Movie theaters have been having a tough time this year. Despite some great movies like Wonder Woman, Baby Driver and Dunkirk, theaters have had a down year, and this year isn’t a special exception. Netflix co-founder and MoviePass CEO Mitch Lowe wants to get butts into seats, and thinks he knows how to do it: For a low monthly fee, hit theaters all you want.
It’s like Netflix but for movie… theaters
The service is called MoviePass, and here’s how it works: For $9.95, you’ll be able to watch one movie a day in any movie theater that accepts debit cards. MoviePass will pay the full price of the ticket, so the theater won’t lose out on the proposition. The pass will work with any non-3D and non-IMAX screens.
But let’s talk about how it actually works, and how movie theaters feel about the situation.
Personally, I try to see a couple movies a month, so I’d be getting my money’s worth out of a subscription like this. But the math there already breaks down. A movie ticket these days costs at least $10 in major cities. If I go to more than one movie a month, let alone as many as 30 times (as unlikely as that is), the math breaks down quickly. How can this possibly be profitable for MoviePass?
It’s all about data. The company raised a bunch of cash this week by selling a majority stake to a data company Helios and Matheson Analytics Inc., according to Bloomberg.
All your data are belong to us
The goal, according to Helios and Matheson CEO Ted Farnsworth, is data collection. The company wants to collect movie-goer data and use that for advertising and whatever else.
And there’s a lot of data to collect here. Signing up will give them your name, location, age, and gender. Then you’ll be telling them what movies you go to and when. So they’ll know who is going to what and where, and be able to sell that data to interested firms. Movie theaters could use it to better target advertisements. Instead of seeing First Look with Maria Menounos, we might see targeted ads. Movie studios could use this, too. All this could be funneled into an algorithm that would help them decide whether a movie is worth greenlighting in the first place.
Movie theaters aren’t happy with the idea, though, and investors don’t seem to understand it. While the business would be paying for tickets in full price, Bloomberg says AMC’s stock took a 2.6-percent hit.
AMC is throwing shade
AMC, the largest theater chain in the world, is also the exhibitor throwing a fit over the idea, and is threatening legal action against the firm. The theater chain said in a statement that MoviePass “is not in the best interest of moviegoers, movie theaters, and movie studios.” The company said it is consulting attorneys to find out if it can prevent MoviePass from being used within its chain. That’s going to be tough, as MoviePass isn’t going to be passing out membership cards – the whole thing goes through your debit card.
“From what we can tell, by definition and absent some other forms of other compensation, MoviePass will be losing money on every subscriber seeing two movies or more in a month,” AMC’s statement says, which shows that they seem to misunderstand the mode the same way investors do.
But Lowe knows Flix
Lowe not only helped found Netflix, he also helmed rental-kiosk service Redbox. He’s been in the business of getting eyes on movies for a while. Lowe says that MoviePass is a win for everyone involved. It’s not that people are staying home to watch Netflix and the other 8 hojillion streaming services on the market, Lowe says. It’s the cost of the whole moviegoing experience.
“People really do want to go [to movie theaters] more often. They just don’t like the transaction,” Lowe said. MoviePass claims that it boosts movie attendance by a cool 111-percent, too, and that people who use MoviePass buy more concessions. Those are places where movie theaters make a lot of their money, so that seems like a good thing for theaters.
There are plenty of reasons to be a bit suspicious of the service, but it seems like AMC doesn’t really have a lot of ground to stand on, other than just the idea of not liking change.
Lowe thinks theaters will see the value of the increased traffic, and that MoviePass and theater chains will start to work in a more symbiotic relationship, with the chains cutting MoviePass in on concession sales and giving them advertising space in their establishments.
Looking at how the business model works, it seems like the biggest losers will be moviegoers and the general health of the movie industry.
Farnsworth, the big data CEO, described MoviePass as being similar to Facebook or Google, which are really just advertising platforms that provide us some value in return for us giving them piles and piles of personal data. We’re not the customer – firms that buy and use data are. MoviePass will be, at least in part, some of the same thing. If MoviePass is successful and movie studios start using its data, we’ll end up with movies that are kind of like that Soylent drink; they’ll fulfill our basic entertainment needs but not much more. Studios will optimize creativity out of movie production. That sounds doom-and-gloom, but I don’t think it’s wildly out of the question. Creativity is about taking risks, and big business is about the exact opposite.
I can think of another way AMC and other theaters could fight against the record low theater attendance: drop their prices. Movie ticket prices are higher than ever, with the average price at $8.95 as of July. A trip to the theater can easily cost $20 per person or more after concessions, especially depending on where you live. If the cost of a trip to the movies is the main thing keeping people out of theaters, a simple price drop and some good PR could do a world of good.
So, what do you think? Would a service like MoviePass get you out to theaters more often? Is it the cost of movies keeping you out of theaters, or is it the overall experience?
MoviePass has an uphill battle ahead with legal action in the workings, but Helios and Matheson pumped $27 million into the company, with subscriber milestones determining the future of that deal. It’ll be tough for AMC to block this service without just blocking debit cards entirely. But if ticket prices really are the big blocker, MoviePass could revolutionize the industry as Lowe believes.