You may have heard about MoviePass, a company that made headlines, last August, when they announced that they were lowering their monthly subscription rates to just $9.99 a month. This drop in subscription price meant that subscribers were able to see almost an unlimited amount of movies playing in theater for less than`$10 per month. Maybe you dismissed it as some obvious internet scam and went on with your life without inquiring further. After all, there’s no way theaters are going to let you get away with seeing as many movies as you want for ten bucks a month, right?

But that’s exactly what’s happened, and MoviePass just crossed the one million subscriber mark at the end of 2017.

I signed up back in August to find out if MoviePass was everything it promised. It took about a month to receive my MoviePass debit card in the mail, because the company was inundated with a sudden surge in membership, and since then, I’ve been to the cinema an average of twice per month using MoviePass. The membership has more than paid for itself, and better yet, I recently agreed to a yearly membership for $89.95, a rate that translates to about $7.50 per month. The one main exclusion is it doesn’t cover 3D, IMAX, or other special formats.

How does MoviePass work?

You get your MoviePass debit card and download the company’s app on your mobile device. You select the theater and showtime of your choice on the app. Next, you have to Check-In on the app. When you’re near the chosen theater, the app lets you click the Check-In button, at which point, the company transfers the ticket value into your MoviePass card. You then have a half hour to purchase the ticket at the box office or automated kiosk using your MoviePass debit card.

MoviePass app Check-In screen

If the showtime is sold out by the time you get to the theater, you simply click a button on the app to cancel the selection. This is important because one of the few limitations of the subscription is that you can only use MoviePass once per day.

How does MoviePass make money?

The first thing to consider is that the cost of movie tickets vary wildly across the county. In the NYC metro area, tickets usually range between $12.50 and $15, meaning I’m ahead of the game immediately with only one movie. But the national average cost of a movie ticket is $8.65.

MoviePass CEO Mitch Lowe (a co-founder of Netflix and Redbox) has opened up about some of his business model. Part of the long-term plan seems to be similar to how insurance operates, with members who seldom go to the theaters paying for the hardcore theatergoers. But ultimately, this isn’t where Lowe expects to make his money, as he’s happy just turning ticketing into a “break-even” business.

The biggest cash cow is the metadata MoviePass collects on its users. Member data collection contributed immensely to Netflix’s evolution from revolutionizing the movie rental market to becoming a behemoth in producing original content that rivals most television networks and film studios:

Specifically, it sold a majority stake of itself this week to Helios and Matheson Analytics, a big data company that sees big potential in the type of information it can glean from MoviePass members.

“If you get a trailer right now for Spiderman on Facebook, Facebook can’t tell if you ever actually go to the movie. We can,” says Ted Farnsworth, Helios and Matheson CEO. “We can tell if you look at Spiderman and look at Wonder Woman and Mission: Impossible, we can tell you exactly what movie you went to out of all three trailers.”

Both Lowe and Farnsworth say that they have no plans to sell user data to outside parties. They do, though, see enormous potential in their ability to target movie promotion to their users that provides a tangible lift at the box office.

So why is AMC so pissed off about it?

But many theater owners are not happy about MoviePass. For instance, back in August, AMC threatened legal action. But their stated reasons don’t really make a whole lot of sense.

One criticism made by AMC is that moviegoers will grow disappointed when MoviePass inevitably raises its rates. But how is that different from moviegoers being disappointed at the theaters when ticket prices eventually rise? And why should MoviePass customers’ disappointment even concern the AMCs and Regals of the world at a time when fewer and fewer Americans are turning out at the box office?

Perhaps the unstated fear by theaters is that MoviePass will grow powerful enough to push them around and demand a slice of the ticket prices.

But should this really be a fear at a time when, again, Americans aren’t going to the movies anymore? A recent article cited four possible reasons ticket sales have declined. The first was ticket and concession costs, a problem certainly half solved by MoviePass, who pay the theater the full ticket cost. And, speaking for myself, if I’m not paying the ticket cost anymore, I’m far more likely to pop for the overpriced fare at the concession.

Then there’s the issue of movie selection. If I’m paying the same amount to see ten movies as I am to see only one movie, I’m far more inclined to get a ticket for even movies I’d otherwise be willing to wait to see when they come to streaming services. I might even get a ticket for a movie I strongly suspect will be absolutely terrible and which I’d never even think to buy a ticket for before I had MoviePass.

A third problem theaters face when it comes to attracting ticket buyers is alternative streaming options. If I’m already paying for Netflix and Amazon Prime, why do I need to spend even more money to go to a crowded theater? MoviePass at least puts the theater experience on even footing with streaming subscription services in that regard.

Lastly, the article above brings up the rise of higher quality TV content. MoviePass probably doesn’t offer a solution to this, however, we have seen a rise in recent years of special one-night-only screenings of popular episodes of television series. If theaters began capitalizing on this more, they’d be even more likely to fill seats for an episode of, say, Game of Thrones if audiences weren’t asked to pay any additional cost.

As far as I can tell, theaters don’t really have a strong reason to condemn MoviePass (or similar alternative services like Movie Club or Sinemia) and every reason to embrace them. At least for now.

Even when I tried to come up with the most absurd abuse of the service I could think of (just getting a movie ticket with MoviePass in order to use a theater’s bathroom and then leaving) such callous behavior only negatively impacted MoviePass, not the theater itself, who would collect the full cost of the ticket from MoviePass regardless of whether I stayed to watch the film.

What’s the REAL reason AMC is pissed?

AMC has taken some aggressive, and rather childish, steps to try to discourage MoviePass customers. They tried, for instance, to stop customers from paying with MoviePass cards but soon discovered it would require declining all MasterCard payments.

Deadline may have hit on the true reason AMC hates MoviePass:

AMC Theatres reportedly shopped around their version of a monthly ticket price plan to the major studios, which Deadline heard was met with a cold response.

AMC tried their own proprietary version of this subscription model but could never figure out a successful business model. MoviePass seized on the customer metadata as the main source of profit while AMC only had their eyes on profiting off the ticketing itself.

If this is the answer, then that would mean AMC’s animosity towards MoviePass isn’t about any reasonable concerns about losing profits but a petty grudge against a company that beat them to a successful subscription-based business model.

But regardless of whether MoviePass and AMC work out their differences, one thing seems clear. The genie probably can’t be put back in the bottle now. Netflix killed the old movie rental model and there’s good reason to believe MoviePass and/or similar subscription-based services will become increasingly ubiquitous in the near future.

And given the declining numbers at the multiplexes and rising ticket costs, theaters may soon have no choice but to embrace The MoviePass Era.

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