MoviePass ($10 a month for in-theater movies) (1 Viewer)

superchuck500

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Is MoviePass a legitimate disrupter in a business that could probably use some disrupting? Or is MoviePass a bully making a power-play that may or may not work out?

https://www.moviepass.com

MoviePass (which allows members to see a movie-per-day at theaters) used to cost between $30 and $50 a month - and had approximately 20,000 members. The way it works is that MoviePass issues the member a debit card that they use (in conjunction with a mobile app) to buy tickets at the theater, and MoviePass then pays the theater operator for the ticket. To the theater operator, it's just a different way of getting the same ticket payment, so it hasn't been an issue.

Then the company was bought by Helios and Matheson Analytics (HMNY), an aggressively acquisitive company that operates in the tech, AI, and data analytics field. After HMNY bought MP, they lowered the monthly subscription fee to $10 in August 2017. Membership began to boom and is now more than 1.5 million members - growth of 7500%. Industry observers (and theater operators) questioned HMNY's motives: how could this be sustainable - MP would be in the red on each account if the user went to the movies more than twice in a month. HMNY explained that its model was to dramatically expand its subscription base and then sell the data about moviegoer behavior, peak times, films, studios, etc. to buyers - and the data would be valuable enough to offset the ticket gap.

Some were skeptical but as HMNY was in the data analytics business, perhaps it made sense. Others, like AMC theaters, objected - as they saw a wolf trying to get in the henhouse. At first blush, it would seem like AMC wouldn't care, as long as MoviePass made the payments for the MP users theater visits, more MP users could translate to more AMC moviegoers that also buy concessions . . . and everyone knows that theater operators have substantial margins on concessions. AMC, however, feared that as MP gained more members it would gain more leverage - eventually seeking to negotiate the price of tickets it actually pays to the theater operators, which would ultimately amount to the theaters surrendering a cut of their box office to this new third party. If you think about it, it's a very aggressive strategy, even ruthless. But business disrupters are, by nature, aggressive and unsettling to the established model. The theater business hasn't really changed how it operates (maybe ever) and is, perhaps, ripe for disruption.

In the past couple of weeks, MP appears to be confirming AMC's fears. It seems that MP has been approaching theater operators with a "partnership" proposal that amounts to a $3 per ticket price reduction to MP. It's not clear whether MP has been truly collaborative with these talks, or whether they have been more like a shakedown. But AMC has refused to participate. In response, MP has removed a handful of high-volume AMC theaters from its app - sending MP members to other outlets in the market. This marks MP's first attempt to demonstrate its market power - and it remains to be seen whether AMC will change its posture.

Apparently some smaller theater chain operators have noted that their sales are up as a result of MP. With a membership model, people who would have previously maybe gone to one movie a month or even a quarter, might now double or triple that activity. AMC, however, claims that MP amounts to less than 5 percent of its attendance and is therefore uninterested in further validating the subscription model.

So what's going on? Is MoviePass the beginning of a migration in the cinema business to a subscription option? Or is this just an aggressive business model that is unsustainable, but a calculated gamble to muscle into a business that appears ripe for the taking?

(Note that this quote has been edited for brevity in this post):

AMC’s initial panic seemed to be over MoviePass lowering the price point for theatergoers; if the service went away, would viewers be able to stomach paying full price for tickets again? But it appears the only thing more frightening to AMC than MoviePass’s failure is its success, as the company now has the ability to bargain with real strength. By removing AMC from its app, MoviePass can direct viewers to other chains and independent theaters, which could make for a tangible difference in sales.

Essentially, this is a show of force, and the next step is seeing if MoviePass’s change can actually hurt AMC. “As we’ve grown our subscriber base, we’ve seen a dramatic increase in movie-theater attendance among our subscribers, which proves to us that MoviePass is working to revitalize a declining industry,” Farnsworth said in a statement. “Other theater companies have seen this attendance resurgence and have approached MoviePass to collaborate. Since the get-go, AMC has not been interested in collaborating with MoviePass—a move that is not in the interest of our subscribers and AMC theater-goers.”

The demand for “partnership,” or a $3 cut of ticket sales, is partially rooted in the assumption that MoviePass users then spend even more money at the concession stand, given that their ticket was “free.” Popcorn, drink, and candy sales are the bedrock of any theater chains’ profits, and MoviePass is saying that its members contribute to those numbers. Anecdotally, I’ve found that to be true—I’ve been a MoviePass subscriber for six months now, and the high cost of popcorn is easier for me to stomach if it’s my first purchase at the theater.

MoviePass’s bold display against AMC is an example of how its growing monopoly of subscribers can be used to “disrupt” the industry. It’s just a question of how effective that disruption is. AMC responded with a public shrug, saying in a statement, “We have no further comment about MoviePass’s unilateral actions."

