MoviePass – What it means and why AMC doesn’t like it

MoviePass has been around since 2011. It is a service that allows you to see as many movies as you want a month for a set price. There are some limitations like it will only cover the cost of 2D movie tickets. But the real story is that… It just dropped its price to $9.99 a month.

This means that a person can pay $10 a month and go see two, three, six, ten, movies in a month and not pay a dime more.

It is being hailed as the Netflix for the theater goer.

So, how can they do this? Why is AMC upset? How does it work? Let’s dive in.

How MoviePass works

  1. You sign up via the app for in the Apple App Store or in Google Play.
  2. You get a debit card in the mail.
  3. You go to the theater location where you want to buy the ticket.
  4. It verifies the location and pulls up the current showtimes, you choose your showtime.
  5. The app adds the cost of the ticket to your debit card account.
  6. You buy the ticket with your debit card.

Repeat steps 3-6 for subsequent movies.

MoviePass Business Model

MoviePass is taking a potentially huge loss on this gamble as they are still paying full price for the ticket. AMC and other theaters are not losing any money, MoviePass is the one taking the hit.

The average AMC ticket price is currently $9.30 a ticket. If a MoviePass subscriber sees just two movies a month MoviePass is at a loss. So… why?

Data.

MoviePass is owned by a data analysis company. Right now there is no way for the industry to know detailed specifics about who is going to movies. With this app they can know age, race, sex, location, group vs solo, time of day, time of year, etc. etc. etc. Information not available previously. They can then sell this data back to the studio and cover their costs and the studios can use this to know when to release certain movies, genres, and where, and at what time, to make the most money possible and not spend money where it won’t be beneficial.

What Doesn’t AMC Like This?

There are three reasons AMC does not like this, and at this point they are all speculation, but fairly valid reasoning on AMC’s part:

  1. It is an unsustainable business model that sets a false precedent and, when it fails, will hurt the theaters.
    • AMC believes that MoviePass will go bankrupt within a year. When this happens moviegoers who were used to paying the low price will go to AMC and others and wonder why they can’t match MoviePass’s model. Customers will become angry at AMC and other theaters, thus, hurting the industry.
  2. The Data collected and sold will lead to decreased theater releases.
    • AMC and others are losing money year after year. Less and less people are watching movies in theaters. This summers box office was the worst summer box office in a decade. If MoviePass gets this data into the hands of the studios and they find that, for example, releasing a horror film for a limited run in the mid-west and an extended run on the East Coast is more profitable, or that this movie would actually make more money going straight to VOD and skipping the theater altogether… The control is out of AMC’s hands.
  3. MoviePass could demand a cut of theater profits down the road.
    • If MoviePass does what is thinks it can do, which is significantly increase the traffic to theaters by offering such a good price, AMC’s profit forecast could change for the better as attendance goes up. What stops MoviePass from then going to AMC and saying something along the lines of, “If you want to continue to be a part of the MoviePass program and have our customers attend your theaters you need to give us a cut of your profits.” AMC couldn’t say no. Thus, AMC becomes the one paying for your discounted ticket via paying MoviePass and ends up sustaining the very model that ultimately cuts into their own profit margins.

What has History Shown Us?

Napster changed the face of the music industry to where it is still struggling today. Netflix changed the face of movie rentals that wiped Blockbuster from the map and made streaming the norm. MoviePass could drastically change how the movie industry functions in the future.

Does that mean we shouldn’t do it? That choice is yours. $10 a month for all-you-can-eat movies is a great deal and it is a company that has been in operation since 2011. And heck, with all the streaming services, theater prices, cable, etc. etc. Something has to give. We consumer need a break now and then, and this is a good break.

Conclusion

Ultimately, this is going to be interesting to watch as it unfolds. Blockbuster had the opportunity to buy Netflix back in the day and passed. AMC actually had a close partnership with MoviePass a few years ago and passed. Could AMC be the blockbuster of our time? Is MoviePass the way of the future or will the industry adapt?

I, for one, will be watching intently, popcorn in hand.

What do you think of moviepass? Are you going to try it out? Why or why not?

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