By James DeRuvo (doddleNEWS)
I don’t know if you’ve been paying attention to how much movie tickets are, but they’ve gone up every single year since 1993. In New York and Los Angeles, it’s not uncommon to lay out $15 a ticket. And that’s not even with Popcorn. But there’s a way out of the madness, thanks to a former Netflix executive, MoviePass will now let you watch as many movies as you want for only $10 a month.
“People really do want to go [to the movies] more often. They just don’t like the transaction.” – Mitch Lowe to Bloomberg.
Originally launched in 2001 buy Stacy Spikes and Hamet Waits, MoviePass is a subscription service for going to the movies. It gave subscribers the ability to watch any movie, at any theater that is part of the system, for any show time, including opening night. The only caviats are that MoviePass is only good one movie a day, and only for standard screenings. IMAX and 3D presentations are not included. But at a low monthly price compared to buying tickets at the box office, it was very attractive.
The scheme launched in rough waters, however, receiving push back from theater chains who saw it as an accounting nightmare destined to lose money. How do you pay studios that usually get up to 100% of the box office revenue (that’s why popcorn is so expensive)? MoviePass, however, buys the tickets in bulk and then resells them to members through the monthly scheme.
“Everybody doesn’t go the movie every single day,” Co-founder Stacy Spikes told The Hollywood Reporter in 2012. “We found in our beta trials that there are people who over-use the service and people who under-use the service. Overall, there is a balancing act … we have an economic model that works.”
But over time, with ticket sales gradually dropping year after year, and prices going up year after year, the theater chains saw that they were in a downward cycle and decided to give MoviePass a go. And by the beginning of the year, MoviePass had over 20,000 members, who could see movies at 4,000 theaters and 36,000 screens around the country. That amounts to 91% of all movie theaters.
The problem was, that the system used to require users print up a voucher with which to redeem at the box office. The process was complicated and the service’s monthly fee also varied by geographical location, so users would pay anywhere from $30-40 a month depending on where they lived.
So when MoviePass brought former Netflix and RedBox executive Mitch Lowe on board, he moved to standardize the pricing structure, lower it to $10 a month, and make it dead simple to buy your ticket. Now, members use the MoviePass app on their mobile device to input their membership number and get their ticket. Signing up is free, and all users need to is keep a debit or credit card on file. PayPal is also accepted.
“In AMC’s view, that price level is unsustainable and only sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled.” – AMC Theaters Statement
MoviePass’ price drop, however, has not been without controversy. AMC has already threatened legal action against MoviePass, which they characterize as “a small fringe player” in the movie exhibition business. “(The MoviePass business model) is not in the best interest of moviegoers, movie theatres and movie studios.” Considering what AMC charges at the concession stand, I’m pretty sure that the last two are the only considerations that the chain cares about.
“There must be some way to make us whole,” Lowe told Variety. “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.”
Lowe says that AMC couldn’t be more wrong about the effects of MoviePass on the industry, and cites a 111% boost in attendance by MoviePass members, whom he says tend to buy more at concessions. But AMC has their own competition loyalty program, called STUBS, which they charge an annual fee for. So that’s likely why they are threatening legal action. “And that legal battle may cause trouble for MoviePass, which along with the price drop, also announced that a majority stake of the MoviePass service would be sold to a public data firm Helios and Matheson Analytics Inc. The potential lawsuit could stall the sale, but Lowe says that’s the least of their problems. “I’m not worried about it killing the sale,” he said. “What I’m worried about is it confusing customers and making them believe they can’t use this service at AMC theaters.”
At the moment, AMC does participate in the program, it looks like they are making plans to jump ship. “While AMC is not opposed to subscription programs generally, the one envisioned by MoviePass is not one AMC can embrace,” the company’s statement reads. “We are actively working now to determine whether it may be feasible to opt out and not participate in this shaky and unsustainable program.”
But Lowe says that AMC is reacting the same way that video rental chains like Blockbuster did, when RedBox rolled out their DVD kiosks. And we all know how that ended up.“It’s the big guy being afraid of the little guy offering better value to consumers,” Lowe said.