Everyone is talking about MoviePass this week. The subscription service that allows users to check into an app and use a special credit card to buy one movie ticket every day for a flat fee each month was recently acquired by Helios and Matheson Analytics Inc. and introduced a new low price of $ 9.95 a month. That’s right, for $ 9.95 a month, MoviePass will let you see one movie a day every month for under $ 10. But one movie theater chain isn’t happy about it.
Shortly after MoviePass announced their new price point, AMC Theatres, the largest movie theater chain in the United States, came out with a harsh statement saying that MoviePass in its new form would not be welcome at their theaters and they were having their legal team look into the possibility of banning the subscription service in all their locations. But the founders of MoviePass aren’t concerned, and they don’t even see how it’s possible unless AMC Theatres stops accepting MasterCard altogether.
Find out more about why AMC Theatres banning MoviePass doesn’t seem possible below.
How Does MoviePass Work?
First of all, let’s have a refresher on how MoviePass works. The company has a deal with a credit card processor and MasterCard that provides users with a special credit card linked to an app that allows people to check in to a movie and pay for the ticket using either the app or the card in question. The movie theater gets full price for the ticket from MoviePass. There is no discounted price at all. That’s it. So how exactly does AMC Theatres think they’re going to get out of this?
AMC Theatres May Not Be Able to Block MoviePass
Speaking with MoviePass CEO Mitch Lowe, Yahoo Movies asked what they thought about AMC Theatres firm stance on their service. First, Lowe regards the theater chain’s statement as “all bluster” but he’s not taking it personally and hopes they’ll still be able to work together. Lowe said:
“This was the last thing we would have wanted for what we hope to be a partner. We want to reinvigorate people going to AMC theaters. It’s the largest theater chain. It’s the place where the bulk of our customers go the most often. We really want to be their partner. I’m assuming we’ll get through this and then we’ll sit down at a table and figure out how to help each other.”
Furthermore, if AMC Theatres wants to block MoviePass from being used, it sounds like they’re going to have to pay a lot of money or have some kind of legal battle. Lowe explains:
“The fascinating thing is we use a MasterCard debit card. We pay full price for the tickets we buy. We comply fully with the rules of MasterCard and AMC has signed agreements with both their credit card processor and with MasterCard to comply with all the rules. They would essentially have to not take MasterCard in order to block us. I don’t think you can cancel that agreement without severe penalties.”
This is exactly what we thought when we discussed this situation on a recent episode of /Film Daily. So if you’re a user on the fence about MoviePass, this isn’t something they’ll be able to block very quickly and likely not at all. It sounds like it’s a good idea to get signed up and start using a MoviePass, especially at AMC Theatres locations.
How Do Other Movie Theater Chains Feel About MoviePass?
Mitch Lowe was also asked about other movie theater chains during this big change for MoviePass’ business model. It sounds like most of the other major chains don’t have a problem with their approach to increasing ticket sales. Lowe says:
“We talked to the independents and the majors, the other two big guys [Regal and Cinemark] and they feel completely different. They all are taking a wait-and-see attitude, but they are positive about what we are doing. They welcome anybody who has figured out a way to get people back to the movies.”
Again, boosting attendance is a good thing for movie theaters, and with no other innovations helping raiser those numbers, it couldn’t hurt to try something new like this. So why is AMC Theatres so adamantly against it. Lowe thinks they’re having more problems behind the scenes. The CEO said:
“You’d almost have to have something else going on if you are turning down full price customers. To me, something else is going on with AMC. Two weeks ago their stock cratered. Their stock is down 61% for the year. We just came out yesterday. We are not responsible for that drop. And yet they made it clear, what are we one ten thousandth the size of their size, and yet somebody believes that we’re going to impact their business. My belief is this is a little bit of trying to find a scapegoat for their own problems that they haven’t been able to handle.”
How Will MoviePass Make Money?
The biggest problem AMC Theatres had with the new MoviePass is that they didn’t see how the business could sustain itself with such a low price point. MoviePass has acknowledged that they’ll indeed by operating at a loss at first, but they’re confident that this won’t cause them to go out of business. We’ll let Lowe explain why this isn’t the case:
“They don’t understand our business model. At Redbox we held a dollar a night [rental] for eight years. Raising it was the last thing we ever wanted to do, but labor goes up, Walmart wanted more money for the discs, all those things. We surveyed and tested every price down to $ 14.95. Even active moviegoers had to think is $ 14.95 really worth it? At $ 9.95, even people who rarely go say I’d be crazy not to do that. We need to offset costs in Manhattan and L.A. by getting a lot of people in Kansas City and Omaha and places where the average ticket price is five or six bucks to sign up.”
So how will MoviePass be making money? Without getting specific, Lowe adds, “There’s dozens of streams of revenue. We have enough money through this investment to build a materially big subscriber base who we think will love the service. When that happens, we can leverage that in all kinds of ways.” That’s why MoviePass will be mining data from their users for viewing habits and more effective ways of marketing movies.
Surely part of this is Mitch Lowe playing up the confidence in his business so that users don’t feel apprehensive about subscribing. There’s never a guarantee that what a business hopes will happen will actually come to fruition. But there’s only one way to find out, and it’s not by denying them a chance to prove they can deliver on their business model. For now, MoviePass isn’t going anywhere, and it sounds like it could be a real gamechanger.
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Hopefully this helps clear up some of the issues between AMC Theaters and MoviePass, but it sounds like this disagreement between them and potentially huge shift in the movie theater industry is just getting started. In the meantime, enjoy MoviePass while you can and show AMC Theatres that this subscription service is what you want.
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