Step up your movie theater snack smuggling game, you’re going to be at the movies a lot more thanks to MoviePass.
MoviePass, a movie theater subscription service that allows you to see a movie every day for a flat monthly fee–and they just lowered that fee to $9.95!
Previously the company charged $30 per month. The fee reduction is a gutsy business move to garner notoriety and subscribers. When MoviePass realized that the cost benefit analysis of a $30 monthly fee was pretty low for subscribers, the $20 price reduction was an obvious decision. Who wouldn’t want unlimited movies at the cost of a single movie theater ticket?
To provide customers with the low monthly fee, Movie Pass will pay theaters the full ticket price for each movie a MoviePass subscriber views. MoviePass could lose a lot of money subsidizing people’s movie habits. Fortune reported, “the company [MoviePass] raised cash on Tuesday by selling a majority stake to Helios and Matheson Analytics, a small, publicly traded data firm in New York.
Helios and Matheson’s goal is to amass a large base of subscribers and collect data on their movie viewing habits. In the same ways that Facebook or Google collects user data, this will allow Helios and Matheson to understand movie fans and better target advertisements and marketing materials to them.
MoviePass was founded in 2011, originally on a similar business model to that of a gym membership or Netflix. And if you see other similarities to the video streaming site Netflix, that’s no coincidence. MoviePass CEO Mitch Lowe is one of the founding executives of Netflix. He also served as the President of Redbox.
As movie theater sales continue to plummet across the country–with the top four cinema operators, led by AMC Entertainment, losing a reported $1.3 billion in market value this month–theater operators should welcome any effort to increase sales. However, some theaters are already renouncing their involvement with MoviePass.
AMC Entertainment Holdings Inc. said MoviePass wouldn’t be welcome in its theaters, and that it was working with its lawyers “to determine if or how AMC can prevent a subscription program offered by MoviePass from being used at AMC theaters in the U.S.”
It may be difficult for AMC to block the use of MoviePass cards, which the company says can be used at any theater accepting debit and credit cards, or roughly 91% of all U.S. theaters.
MoviePass’s card is powered by Mastercard Inc. and essentially operates like a credit card where MoviePass pays the bill. According to Mastercard’s rules, merchants are obligated to honor all cards. The rule states that merchants that choose to accept debit or other Mastercard cards “must honor all valid Mastercard Cards without discrimination when properly presented for payment.”
But Lowe is not deterred by AMC’s comments “They’re not in a position to stop our customers from using MoviePass cards,” Lowe told MarketWatch. “The big guys are always trying to stifle innovation.”
While the sale of movie tickets has continued to drop over the past few years, the cost of a single ticket continues to rise. According to Box Office Mojo, the cost of movie tickets has nearly doubled in the past 20 years. The national average cost of a movie ticket is $8.89 but in places like New York City or Los Angeles prices can set you back $12-$16 and up.
A veteran in the video entertainment business, Mitch believes the high cost of movie tickets is to blame for the theater industries decline, not the competition from Netflix, Hulu, or Amazon Prime. “People really do want to go [to the movies] more often,” he said. “They just don’t like the transaction.”
“If you look at the Motion Picture Association of America reports, over the last five years Millennials have declined going to the movies by 20%,” Lowe said. He believes MoviePass can be a step toward helping improve theater attendance by bringing Millennials back to the theaters. “Our subscriber base is more than 75% millennial,” he said.
And he could be on to something. After dropping their subscription price to $9.92, the company has already reached its 2018 subscriber goal, boasting more than 150,000 subscribers, up 20,000 from last December.
