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» Film-Tech Forum   » Operations   » Ground Level   » Meet the Lone Loser in MoviePass Hitting 1 Million Members (Page 1)

 
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Author Topic: Meet the Lone Loser in MoviePass Hitting 1 Million Members
Harold Hallikainen
Jedi Master Film Handler

Posts: 634
From: Denver, CO, USA
Registered: Aug 2009


 - posted 12-24-2017 12:17 PM      Profile for Harold Hallikainen   Author's Homepage   Email Harold Hallikainen   Send New Private Message       Edit/Delete Post 
http://host.madison.com/business/investment/markets-and-stocks/meet-the-lone-loser-in-moviepass-hitting-million-members/article_9b54dd21-806d-5b92-92c9-d5d263af9268.html

It's no surprise to see the best deal in the multiplex industry gaining momentum. MoviePass announced on Wednesday that it has surpassed a million subscribers to its namesake service, a debit card that lets members screen a single movie a day for just $9.95 a month. Shares of Helios and Matheson Analytics (NASDAQ: HMNY) moved 3% higher on the news, as it owns a nearly 54% stake in the platform.

MoviePass has come a long way since it was servicing just 20,000 accounts in mid-August. Slashing the monthly price of its service from what had been as high as $30 to $50 to less than 10 bucks turns heads. The last movie ticket you bought was probably for more than $9.95, so just imagine how much money you can save if you see more than a single movie a month through MoviePass. Some of the larger theater chains have complained about MoviePass disrupting the value proposition, and it's easy to see why there's nervous rumbling among streaming video services if folks are flocking back to the corner multiplex.

At the end of the day, the theaters will benefit from the increase in box office sales. Streaming isn't going away. There's only one real loser when it comes to MoviePass hitting a significant seven-figure milestone this week, and -- spoiler alert -- it's the stock that rose 3% on Wednesday following the announcement.

Let's all go to the lobby
AMC Entertainment (NYSE: AMC) has been bellyaching about MoviePass since its summertime price cut, but it's a flimsy argument. AMC and most of its smaller peers are getting face value for MoviePass purchases. They're debit card transactions, and AMC revealed in its latest earnings call that it's collecting an average of $11.88 per ticket from MoviePass members.

Exhibitors were having another lousy year until It arrived in early September. Moviegoers flocked to the silver screen reboot of Stephen King's horror classic in record numbers, but it's probably not a coincidence that it was also just when MoviePass debit cards were getting sent out in droves to those hopping on the monster deal. AMC argues that it turns the value proposition of a night out at the movies on its ear -- and that's fair -- but AMC Entertainment and its rivals should all be thriving through the next few quarters as a million people and counting have MoviePass pay full price for the spike in flicks they're watching.

MoviePass is giving multiplex theaters a boost, and it's also bailing out Hollywood. Helios and Matheson itself has also pushed out press releases claiming that a large percentage of indie flicks promoting through the platform are seeing a spike in MoviePass redemptions relative to traditional purchases. If you are fortunate enough to get a MoviePass card -- they're still drowning in customer complaints on that front -- you're going to use it.

The only real loser here, unfortunately, is MoviePass. It claims that it will eventually be able to offset the multiplex subsidization through advertising, selling data, and working with theater chains for discounts, but there's no way that the data culled or the marketing pitched on an $11.88 movie ticket will cover that tab. MoviePass is going to bleed through a lot of money, and it wasn't a surprise to see shares of Helios and Matheson lose nearly a third of its value last Thursday after announcing a secondary offering at a fire-sale price. The MoviePass model is great for film buffs and probably even better for the film and theater industries. It's just had to imagine it ever becoming a sustainable business model.

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Jonathan M. Crist
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From: Hershey, PA, USA
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 - posted 12-24-2017 01:12 PM      Profile for Jonathan M. Crist   Email Jonathan M. Crist   Send New Private Message       Edit/Delete Post 
MoviePass is radically changing the value of the theatrical film experience, but what does that mean for consumers and theater owners?

The Verge Article by Nick Stott December 15, 2017

I see a lot of movies. I moved to the Bay Area from New York nearly five years ago, knowing not a single person living in San Francisco, and I found going to the movies to be a solitary, almost meditative experience. Even as my friend group expanded, I kept up on the cherished cinematic ritual: the exorbitantly priced snacks, the ticket-taking and seat-selection process, the previews, and then the movie itself, with its sense of experiencing something new and unseen. There’s an antiquated sense of sacredness to a movie theater, and a theatrical experience only it can deliver.