There’s little question that major chains like AMC and Regal have struggled to keep up with expanded home-viewing options—most multiplexes are simply not as comfortable, and certainly not as cheap, as staying home and watching Netflix on a big TV. These chains are now moving to revamp the theater experience (adding reclining chairs and reserved seating), but it’s been a slow process. Perhaps the increased pressure from MoviePass will speed AMC’s efforts to spruce up its theaters and draw a loyal customer base, or will at least convince the chain that the old way of doing business (rather than the subscription- and advertising-based model) is dying.

At the same time, it’s hard to tell if MoviePass is really built for the long run. The company’s customer service ranges from slow to nonexistent, with new subscribers often waiting weeks for their cards to arrive in the mail. The $9.95 price point is so ludicrously low that it surely cannot be sustained forever, even if MoviePass starts getting a cut of ticket sales. Perhaps Farnsworth is right about advertising data being enough to shore up finances (it certainly works for Google and Facebook). But so far every public move the company has made has been a PR splash, whether it’s the drastic price cuts, or these aggressive negotiations, or the fact that MoviePass actually acquired a film for distribution at this year’s Sundance Film Festival.

The rapid success of MoviePass since the price drop is hard to deny. Even the most optimistic predictions wouldn’t have foreseen it hitting 1.5 million subscribers this soon after the fee change, and the company insists that independent theaters and chains have been happier to negotiate as a result.

https://www.theatlantic.com/entertainment/archive/2018/01/is-moviepass-here-to-stay/551741/
 

bclemms

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It's business.

No different than priceline or kayak or netflix or any other third party business model that figured out how to do it better.
 
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superchuck500

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It's business.

No different than priceline or kayak or netflix or any other third party business model that figured out how to do it better.

Yeah, I tend to agree. We'll see whether they can stick around. It sounds like MoviePass could substantially improve it's interface and support. Right now, you have to wait and get the debit card in the mail and then use it in combination with the app to "check in" - that doesn't seem like the kind of slick tech you usually get with a disruptive new business (e.g. Uber).

But I also think it makes sense that if the platform gets enough members (millions), the movie habits and behavior data will indeed be valuable to marketers and the film business in general. If a platform can aggregate movie watching data and sell it, passing along the value to the subscriber - that makes sense. Our behavior is indeed a marketable asset if we can package enough of us together to make it valuable (e.g. Facebook).
 

Zack Lee

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they must be sticking it to you on the candy and sodas


edit: oh, I thought you watched them at home. I was going to get my girlfriend to stuff her purse lol
 
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superchuck500

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they must be sticking it to you on the candy and sodas

The concessions aren't part of the subscription. So those prices are simply the prices that everyone pays at the theater. The MoviePass membership gets you in the door, and then you go buy concessions like everyone else.

I suppose that if theater owners want to try to gain back what they have "partnered" with MoviePass, they could increase concession prices - but that could be problematic for the non-MP members . . . or they could somehow have a way to have MP members buy concessions under separate pricing.
 

Zack Lee

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The concessions aren't part of the subscription. So those prices are simply the prices that everyone pays at the theater. The MoviePass membership gets you in the door, and then you go buy concessions like everyone else.

I suppose that if theater owners want to try to gain back what they have "partnered" with MoviePass, they could increase concession prices - but that could be problematic for the non-MP members . . . or they could somehow have a way to have MP members buy concessions under separate pricing.

brah I went to see It and it was the first movie I have been to since Titanic. I was floored. I think skittles were 8 bucks. How do you go up on that.
 

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If MoviePass included a large popcorn and medium drink for like $20/mo, i'd buy the hell out of that!

Movie ticket--$13 (at least at AMC)
Large popcorn--$8
Large drink--$5.25

Im assuming people must have snacks and refreshments during a long movie. So with tax you're paying nearly $30 just for a ticket and popcorn/drink for yourself per movie visit or $15 per movie if you have MoviePass
 
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superchuck500

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brah I went to see It and it was the first movie I have been to since Titanic. I was floored. I think skittles were 8 bucks. How do you go up on that.

Yeah - prices are already pushed up about as far as the market will tolerate.
 

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I think they did disrupt the market but Cinemark answered back with in my opinion a better offering but the only stickler is that you are only bound to Cinemark. The Cinemark movie club is $8.99 a month, comes with 1 free ticket and additional tickets only $8.99 a month plus 20% off of concessions. If you do not use your 1 free ticket a month it does roll over to your bank. You can also share your concession discounts with family and friends.
 

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I read that one major concern for the theaters is a permanent shift in what moviegoers are willing to pay, if moviepass goes under.

When movie buffs that see 5+ movies a month get used to paying $9.95 a month for unlimited movies, they may not be willing to go back to paying $10-15 each if moviepass doesn't work out.
 
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superchuck500

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I think they did disrupt the market but Cinemark answered back with in my opinion a better offering but the only stickler is that you are only bound to Cinemark. The Cinemark movie club is $8.99 a month, comes with 1 free ticket and additional tickets only $8.99 a month plus 20% off of concessions. If you do not use your 1 free ticket a month it does roll over to your bank. You can also share your concession discounts with family and friends.

Is that really better? For $8.99, you get access to movie tickets at $8.99 and 20% off concessions?

