MoviePass’ resurrection will face old problems and new rivals

Source: MoviePass

MoviePass, the movie theater ticket service that skyrocketed to popularity in 2017 and spiraled into bankruptcy protection two years later, is looking for a Hollywood reboot.

Co-founder Stacy Spikes regained ownership of the company on Wednesday after a bankruptcy court judge in the Southern District of New York approved the sale on Monday. Spikes said the company is exploring the possibility of relaunching in the near future.

The theatrical industry has changed drastically in the two years that MoviePass has been out of commission. The global Covid-19 pandemic shuttered cinemas and clogged the production pipeline, leading to smaller-than-average box office gains as the industry has worked to rebuild.

MoviePass’ attempted resurrection comes at a time when many movie theater chains have bolstered their own paid loyalty programs to include ticket subscriptions and discounted concessions.

The company would not only have to navigate a new industry landscape and these rival rewards platforms, but also create a sustainable business model, something it was unable to achieve before shuttering in 2019.

“AMC A-List rose from the ashes of Movie Pass and has become essential for many avid moviegoers,” said Jeff Bock, senior analyst at Exhibitor Relations. “It will be difficult to lure current subscribers away considering the plethora of problems MoviePass cardholders encountered.”

“I’m not saying it can’t work, but many potential subscribers will be extremely wary of this sequel,” he said. “Could it help the box office? Certainly. But they better have a better business plan in place if the company is going to survive long-term.”

Founded in 2011, MoviePass was acquired by Helios and Matheson Analytics in 2017. At first, the service offered customers one movie voucher per day for $30 to $40 a month before transitioning to $10 a month. The hope was that most subscribers wouldn’t actually use the service regularly, in the same way that gyms are able to offset cheap monthly fees because of no-show subscribers.

Many MoviePass subscribers, which signed up in droves in 2017, began to use the service too frequently, however, and the company started to lose money quickly. In an effort to stay afloat, MoviePass began altering its subscription once more, cutting the number of titles that could be seen in a month and not allowing users to see the same movie twice.

The subscription went from having more than 3 million members to around 225,000 in April 2019. Without the backing of movie theaters, which had balked at MoviePass’ business model and intrusion into the industry, the company was forced to dismantle in mid-September 2019.

“It’s been proven that the model of losing money on every transaction and trying to make up for it with volume, 100% does not work,” said Eric Handler, media and entertainment analyst at MKM Partners.

AMC launched its A-List program in the summer of 2018, offering audiences up to three movies per week in any format — IMAX, Dolby Cinema or RealD 3D — as well as free upgrades on popcorn and soda, free refills on large popcorn, and no online ticketing fees. Additionally, the program provides points to users that can be redeemed for money off future purchases.

This service costs between $20 to $25 depending on where customers are located in the U.S. Before the pandemic, AMC had around 900,000 A-List members who were watching around 2.6 movies per month. After reactivating the service in July, AMC said it retained around two-thirds of subscribers.

Rival Cinemark has its own loyalty program called Movie Club, which provides users with one free ticket to a regular movie per month, 20% off concessions and no online fees when purchasing tickets. This service launched in December 2017, costs $9.99 per month and unused movie tickets roll over to the next month.

The company recently launched a platinum version of its Movie Club for members who visit 25 times or purchase 60 tickets in a calendar year. One of the major benefits is 25% off concessions.

In mid-2019, Cinemark’s Movie Club had more than 500,000 users. Upon reactivating this program this year, the company said it only saw a 6% drop in membership, which was largely driven by credit cards that had expired.

The company also said that 64% of its Movie Club members indicated an interest in achieving platinum status this year. Additionally, it launched a new service for online food and beverage ordering that allows guests to skip the lines and either pick up their concessions at the counter or have them delivered to their seats.

Regal was the last of the major movie theaters to launch this kind of subscription service, entering the scene in mid-2019, just as Movie Pass was departing.

Regal Unlimited allows customers to watch as many movies as they want, as often as they want. It has three tiers that range from around $18 to $24 and offer a 10% discount on all food and non-alcoholic beverages, free large popcorn and soda on the user’s birthday, and no blackout days for movie reservations.

The main difference between the three tiers is the number of theaters that users have access to when selecting their movies. The lowest tier is accessible at 200 theaters, the middle tier accesses 400 theaters and the highest tier is for 550 locations across the U.S.

“MoviePass can’t offer what A-List and Movie Club can offer because those two services can offer concession benefits as well,” Handler said. “Having an independent service is highly unlikely to work unless there are smaller circuits who maybe want to offer some type of white-label service.”

Source: CNBC

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