June 30, 2016
Mitch Lowe, a Netflix co-founder and former Redbox president, is now chief executive at New York-based MoviePass, a company that pitches a subscription service for moviegoers. The user gets a debit card, which starts at $30 a month, to attend as many movies as she likes, in movie theaters that cover 90 percent of the country. But movie theater owners are reluctant to fully adopt the non-traditional idea. To gain acceptance, Lowe plans to launch the company’s first major marketing campaign, expand its services and raise more money.
Bloomberg reports that Lowe would also like to lower the cheapest subscription rate to $20 a month. One obstacle to adoption is that theater owners “haven’t completely bought into the idea.”
“We’ve got a subscription where you can go to the movies at almost any theater that accepts a debit card, yet people don’t really get how great an experience we can make it,” says Lowe.
That is especially true for theater owners, who are seeing attendance at U.S. movie theaters decline by 17 percent since 2002, according to Box Office Mojo. Theater owners’ strategy has been to charge more for tickets and focus on experiences — such as 3D and IMAX — that moviegoers can’t enjoy at home. For those reasons, the idea of a subscription service doesn’t seem to be a natural fit. Lowe will have to convince skeptical theater owners to embrace the idea and work more closely with MoviePass.
“The movie industry has been very resistant to change,” says SNL Kagan analyst Wade Holden. “They’re trying to draw in more crowds but still keep their traditional ticketing services.”
MoviePass also aims to help theater chains with their growing millennial problem, as younger audiences increasingly have more options for consuming media. “The company says 75 percent of its subscribers are millennials,” reports Variety, “and recent research from MoviePass found that the subscription service more than doubles theater [attendance] and that subscribers spend more than 120 percent more on concessions.”
Lowe, who believes “a subscription service will inspire people to visit theaters more regularly,” notes that MoviePass does not take a cut of the ticket sales. “The theaters will get full price,” says Lowe. “We’re not asking for a discount or a rebate. When we go into these conversations, that’s the first thing they expect us to be asking.” Rather, the MoviePass business model is based on customer underuse of their subscription, much like health clubs.
Lowe took “a significant ownership stake” in MoviePass earlier in the year and began serving as adviser before agreeing to take over as chief executive. Earlier in his career he invested in Captain Video, a San Francisco Bay Area movie store chain; co-founded streaming powerhouse Netflix and was president and COO of rental giant Redbox.