Still, that experience isn’t cheap. In San Francisco, seeing two movies a month costs at least $25 — upward of $40 with any type of food. Three movies a month is nearly equivalent to four months of Netflix. MoviePass, the now suspiciously cheap subscription service from Netflix co-founder Mitch Lowe, is pretty much tailor-made for moviegoers like me. And theater chains, particularly AMC, are absolutely not on board.

I signed up in late August, after the steep price drop, and got my MoviePass card in early September. In the past three months, I’ve paid a little under $30 to see 14 films. The flat monthly fee freed up my budget to splurge on concessions, but even if I buy more food, I’m still coming out on top. The average movie in San Francisco costs about $12, nearly 50 percent higher than the national average. So seeing just one film a month with MoviePass, which lets you see one movie per day for $9.95 a month, more than covers the cost of the subscription fee.

For me, MoviePass has become a simultaneously dangerous and exhilarating experience. I feel like I have access to a dark secret: perhaps movies aren’t really worth what we’re told they’re worth. What if, instead of paying $12, you could always just pay $2 or $3, bundled into a monthly fee? I cherish the theater experience as an institution. But given the freedom to pay less for it, I can’t help but take the opportunity. It’s like the Napster era, when the sheer ease of music piracy made it tremendously tempting, except that I can enjoy MoviePass with a clean conscience. At least until the company decides it can’t sustain its pricing model, or chains reject the service entirely, or something larger and more systemic changes about the film business.

But MoviePass has fundamentally changed the value I put on movie tickets. This is why it’s so controversial for theater chains. At first blush, it may be difficult to understand why. MoviePass still pays theater chains full price for the tickets it passes on to its own customers. It also restricts users to standard screenings, so no IMAX or 3D, and most theaters don’t support online pre-purchasing, so you have to go in person to buy your ticket. Problem is, AMC and other chains have to worry about MoviePass going belly-up.

From the outside, that seems inevitable since if I see two movies a month in pricey San Francisco, I’m already costing MoviePass money. MoviePass is banking on some subscribers seeing only one movie per month, or none at all. It’s offsetting the higher cost of tickets in expensive urban areas with the lower cost in other parts of the country. It’s taking a loss in order to build a consumer base, and banking on collecting data about those consumers’ habits, and selling it down the road. AMC claims the company is planning to eventually leverage its base against theaters, and try to push movie prices down. But if none of these things happen on the scale the company hopes, MoviePass’ model is unsustainable.

And the company is aware of the necessity of providing consistent data and keeping customers locked in. In November, MoviePass changed its terms of service to limit users’ ability to deactivate and reactivate the service at will, so they can’t limit their use to summers and the year-end holiday season. The company also offered an even more discounted rate if viewers were willing to pay upfront for a year.

The company is going through a boom period: MoviePass saw 150,000 new signups in just two days when it dropped its price back in August. But if it does go under, those subscribers will have to return to paying between $10 to $15 for a single ticket. After three months with the service, I don’t think I could do that. MoviePass changes almost everything about the theater experience, when the cost of entry is virtually zero.

Now I idly entertain the idea of seeing a movie every day after work, or when I have time to kill before meeting friends. I’m more willing to consider movies with subpar Rotten Tomatoes scores but otherwise appealing concepts, like The Foreigner and Murder on the Orient Express. I’m also more likely to consider films in genres I typically avoid. Now, nothing really gets in the way of going to the theater except how much free time I have. But once you’ve gotten something for what feels like free, it’s difficult to go back to paying for it. If MoviePass went away, I’d still reserve money and time to see one or two films a month, but I’d be more choosy than I used to be, and more reluctant about paying full price for tickets. I can imagine other subscribers writing off theaters until something similar to MoviePass pops up again — especially with so many other, cheaper entertainment options available.

The same struggle between the subscription model and the single-item model has played out with other entertainment industries lately. Fewer consumers are eager to buy physical CDs in the era of Spotify, or DVD box sets in the age of Netflix. Over the last five years, both physical music and digital download sales have shrunk, while streaming revenue has grown, overtaking physical media for the first time this year. This past summer also marked the moment when Netflix subscriptions surpassed those of all US cable providers combined. The film business and its players up and down the chain remain some of the few entertainment holdouts resisting the transition to “all you can consume” subscription models.

So MoviePass poses a kind of existential threat to theater owners, because its model devalues access to the theater experience. We pay so much money to sit in a theater, and for the right to drink an overpriced soda or eat a $10 tub of popcorn, because theaters have all decided on a ticket price customers must pay for the premium of that big screen and sound system. Theaters keep trying new things — comfy recliners, next-generation surround sound, laser-powered projectors, “4DX” screenings, and restaurant-quality dining options. But in the end, when theaters make money, or Hollywood manages to recoup its ever-growing film budgets, it’s because ticket prices have steadily risen over time. They’ve hit an all-time high in 2017, even as the number of moviegoers has declined.

