AMC is looking to take legal action to ban MoviePass at its theaters, but why?

[Shawn Knight]

MoviePass, a start-up that allows subscribers to watch movies in theaters for a flat monthly fee, set the Internet afire on Tuesday when it announced it would be slashing its subscription cost down to an absurd $9.95 per month.

In case you missed it, MoviePass’ revised subscription lets you watch one movie per day in virtually any theater in the US. For dedicated movie buffs, that could translate to 31 showings a month – all for less than 10 bucks. What a deal!

New majority stake owners Helios and Matheson Analytics Inc. have a plan to monetize the program – selling your viewing habits to the highest bidder – but it’s a long-term play. In the interim, the prospects of MoviePass making any money seem slim.

For those stoked about the subscription offering, reality now appears to be setting in.

AMC Theatres, the largest theater operator in the US, on Tuesday evening said it is concerned that MoviePass’ announcement is not in the best interest of moviegoers, movie theaters and movie studios. The chain contends that MoviePass’ price is unsustainable and only sets up consumers for ultimate disappointment down the road if or when the product fails.

As such, AMC is consulting with its attorneys to determine if or how it can prevent MoviePass’ subscription program from being used at its theaters.

Remember – MoviePass said it will pay theaters the full price of each ticket used by subscribers. If that is indeed true and MoviePass can deliver on that promise, why in the world would AMC push back against a program that would put more butts in its seats?

AMC added that it believes that promising what essentially amounts to unlimited first-run movie content below $10 per month will not provide sufficient revenue to operate quality theaters nor will it produce enough income to provide filmmakers with sufficient incentive to make great new movies.

Again, they – and every other theater – would be getting full price for each ticket. This means that nothing would change for them or filmmakers except that maybe more people would be visiting theaters and spending money on expensive concessions.

People aren't going to be mad at AMC if MoviePass fails (well, they might be now). As best I can see it (and I'm not even a movie buff), it's none of AMC's concern what MoviePass does or offers as long as they are getting paid full price for tickets. Why does AMC feel it is their job to police MoviePass?

I’ll agree with AMC that the concept is a stretch. Heck, I’ll even go out on a limb and say that it’ll probably fail over the long haul (assuming it can get off the ground at all). But, the same could have been said about other all-you-can-eat, on-demand services like Netflix and Spotify. Who would have guessed in the days of Blockbuster and record stores that movies, TV shows and music would one day be “given away” for less than the cost of a meal at a fast food joint?

Please, feel free to share your opinion on this development (argue AMC's stance) in the comments section below as I'm seriously struggling on this one.

Images courtesy AMC, ArtsQuest and Best Business Template

Permalink to story.

https://www.techspot.com/news/70590-amc-looking-take-legal-action-ban-moviepass-theaters.html

 

[VitalyT]

it is concerned that MoviePass’ announcement is not in the best interest of moviegoers, movie theaters and movie studios

So they are telling us that paying less isn't good for us. Yeah, money is an evil thing, best is to get rid of it, and fast!

 

[m4a4]

I don't know anything about AMC, but they sound like they'll be like any other big corporation. So, there's something that they gain from trying to preventing this... but what? PR? Maybe they were thinking of trying a more expensive subscription service, but this will undercut them?

Anyways, I'm sure that MoviePass will bleed money in the first bit. But on top of selling customer data and customers getting lazy, I can see it potentially working in the long term.

I know for myself, I generally see less than 12 movies in theaters a year. So if I subbed, they'd make some money off of me (after the honeymoon phase).

 

[drwho]

How can something like this work? Imagine there are one million subscribers and each one does go every day and watches a film, at $9 equates to $279 million dollars for the month. You would need nearly three years subscription to cover one month. MoviePass would be hoping that most of the subs would not bother going everyday or even watch more than one a month to break even.

If this kind of offer was in Australia I would be going everyday, tickets cost around $20 here.

 

[bmw95]

How can something like this work? Imagine there are one million subscribers and each one does go every day and watches a film, at $9 equates to $279 million dollars for the month. You would need nearly three years subscription to cover one month. MoviePass would be hoping that most of the subs would not bother going everyday or even watch more than one a month to break even.

If this kind of offer was in Australia I would be going everyday, tickets cost around $20 here.

