MoviePass: Phantom of the Movie Theater

The past few days I’ve been talking with some close friends about the weirdly incredible rise and fall of MoviePass, the monthly subscription service for any movie theater, and it turns out a lot of people don’t know the details of this story. In fact a few people didn’t even know what MoviePass was, I think that might be one of the reasons it didn’t work. Today I threw away my MoviePass card because in my heart of hearts, I know it’s dead. Like it or not, MoviePass has changed movie theaters forever. But is that for better or worse?

Currently the stock for Helios and Matheson (the parent company that owns MoviePass) is at 0.061. Back in October the stock price was at 8,225.00. So what happened? Originally the MoviePass model was two fold. They set out to basically be the only source for people to see movies through. Kind of like Fandango is right now. Statistically they say around 225 million citizens in the US and Canada go see the movies in the theaters. On average people see about 5 movies a year. Let’s say the average movie ticket is at 15 dollars (I know that sounds high but as someone that goes to the movies a lot, that is the average price) With MoviePass being a service that is 9.99, lets round to 10, a month. So theoretically the business model looked something like this. MoviePass, at its best, would be making 27 billion dollars a year. On average MoviePass would only be spending about 17 billion dollars a year on tickets for it’s subscriber. Any crazy person would think a 10 billion dollar net would keep a business afloat.

Here was the problem, MoviePass relied on the Planet Fitness model (people spending 10 dollars a month to not use the gym). Their business model was to take advantage of dumb people. Let’s go back to that average number of movies visited. Even if you went and saw 5 movies over the course of the year. That would only be 75 dollars. A years worth of MoviePass is 120 dollars. No sane person would use this service unless they were a hardcore film nerd. MoviePass the full ticket price out of pocket. So even seeing one movie a month saves you money. But with their model, people were seeing on average 3 movies a month. I’m no mathematician but a person only paying 10 dollars, to use a service that costs the company 45 dollars is not going to work out for very long. It was reported that MoviePass was hemorrhaging money. Losing about 21.7 million dollars a month. There have been plenty of businesses that start out in the red and slowly build up a platform until they are back in the black (finally get that AC/DC song now) but there was no turn around in sight. Eventually MoviePass had to give their investors a reason to keep their company afloat.

I still think it is possible with the right changes to the company and business model, that a company LIKE MoviePass could survive. But MoviePass itself has way too much bad PR. Word got out that in order to keep their business alive, they were going to mine and sell the users data. In today’s modern climate that is a big trigger for upsetting people. Personally I don’t really care. If you own a credit card, have ever Googled anything, brought something on Amazon, or posted an opinion on Facebook, then your data is already out there. But I’m not here to debate the morals of selling data. The fact is they got caught doing it and so any trust the customers had went out the window. This mixed with peak pricing for specific times, not being able to see IMAX or 3D movies, and random blackout days, basically ruined any positive feedback MoviePass got. I mean I couldn’t even see the new Mission Impossible movie (let’s be honest I was gonna just buy a ticket to somewhere else and then sneak into MI:Fallout, but still). They had the chance to die the heroes but instead lived long enough to become the villains. And now they aren’t the only theater subscription service out there anymore.

For all of its potential flaws within their own company, MoviePass actually did a lot of good for the movie theater industry. Everyone knows that movie prices have been steadily increasing. Movie theaters have been jumping through a lot of hoops and renovating their establishments to try to get more people to contribute to their business. The truth however, is that movie ticket sales have just been on a steady decline. But then came along MoviePass. With the ability to take more risks and see movies they wouldn’t normally pay to see, people are going to the movies more. MoviePass themselves reported that they were the direct contributors for 10% of tickets for Three Billboards, 1.78% of Justice League, 2.18% of Coco, and 3.54% of The Snowman. More people are going to see movies now then in a good while. Which means people are spending money on concessions, which is how theaters make their money. So it seemed logical for MoviePass to ask the theater’s directly for a cut of their concessions. To which one specific company, AMC, told MoviePass to suck their dick that they will not go forward with that type of deal and instead start their own service.

Actually AMC had apparently been experimenting with a service similar to MoviePass for 3 years in the United Kingdoms. The AMC stubs plan is 20 dollars a month and allows for only 3 movies a week. However this also includes 3D and IMAX films along with a concessions discount. The real genius of this move though is that AMC doesn’t lose any money. You can only go to AMC theaters. Even if one person buys a ticket to a movie, the theater has to play that movie in that time slot, so AMC is simply filling the empty seats with stubs members. MoviePass is paying the entire full ticket for any movie. AMC took the MoviePass plan and perfected it. And they’re not alone. Cinemark theaters are starting a very similar plan of their own called the Cinemark Movie Club. There is also a company called Sinema, which seems closer to the MoviePass model so I’m unsure how successful they will be. But the point remains, this is the future of movie theaters now. And is it a future we want?

MoviePass will probably be dying soon. But AMC and the several other theaters that follow suit, will all have their own subscription services. It could unfortunately become another way to divide the audience. I already have encountered one instance of asking a friend to go to the movies, and for him to be on bored up until he found out I wasn’t going to an AMC theater and bounced. Is that how things will become? If I have Cinemark membership and you have an AMC membership, are we to never see a movie together again? We all know it’s hard enough for people to choose to have Netflix and Hulu and Amazon Prime, so I don’t see many people having multiple theater subscriptions. And what of the smaller more indie theaters that are already struggling to compete with the top dogs, can they afford to have a competitive subscription services? Maybe one day another service will come along like Cable and group all the theaters together. But that wont be any time soon in my eyes. On the plus side however this could be the savior the movie theaters have been looking for. All it took was the very public rise and fall of a failed company called MoviePass to come along and bring the industry into the modern age of subscription services.

 

Article written and MoviePass card thrown away by: Troy Smith

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