MoviePass Drops Its Price, Pleasing Customers but Angering AMC

AMC Theaters, the country’s largest cinema chain, is looking for ways to stop moviegoers from using MoviePass in its theaters. Credit Frederic J. Brown/Agence France-Presse — Getty Images

Membership to the theater going subscription service MoviePass surged after it dropped its prices this month, with more than 150,000 new users signing up in just two days. Its members can now go to the movies 365 times a year for $9.95 a month, and so far they have been going in droves, according to data released by one of the company’s investors.

But not everyone is happy: AMC Theaters, the country’s largest cinema chain, has said that it is looking for ways to block subscribers from using the MoviePass app to buy tickets to its theaters.

In a statement this month, the theater chain derided MoviePass as “a small fringe player” and said the service was “not welcome here.” AMC said lawyers were reviewing its options for barring subscribers from using MoviePass at its facilities

MoviePass, which began in 2011, announced on Aug. 15 that it would lower the cost of its unlimited monthly subscription from as much as $50 in the most expensive cities to a flat nationwide rate of $9.95. The deal works at 91 percent of movie theaters in the United States, the company said in a statement, but it does not apply to 3D or IMAX movies. Members can see one movie a day.

“We believe that you want to see more movies in theaters,” the company told subscribers in a blog post.

But that, according to AMC, is exactly the problem. MoviePass is essentially a company that resells movie access: It pays the full ticket price for a film and then makes those tickets available to subscribers, who pay a lot less than they would otherwise.

AMC said the average nationwide price for a ticket at one of its theaters was $9.33 in the most recent fiscal quarter. A MoviePass customer who saw 31 movies in a month would be paying 32 cents for each film.

Ticket-by-ticket, it works out to be a good deal for consumers. But AMC said a nationwide $9.95 price point was “not in the best interest of moviegoers, movie theaters and movie studios.” It may not even be in the best interest of MoviePass itself, AMC said.

“From what we can tell, by definition and absent some other form of other compensation, MoviePass will be losing money on every subscriber seeing two movies or more in a month,” the theater chain said in a statement. “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.”

The chain also said MoviePass’s approach to pricing could damage the movie industry long-term because it “will not provide sufficient revenue to operate quality theaters nor will it produce enough income to provide film makers with sufficient incentive to make great new movies.”

The average price of a movie ticket in the United States was $8.65 in 2016, according to the National Association of Theater Owners. But prices vary widely from place to place. A single, non-discount ticket to an evening show can cost $23.29 at a theater in Times Square in Manhattan but only $9 in El Dorado, Ark.

Helios and Matheson, an analytics firm that bought a majority stake in MoviePass this month, said the surge in new subscribers had surpassed the company’s membership projections through late 2018. But a spokesman for MoviePass said it would not release the overall number of its subscribers.

“We did not foresee a phenomenon of this magnitude coming,” Ted Farnsworth, the chief executive of Helios and Matheson, said in a statement. “We set the expectation for MoviePass to achieve at least 150,000 subscribers 15 months down the road.”

Data released by the firm indicated that two theater chains, which the firm declined to name, had seen significant increase in attendance since the new price plan came into effect.

Comparing data from the week before the plan was announced and the six-day period afterward, the firm said the number of seats filled by MoviePass subscribers had jumped from 206 to approximately 4,137 in one of the chains. In the second chain, that figure rose from 203 to approximately 1,795.

A spokesman for MoviePass said he did not know whether either of those chains was AMC, which operates more than more than 600 theaters in the United States, according to Ryan Noonan, a spokesman for the chain. He declined to elaborate on the statement it released on Aug. 15.

AMC and MoviePass did not always have such a tense relationship. The two began a partnership in 2014 that let subscribers watch movies in AMC theaters in Boston and Denver for between $35 and $45 a month, a far higher rate than it offers now.

MoviePass said the recent price drop brought “a massive amount” of visitors to its website and app, crashing both. That made it difficult for new subscribers to sign up and “significantly increased our incoming correspondence,” the company said on Tuesday.

MoviePass worked to repair both (and to respond to angry customers on social media who were unable to sign up for the new deal) throughout the week, and on Wednesday said they were up and running again.

Mitch Lowe, the chief executive of MoviePass and a co-founder of Netflix, told The Denver Post that he thought the statement from AMC was “bluster.”

“I’m worried about it, but I wish they would just sit down and talk to us,” Mr. Lowe told the paper. “I’m sure at some point or another we’ll be best friends.”

By LIAM STACK/NYTimes

Posted by The NON-Conformist

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