Beyond conditioning consumers to expect absurdly low price-per-movie metrics, MoviePass takes pricing control out of theaters’ hands. Fewer people will want to see a $22 movie at a 3D IMAX theater when the standard 2D version costs 10 percent of that. By giving consumers a cheaper option — and as with all buffets, it becomes a progressively better value the more you use it — MoviePass is harming how much studios and exhibitors can control their own destiny. The price of a movie ticket, and the stranglehold on streaming and distribution rights, is at the core of the film industry’s livelihood.

There is a silver lining in MoviePass’ risky gamble. MoviePass may very well be unsustainable, even if it manages to partner with theaters for discounted tickets or food and drink deals, or if the long-term play to monetize its data bears fruit. That latter business model may need some kinks ironed out, because as it stands today, anybody with the card and mobile app login can use it. So friends and family members can share a MoviePass card just as they do with a Netflix or HBO Go login, spoiling the usage data MoviePass is banking on.

Yet at the end of the day, MoviePass is getting me and thousands of others to see more movies, sometimes regardless of what critics are saying. Movies have become such an overwrought affair these days, involving careful scrutiny over film and theater selection, because of how much tickets cost. Films that seem like required theatrical viewing are rare, given that the trip might cost a group of four upward of $75. It’s tempting to just wait for a new picture to hit Netflix, Amazon, or Redbox.

Yet subscription businesses have proved that, when given choice and freedom, people will consume more. The process of weaning consumers off one form of media consumption and directing them to another does take years. And there are always concerns over how artists and creators are being compensated in all-you-can-consume models, and how ambitious new projects are greenlit over safe franchises. Netflix and Spotify have proven the viability of media subscription models, but those models are evolving rapidly as the industry changes.

It’s not clear there is a way to build a movie theater subscription service that makes everyone happy. Even at $20 or $30 a month, it doesn’t seem viable so long as the rest of the economic chain of the film industry holds the line. But instead of criticizing MoviePass’ approach, or trying to prevent the service from taking off, the film industry should treat the service’s popularity as a learning experience.

Just as Netflix and other on-demand services have helped revolutionize the culture around media consumption, so could companies like MoviePass — with the right support structures in place, and perhaps a bit of compromising from consumers like me. Cinemark has already taken tentative steps toward creating its own subscription model. It doesn’t look particularly competitive, but it’s a first step. The film industry just needs to figure out how to meet moviegoers halfway.

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Mike Blakesley
Film God

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From: Forsyth, Montana
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 - posted 12-24-2017 03:31 PM      Profile for Mike Blakesley   Author's Homepage   Email Mike Blakesley   Send New Private Message       Edit/Delete Post 
Well there's only one way to make the whole thing work financially -- charge more money for it.

I'm sure when people first get MoviePass they binge out on every movie they can find, but then the novelty wears off and they probably settle in to one or two movies a month, the same as they did before they had a MoviePass. So that's what MoviePass ought to cost....the price of 1 or 2 movies a month.

Pricing something below cost is the very antithesis of business. It's OK for something you want to get rid of, but you don't do that with your A-list product. Heck I learned that from my dad when I was about 9. I can't believe MoviePass thinks they can magically ignore the rules of reality, especially when the returned value of "advertising" keeps shrinking.

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Lyle Romer
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 - posted 12-24-2017 10:05 PM      Profile for Lyle Romer   Email Lyle Romer   Send New Private Message       Edit/Delete Post 
quote: Mike Blakesley
Pricing something below cost is the very antithesis of business
Unless you can make it up in volume!
[beer]

That always ranked second in my stupid things people say about business list after "it's a tax write off for them."

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Marcel Birgelen
Film God

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From: Maastricht, Limburg, Netherlands
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 - posted 12-26-2017 05:43 AM      Profile for Marcel Birgelen   Email Marcel Birgelen   Send New Private Message       Edit/Delete Post 
It's also how those "business 2.0" ventures work nowadays... First, give it away for free or at insane rebates by burning up someone's cash and once you have sufficient "mass", try to figure out a business model from there, maybe do an IPO in between so the original share holders can cash in and then see if it sticks. If it doesn't, someone else will be holding the bag by then.

