David Pierdomenico
First launched in 2011, MoviePass was slated to revolutionize the theater industry. Much like Netflix, it sought to offer a subscription based service, like that of a gym membership. Initially, its monthly price ranged from $40-$50. But after Mitch Lowe took over as CEO, and he began to experiment with pricing, everything began to go downhill.
Too Good of a Deal
MoviePass sought to entice more customers by lowering their prices. Back in 2017, they went as low as $10/month for their unlimited plan. For consumers, it was the very best deal in town. For roughly the same price of a ticket (or even less than some ticket prices), it was possible to see as many films in a month as desired. The only limitations were no more than one per day, and exemptions existed for specialty screenings such as IMAX or 3D. And so the bandwagon was launched and in a period of a year, new subscriptions multiplied more than tenfold.
On the surface it seemed that their business was booming, yet underneath things weren’t going so well. Rather than making money off of new customers, they were losing it because of just how much they were using the service. Every time someone used it more than once per month, MoviePass was already taking a hit. CEO Mitch Lowe claimed that it didn’t matter because they were going to attract new subscribers that didn’t use the service that much. But he underestimated the very reason why people joined. Casual moviegoers that don’t see films that often have no reason to sign up.
How AMC Does it Better
As MoviePass skyrocketed in popularity, AMC wasn’t a fan. They felt the new company was nothing more than a gimmick and was trying to undermine the theaters. They were especially offended when they were asked if they would share a portion of the concessions revenue; a sure sign that MoviePass was desperate to earn more money. After refusing, they decided to launch their own program. And in June 2018, AMC Stubs A-list was unleashed. Sure it’s double the price at $20/month, but it allows for 3 films per week, multiple viewings in the same day, and purchasing tickets in advance. So despite the high price, it makes up for every convenience issue MoviePass has.
Plus, AMC isn’t too concerned if they lose some money with this program, because it still drives people to their theaters who will then spend money on concessions which leads to huge profits. They are also the largest theater chain in the world, so their longevity is much great than that of MoviePass. They know they can outlast them. On a similar note, a lesser known company called Sinemia offers a subscription type deal as well. First launched in 2014, they were initially limited to California, but now operate in the rest of the US and UK. They offer a $15/month plan, but it limits customers to only 3 movies for the whole month. While this isn’t putting them at the top, it’s also not breaking their bank either.
Odd Business Practices
With the volatile nature of their financial situation, one would think that Lowe and the rest of MoviePass would be delicate and cautious with how they spoke to the public; yet they’re anything but. Earlier in 2018, they launched a production company called MoviePass Ventures, which was meant to produce widely released films in an attempt to grow via box office results. Their crowning achievement was the abysmally reviewed Gotti. When the critics ridiculed it to no end, they even ran a vicious attack ad, alleging professional critics to be “trolls behind a keyboard” and urging audiences to see their film.
However what’s really been killing their public image is the recent turmoil of their business model. First, they put on more limitations by not allowing users to the same film more than once. This was followed by peak pricing, which forced them to pay extra for certain tickets at popular times, thus defeating the entire purpose of their service. The final nail in the public relations coffin was the blackout they experienced on the night of July 26, 2018, as fans flocked to theaters for the premiere of Mission Impossible: Fallout. They claimed a “service interruption” which roughly translated to, “our company is out of money because we’re losing it every single day people use our service and we’re waiting for an emergency loan of $5 million to temporarily bail us out of this predicament we created with shortsightedness”. But let’s be honest, that first statement just sounds a lot better going down.
An Uncertain Future
In order to stay afloat, MoviePass has announced some changes. They will raise their monthly fee to $15, and ban all users from seeing wide release films during their first two weeks after release. While this will save them money for now, it’s not helping their business. Not while AMC offers customers opening day new releases in IMAX and 3D for the same price they always have.
MoviePass’ ultimate problem was that they were too good to be true, and now that they must pull the reigns back, they’ll face a backlash from customers who are accustomed to their old business practices that were ironically running them out of business. It’s uncertain if they will even survive the rest of 2018. We’re all sure AMC is watching gleefully as it collapses so they can swoop in and poach their customers.