We could compare the packages and see - obviously there will be a breaking point where the unlimited tickets (well, limited to one per day) with MoviePass for a single fee is going to be superior. For the comparison, we'll use a large popcorn and drink. Prices are for Cinemark taken from https://www.movietheaterprices.com/cinemark-concession-prices/ and we won't figure in tax.

First movie:
MP: $10 (sub fee), large popcorn ($8), large drink ($5.45) = $25.45
CM: $8.99 (sub fee = first ticket), large popcorn ($6.40), large drink ($4.36) = $19.75

Second movie:
MP: No charge for ticket, large popcorn ($8), large drink ($5.45) = $13.45
CM: $8.99 (additional ticket), large popcorn ($6.40), large drink ($4.36) = $19.75

After two movies, it's basically even:
MP: $38.90
CM: $39.50

But the pricing above for the second movie will repeat for each subsequent movie in the month, making the MP a better deal by $6.30 per visit after two movies. If you have MP instead of CM and go to three movies in a month, you're ahead by $6.30. If you go to four movies in a month, you're ahead by $12.60, and so on.

The 20% discount on concessions is attractive but I think you really have to either eat a lot of concessions or go with a significant number of family and friends to each movie to spread the concession benefit around (of course that's not actually a savings realized by you if you're letting your friend get 20% off on his popcorn).
 

itztime

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Is that really better? For $8.99, you get access to movie tickets at $8.99 and 20% off concessions?

We could compare the packages and see - obviously there will be a breaking point where the unlimited tickets (well, limited to one per day) with MoviePass for a single fee is going to be superior. For the comparison, we'll use a large popcorn and drink. Prices are for Cinemark taken from https://www.movietheaterprices.com/cinemark-concession-prices/ and we won't figure in tax.

First movie:
MP: $10 (sub fee), large popcorn ($8), large drink ($5.45) = $25.45
CM: $8.99 (sub fee = first ticket), large popcorn ($6.40), large drink ($4.36) = $19.75

Second movie:
MP: No charge for ticket, large popcorn ($8), large drink ($5.45) = $13.45
CM: $8.99 (additional ticket), large popcorn ($6.40), large drink ($4.36) = $19.75

After two movies, it's basically even:
MP: $38.90
CM: $39.50

But the pricing above for the second movie will repeat for each subsequent movie in the month, making the MP a better deal by $6.30. If you have MP instead of CM and go to three movies in a month, you're ahead by $6.30. If you go to four movies in a month, you're ahead by $12.60, and so on.

The 20% discount on concessions is attractive but I think you really have to either eat a lot of concessions or go with a significant number of family and friends to each movie to spread the concession benefit around (of course that's not actually a savings realized by you if you're letting your friend get 20% off on his popcorn).

Single person MP is the better choice but I guess the way I was looking at it and I should have clarified as a family of 4 (my case) w/CM I come out ahead.
 
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superchuck500

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Single person MP is the better choice but I guess the way I was looking at it and I should have clarified as a family of 4 (my case) w/CM I come out ahead.

I still suspect that there's a point where the fact that you're no longer buying tickets with MP will offset the savings on concessions and make it superior. What is your typical concession purchase when you take the whole family to the movies?
 

johnnyrockets42

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It's business.

No different than priceline or kayak or netflix or any other third party business model that figured out how to do it better.

Different conversation, but if you believe that travel services have figured out how to do things better, I beg to differ. As someone who owns a business and sees how third party travel sites work day in and day out, they are awful. Great for searching for options, but people should always book directly with the hotel/airline/etc.

Movie Pass is intriguing to me as I love movies, but validating the money it costs now to go to the theater is hard to do unless I know its a sure bet.
 

itztime

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I still suspect that there's a point where the fact that you're no longer buying tickets with MP will offset the savings on concessions and make it superior. What is your typical concession purchase when you take the whole family to the movies?

Concessions on average (my family of 4) it is about $36, so with 20% off, I am looking at $28.80 an average saving of $7.20. Then I am saving $ on each additional ticket purchase only paying $8.99 vs $13.69 (used AMC price) saving $14.10 (3 additional family members).
 
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superchuck500

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Different conversation, but if you believe that travel services have figured out how to do things better, I beg to differ. As someone who owns a business and sees how third party travel sites work day in and day out, they are awful. Great for searching for options, but people should always book directly with the hotel/airline/etc.

Movie Pass is intriguing to me as I love movies, but validating the money it costs now to go to the theater is hard to do unless I know its a sure bet.

Agree - I think the travel sites aren't the best example (and that they're okay for searching but you should always deal directly with the vendor itself).

A better example would be Uber/Lyft - though that's not entirely apt either because what they offer is actually a different product than what people were buying (using an Uber-driven car rather than a cab). Here with MoviePass, you're still going to the same movie at the same theater, you're just buying your admission in a different way.


As to MoviePass, I don't think there's a long-term commitment. You can sign up and get the benefits of it and then if something happens with it, you can walk away.
 

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