See unlimited movies for $10 a month? Not so fast, says AMC Theatres
AMC said it was consulting its legal team to see whether it could block MoviePass from being used at its theaters. (Aug. 16, 2017) (Sign up for our free video newsletter here http://bit.ly/2n6VKPR)
MoviePass, a subscription ticket reselling start-up, is trying to become the Netflix of movie theaters by offering virtually unlimited movies for less than $10 a month.
But that plan has drawn the ire of the world’s largest theater chain, marking the latest clash in a feud between the 6-year-old MoviePass and the exhibition industry.
For the record:
2:28 PM, Aug. 18, 2019An earlier version of this article reported that AMC’s stock price fell 5 cents on Wednesday. The price rose 5 cents.
New York-based MoviePass, which allows people to see one movie per day by using its app, said Tuesday that it had lowered its monthly fee to $9.95, similar to the price of online streaming services.
Chief Executive Mitch Lowe, a former Netflix and Redbox executive, said in a statement that the price change “completely disrupts the movie industry in the same way that Netflix and Redbox have done in years past.”
Indeed, for people in major cities such as Los Angeles and New York, that means a MoviePass all-you-can-watch subscription would cost less each month than a single full-price ticket.
That may sound good to moviegoers looking for bargains on seats as ticket prices rise. But AMC Theatres on Tuesday criticized the service in a sharply worded news release with bold type proclaiming, “Not welcome here.” AMC called MoviePass a “small fringe player” whose plan was “not in the best interest of moviegoers, movie theaters and movie studios.” AMC also said it will try to block the service from its theaters.
“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 Leawood, Kan., exhibitor said.
MoviePass, which says it had 20,000 subscribers as of December, also disclosed that it sold a controlling stake in the business to New York data technology company Helios and Matheson Analytics Inc. for up to $27 million, according to a regulatory filing.
When MoviePass started in 2011 with a $50-a-month plan, exhibitors complained that the service would devalue tickets by making customers accustomed to steep discounts. MoviePass later lowered its fee to $30.
The latest discount comes as theater attendance is in a slump. The domestic box office is down about 12% this summer, according to ComScore, and sagging sales have cut into theater owners’ earnings. AMC lost $176.5 million in its most recent quarter. AMC’s stock rose 5 cents, or 0.38%, to $13.30 on Wednesday, after falling 2.5% Tuesday.
B. Riley analyst Eric Wold, who covers AMC, dismissed investors’ MoviePass-related anxiety, saying the theater companies and studios still get paid because MoviePass covers the cost of the discount. In fact, he said, the program could increase attendance and boost concession sales, a lucrative source of business for theater chains.
“The exhibitors get full price for their tickets, and the studios get their usual film rent splits,” Wold wrote to clients. “So as much as this $10/month plan from MoviePass drives increased usage into the theaters at the normal full price tickets, that would be a positive for the exhibitor group.”
MoviePass almost certainly will lose money by offering the discount, and AMC is clearly worried that MoviePass will harm the industry in the long run. The chain said it is consulting its attorneys to see whether it can block MoviePass from being used at its theaters in the U.S. An average AMC movie ticket cost $9.33 in the most recent quarter.
“It is not yet known how to turn lead into gold,” AMC said. “AMC ... believes that promising essentially unlimited first-run movie content at a price below $10 per month over time will not provide sufficient revenue to operate quality theatres nor will it produce enough income to provide film makers with sufficient incentive to make great new movies.”
Aug. 16, 1:10 p.m.: This article was updated to include additional details on the sale of MoviePass.
This article was originally published at 6:30 p.m. Aug. 15.
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