They sell your viewing usage data to advertisers. Highly lucrative. The more movies you watch the more money they make. The $9.99 is a failsafe to account for people who might only watch a few movies a year.

 

[drwho]

How can something like this work? Imagine there are one million subscribers and each one does go every day and watches a film, at $9 equates to $279 million dollars for the month. You would need nearly three years subscription to cover one month. MoviePass would be hoping that most of the subs would not bother going everyday or even watch more than one a month to break even.

If this kind of offer was in Australia I would be going everyday, tickets cost around $20 here.

They sell your viewing usage data to advertisers. Highly lucrative. The more movies you watch the more money they make. The $9.99 is a failsafe to account for people who might only watch a few movies a year.

That data could not possible generate many billions over a year. And then what about the second year of operation. You will be just generating the same data leaning nothing new.

 

[cliffordcooley]

That data could not possible generate many billions over a year. And then what about the second year of operation. You will be just generating the same data leaning nothing new.

You know some people pay to watch re-runs. lol

 

[Steed]

The only thing I can think of is that MoviePass does not support 3D or Imax with their pass. As the theatres have invested heavily into trying to promote everything in 3D and/or IMAX, they would feel hurt if way more people started watching more 2d movies, as it would then lower the demand for the 3D/IMAX ones that they have been pushing so hard. It would make problems when most of their Cinemas are kitted for 3D and they would now have to be showing 2d movies on them. That is what I think annoys the hell out of them.

 

[Kotters]

They want to stomp a potential "Netflix of Theaters" from emerging. If MoviePass got big, and became the source of a large chunk of their customers, MoviePass could exert leverage over the theaters.

 

[Reehahs]

The subscription is relying on gym membership effect in addition to revenue generated by ticket sales of tag-along; people often go together to watch movies.

 

[grumpiman]

The subscription is relying on gym membership effect in addition to revenue generated by ticket sales of tag-along; people often go together to watch movies.

Yeah, but MoviePass gets none of this revenue and just makes more of an argument for AMC to go along with it. I agree with the comment that MoviePass is doing a land grab on subscribers to use as leverage against the theatres and film studios in the long run, the same way Spotfiy and Netflix have done.

 

[RevD14]

Wait, so all those Facebook ads weren't scams?!

 

[GreenNova343]

The only thing I can think of is that MoviePass does not support 3D or Imax with their pass. As the theatres have invested heavily into trying to promote everything in 3D and/or IMAX, they would feel hurt if way more people started watching more 2d movies, as it would then lower the demand for the 3D/IMAX ones that they have been pushing so hard. It would make problems when most of their Cinemas are kitted for 3D and they would now have to be showing 2d movies on them. That is what I think annoys the hell out of them.

Quite possibly. Although that probably means that my wife & I annoy the crap out of them as well. Personally, I think 3D can be OK -- sometimes it's very hokey (I.e. Brendan Frasier's Journey to the Center of the Earth), but sometimes it adds to the action (I.e. I thought it added to the action sequences in Resident Evil: Afterlife -- but I have trouble because the 3D glasses don't always fit well over my glasses. My wife, OTOH, absolutely hates 3D movies, because they make her feel nauseous. But we both definitely agree that IMAX is a waste of our money. That, combined with our preference for matinee screenings & our general preference to wait until movies come out on Neflix/Amazon Prime or at Redbox (or even our local library), as well as our reluctance to buy any kind of concessions, makes us the bane of movie theaters.

 

[p51d007]

Movie theaters are eventually going the way of the "drive in movie". People these days, can have a pretty good "entertainment center" in their own home. With netflix/redbox/torrents they can watch pretty much any movie within 60-90 days after release. Unless you are an empty nest person, GOING to the movies can EASILY cost a "typical family of 4" well over one hundred dollars, if you factor in the price of the tickets, snacks, gas getting to and from the theater, and sometimes dinner if they go to dinner before or after the movie. The movie ticket is nothing more than to get you IN the door, so they can stick it to you on the price of concessions. (although I know many people that except for the drinks, sneak their own "concessions" into the theater).

