The service, currently run by former Netflix executive Mitch Lowe, already lowered the price last year to $15 a month from around $30. Subscriptions were low, and as a result, the price has been severely reduced in hopes of saving the business. In order to compensate this price with theater chains, MoviePass will subsidize the cost of the ticket and pay back the theater.

From a business perspective, this would seem like a foolhardy move, as the company would begin to lose money for each customer who went to the theater more than once. However, the company recently sold its majority stock to Helios and Matheson Analytics Inc., a publicly traded data firm, who intend to regain revenue by collecting customer viewing data which could then in the future be used to benefit advertisers – much in the way social media apps and Google make money. The hope is that theater chains embrace the plan as more people flock to theaters (at a time when only STAR WARS, superhero, and animated films bring in customers), therefore getting audience members to buy concessions – which is where exhibitors make all of their money. The risk may not pay off for the company in the long run, but so far the plan is proving a success – from a subscription standpoint – as the MoviePass site crashed due to traffic once the new price was made available.

You would think all would be fine in Candyland, as theater chains are probably desperate for ways to bring in the viewers. However, the largest movie chain in the world – AMC Theaters – is already meeting with lawyers to try and find a way to opt out of letting people use MoviePass at their theaters. Variety got the scoop that AMC has called MoviePass a “small fringe player,” saying that they “will be losing money on every subscriber seeing two movies or more in a month.”

Right now, the theater chain seems to be worried about  MoviePass being able to compensate the price of the ticket if more than a substantial number of people use the service. It is also worth noting that many theater chains use their own loyalty programs, the use of which is circumvented when using MoviePass. Of course, AMC would like people to use their loyalty program (which at AMC goes by Stubs), which is being seen as a reason why the exhibitor is trying to back out of inclusion in the system.

Overall, the long-term viability of the system is being brought into question, and even Lowe has gone on to say that the company will indeed lose money on the venture, at first. But at the end of the day, what is more important in his eyes is that exhibitors and customers see the value in a service like this and that chains like AMC can come to an agreement on how to make it all profitable. “There must be some way to make us whole,” said Lowe. “We know we have to prove the value we deliver and, at that point in time, where we’re delivering value to studios and theaters, we can work together with them in a constructive manner so that everybody makes more money.”

The theater business will always have a place in the world, as nothing will ever beat the experience of seeing a movie on the big screen. But there is no denying the declining attendance at theaters is unnerving, and there is something so endearing about MoviePass’ plan that hopefully enough people subscribe and head back to theaters. Yes, it seems like a risky move on a business level, but as long as the consumer isn’t cheated the system seems sound – for subscribers anyway. At the very least the service seems like it’s worth trying out, especially if you see more than one movie a month. Let the business folks work out the business dealings. As for us, it’s off to the cinema!

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