August 17, 2017
Early Netflix executive Mitch Lowe is now in charge of MoviePass, and he plans to drop its movie ticket subscription price to $9.95, which will let customers go to one showing per day at any theater in the U.S. that accepts debit cards. In return, MoviePass pays theaters the full price of each ticket, with the exception of 3D or IMAX screens. The company just sold a majority stake to Helios and Matheson Analytics, a publicly traded data firm. AMC has stated it wants to block MoviePass subscribers.
Bloomberg reports that, “MoviePass intends to hold an initial public offering by March,” and that “Helios and Matheson shares rose 5.7 percent to $2.95 at the close Tuesday in New York.” Helios and Matheson chief executive Ted Farnsworth said “the goal is to amass a large base of customers and collect data on viewing behaviors,” which would then be used “to eventually target advertisements or other marketing materials to subscribers.”
“It’s no different than Facebook or Google,” he said. “The more we understand our fans, the more we can target them.”
According to the Motion Picture Association of America, the top four theater owners, “led by AMC Entertainment Holdings, lost $1.3 billion in market value early this month after a disappointing summer,” and “the number of tickets sold in the U.S. and Canada last year declined slightly, while box office revenue rose just 2 percent.”
News of MoviePass’ plan led theater owners’ stock to decline, with AMC stock dipping 2.6 percent to $13.25 at the close. B. Riley & Co. analyst Eric Wold believes that, “investors may be misinterpreting the MoviePass business model,” stressing that the overall impact is “more negligible than anything” and that “if MoviePass can drive more people to theaters that would benefit the exhibitors.”
So far, Wold’s point of view is falling on deaf ears. According to The Wall Street Journal, AMC says MoviePass’ $10 per month plan is “unsustainable” and it seeks to block it at its 600 theaters nationwide. MoviePass, which was founded in 2011, previously “charged between $40 and $50 a month for a similar offering.” AMC’s average ticket price is $9.33, and the average ticket price in the U.S. is $8.95, says the National Association of Theater Owners.
MoviePass is betting that subscribers will go to multiple movies, as it could lose money “in large cities with more expensive tickets … when people see just one movie a month.” AMC believes MoviePass is setting consumers up for “ultimate disappointment down the road” if MoviePass doesn’t succeed. “It is not yet known how to turn lead into gold,” AMC added.
AMC, which fought against MoviePass’ flat fee strategy in 2011, is currently “consulting with attorneys on how to prevent MoviePass subscriptions from being honored at its theaters.”