 

[Vrmithrax]

Yah, on the surface this just seems like an odd move. But, as I started thinking about it and trying to play devil's advocate for AMC, I have to wonder if they are worried that having these ridiculously cheap services will have an impact on the perception of worth for an average consumer. I mean, if a consumer says "why do I want pay to go to this particular movie when I can get a whole month's worth of movies for the same price?" what does that do to the perception of movie theater pricing? People already think that movie theaters are gouging them for admission, how much worse will that thought become?

Regardless of what happens, and what the real reason is behind AMC's resistance, I'm with several of you that have already commented... It seems like a no-brainer that will bring people into theaters, with the theaters getting full price admission, and then they can rake in the profits with the concessions revenue.

 

[mbrowne5061]

AMC is fighting it because they have their own movie viewers club. This price undercuts their membership price.

 

[Tanstar]

There are some good reasoning here, but I think you've missed the biggest one. Movie Pass promises to pay the theaters full price for each ticket, but are they deducting the money from their account at each purchase? Or is there a large chance that they go belly up when the monthly bill comes out to $1 billion and then there's no one to pay the theaters back? I think AMC sees this as a desperate money grab just before filing Chapter 11.

 

[Cal Jeffrey]

AMC: "How DARE another company foot the bill for our customers! We enjoy overcharging them and taking their money for every viewing."

This is ridiculous. AMC's arguments are all completely baseless. I'm with you Shawn. I can't even see why they care where the money comes from as long as they get paid for each ticket. This isn't going to hurt anything. It might not get off the ground, but I see how it could.

Look, first of all most people aren't going to go to a movie a day. We just don't have time. Most will go on weekends. So $10 per month for $40-$80 worth of tickets. Even if you wanted to push the average up to $150 per month. Advertisers will easily pay much more for viewing profiles per person (I think). Let's say Movie pass could pull $200 per person from advertisers. Everyone's tickets are paid for by the advertisers, AMC gets its money, film producers get their money, and Moviepass makes $50 per subscriber. If they can't do this, then Moviepass will fail and go out of business. Either way, AMC is never in a losing position.

On the other hand, if AMC wants to ban Moviepass, let them. They'll be the big losers in that scenario. Like you said, it's "butts in its seats." If I'm a subscriber, I'd be like, "Oh AMC doesn't honor Moviepass? Come on kids. Let's go across town to Regal." The only bite AMC would have would be in places where it is the only show in town, but as it is I don't think that's the case in most parts.

Just saw a new comment while I was writing this:

mbrowne5061 brings up an interesting point saying that "AMC is fighting it because they have their own movie viewers club. This price undercuts their membership price."

If this is true, I would say that under cutting AMC's subscription price is not really what is in effect here, well not completely. I don't know what AMC charges for subscriptions, but lets just say it's $15. From their subs they get $15 per month, but from Moviepass subs they get $40-$150 per month (using my above example averages). What this tells me is that it's the ad revenue that they are upset at losing, which must be fairly substantial for them to consider essentially banning a whole group of people over. Again if this is true, then Moviepass really does have a chance to get off the ground. And since it's business plan does not have limitations on which theater you visit, it becomes a real threat to AMC's sub service which limits you to only their theaters. Hmmm.

 

[copasetic]

I guess it's not HOW MUCH money you make, but where that money comes from. Wazzat? Why does that matter? It reminds me of those stories from back in the 80's of Oral Roberts ministries, turning away badly needed donations because they came from horse racing winnings (some $8M?), claiming it was "tainted" money. NewsFlash: Money is money/Mammon. When it really comes down to it, it's ALL tainted, sooner or later.

But to AMC: You might want to take a look at some market demographics. I know of no less than 4 movie theaters within 30 mins of me, ALL offering first runs at WELL below your hypothetical $10, and they seem to be doing just fine. And if this is you making FULL PRICE (minus maybe a fee) from people who otherwise would NOT have been coming at all...(even $10 is better than $0)....but whatever...Time to wake up, the alarm clock is going off..

 

[RealNeil]

I don't know anything about AMC, but they sound like they'll be like any other big corporation. So, there's something that they gain from trying to preventing this... but what? PR? Maybe they were thinking of trying a more expensive subscription service, but this will undercut them?

Anyways, I'm sure that MoviePass will bleed money in the first bit. But on top of selling customer data and customers getting lazy, I can see it potentially working in the long term.

I know for myself, I generally see less than 12 movies in theaters a year. So if I subbed, they'd make some money off of me (after the honeymoon phase).

Honeymoon Phase indeed! My wife and I would go a couple of times per month. Date night is always a blast.
I think that they don't want movie goers to get used to lower rates for movies. They probably imagine their own business model suffering further down the road.

I'll wait to see if any fur flys and then I'll try it out.

 

[Sum Guy]

A service like this will definitely increase interest in the Dying movie theater. It could revitalize it. Most are empty here where I live. Many have shut down along the coast.

I am a Netflix, and Amazon Prime subscriber. I barely use any of the services now. Like Netflix you can expect limits to be implemented and prices to go up. Netflix went from unlimited screens to 2 screens, 5.1 surround to only 2 channel stereo*, and from 4.99 to 8.99 already.

Its like insurance. Lots of people pay it, but only a few use it. lets not forget about the extremely overprice concessions sales most of the patrons will be spending their extra money on.

Moviepass is banking on people like me. They will limit the viewings per month and increase the price. Its just common sense. Its very possible this news was planted for this reason specifically, and no ban is planned. If this is true AMC is just ignorant to these facts.

 

[JW0914]

Comparing MoviePass in theaters to online content delivers like Netflix and Spotify is ignorant at best, asinine at worst. Theaters have tremendous overhead, hence the $4+ for 3.5oz of candy that cost $0.89 - $0.99 at Walmart and every other edible item and drink they sell.

That pesky overhead includes enormous electric bills for cooling, millions invested in licensing, LSA's, speakers, processors, amps, projectors, etc., employees, local licensing, etc. not at tens of server farms, but at tens of thousands of locations.

At an average ticket price likely somewhere in the $12.50 range, if a MoviePass goer went every day of the month, that's $375/mo, however that wouldn't be in line with the law of averages (which allow the insurance industry to turn a profit), so let's say the average person goes to only 2 showings per month... that's $25 out for the $10 in that month.

Data is worth an enormous amount of money, however MoviePass isn't a Google or Facebook where the companies know more about the average person than the average person knows about themselves, but a company that would be selling data such as: brands & types of snacks/foods/drinks consumed and genre preferences. I'm not a data broker nor an economist, however does anyone seriously believe the above data would be worth 100%+ of the subscription price (at just two theater visits a month, that's 250% above the subscription price)?

 

[seeprime]

How can something like this work? Imagine there are one million subscribers and each one does go every day and watches a film, at $9 equates to $279 million dollars for the month. You would need nearly three years subscription to cover one month. MoviePass would be hoping that most of the subs would not bother going everyday or even watch more than one a month to break even.

If this kind of offer was in Australia I would be going everyday, tickets cost around $20 here.

Even if I lived close to one of the multiplexes, I doubt that I'd go to more than one or two a month, once the joy of seeing one a day for however long, faded. I think they're onto something. AMC is wrong about this. It'll keep people in seats that otherwise would simply stay home and watch Netflix, Prime, or Hulu.

 

[mailpup]

AMC is fighting it because they have their own movie viewers club. This price undercuts their membership price.

I'm curious. What club is that? I know they have a rewards program (Stubs) which gives points for money spent at the box office and concession stand and you do have to pay to join but are you referring to another program? I also know you can buy discount vouchers at various outlets like Costco,.Sam's Club, AAA, employee associations and the like but that's not the same as a movie viewers club. I'm interested because I go to the theater to watch movies once or twice a week, maybe 70+ times per year. AMC is one of the theater chains I visit.

 

[killem2]

How can something like this work? Imagine there are one million subscribers and each one does go every day and watches a film, at $9 equates to $279 million dollars for the month. You would need nearly three years subscription to cover one month. MoviePass would be hoping that most of the subs would not bother going everyday or even watch more than one a month to break even.

If this kind of offer was in Australia I would be going everyday, tickets cost around $20 here.

They sell your viewing usage data to advertisers. Highly lucrative. The more movies you watch the more money they make. The $9.99 is a failsafe to account for people who might only watch a few movies a year.

That data could not possible generate many billions over a year. And then what about the second year of operation. You will be just generating the same data leaning nothing new.

Then you don't know a damn thing about Big Data