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Dave Bird
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From: Perth, Ontario, Canada
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 - posted 12-26-2017 12:08 PM      Profile for Dave Bird   Author's Homepage   Email Dave Bird   Send New Private Message       Edit/Delete Post 
Overall the article is reasonable, though I doubt the following:

quote: Harold Hallikainen
Exhibitors were having another lousy year until It arrived in early September. Moviegoers flocked to the silver screen reboot of Stephen King's horror classic in record numbers, but it's probably not a coincidence that it was also just when MoviePass debit cards were getting sent out in droves to those hopping on the monster deal.
Our little rural drive-in essentially sold out for weeks, in September when we normally don't draw much at all, probably the busiest 3-4 week run this place has had in 50 years. There's no MoviePass in Canada, nor do I think that 1 million of them in the U.S. caused this phenomenon. But the article mostly makes sense, this thing is doomed to fail, now where do I buy "Puts" on this thing?

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Marcel Birgelen
Film God

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From: Maastricht, Limburg, Netherlands
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 - posted 12-26-2017 04:52 PM      Profile for Marcel Birgelen   Email Marcel Birgelen   Send New Private Message       Edit/Delete Post 
You'll have to wait until they go public, then you can short the stock. [Wink]

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Mike Blakesley
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 - posted 12-26-2017 05:24 PM      Profile for Mike Blakesley   Author's Homepage   Email Mike Blakesley   Send New Private Message       Edit/Delete Post 
The article is also wrong about "exhibitors were having another lousy year." It was a lousy end to the summer but the year overall was decent. They can't all be "up" years with the kind of movies we're seeing.

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Monte L Fullmer
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From: Nampa, Idaho, USA
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 - posted 01-05-2018 06:00 PM      Profile for Monte L Fullmer   Email Monte L Fullmer   Send New Private Message       Edit/Delete Post 
On the comment on MP: a buzz word has it that we must check which movie the patron has bought on with MP instead of just using the card for ANY film when we ring it in on our registers.

To me, that's not our responsibility, for that responsibility is between the patron and MP.

Anyone heard of this?

If they hit a million members, MP is gaining almost 10 Million a month in revenue.

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Travis Cape
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 - posted 01-05-2018 06:37 PM      Profile for Travis Cape   Email Travis Cape   Send New Private Message       Edit/Delete Post 
Monte,

The customer has to check-in with the app to allow the MP credit card to work. The app keeps track of what the customer has seen. I've never tried to watch something again. I assume the MP app wouldn't allow me to check-in.

I guess I could go into a different auditorium. I did read on the terms of service that you could get hit with a $25 charge if they think you're committing fraud.

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Justin Hamaker
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 - posted 01-05-2018 09:48 PM      Profile for Justin Hamaker   Author's Homepage   Email Justin Hamaker   Send New Private Message       Edit/Delete Post 
I'm curious to know if other theatres are not seeing much in the way of snack bar purchases from MoviePass customers. We have about 10 regular customers using MoviePass, and for the most part they actually spend less at the snack bar than our regular customers. The exception being the few regular customers who have gotten movie pass.

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Mike Spaeth
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 - posted 01-05-2018 10:16 PM      Profile for Mike Spaeth   Author's Homepage   Email Mike Spaeth   Send New Private Message       Edit/Delete Post 
Of course per capitas drop when using MoviePass. It's the same reason why per capitas are lower on discount days. You're attracting a crowd that is out to save a buck, whether out of necessity or other reason. It's not the same people as those who are willing to buy a full-fare ticket.

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Monte L Fullmer
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From: Nampa, Idaho, USA
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 - posted 01-08-2018 03:55 AM      Profile for Monte L Fullmer   Email Monte L Fullmer   Send New Private Message       Edit/Delete Post 
..and this drop in the Per Cap could be scaring AMC, and heard Harkins refuses to take MP.

You watch: conc prices will go up along with tix prices due to the increase of MP sales.

I tell patrons to use MP while they can, for it reminds me of an MLM: "If it's too good to be true, it probably is."

Big thing I really see is patrons, buying a large popcorn ask for hot dog boats to split up the large popcorn in, plus use their refill in filling more boats. Their is revenue lost right there.

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Frank Cox
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 - posted 01-08-2018 10:50 AM      Profile for Frank Cox   Author's Homepage   Email Frank Cox   Send New Private Message       Edit/Delete Post 
I charge one dollar for an empty popcorn container for just that reason.

When I first added that price to my menu board I figured it was just a disincentive for people to split their popcorn like that and I wouldn't ever actually sell an empty popcorn container. Imagine my surprise when it turned out that I sell one every few weeks.

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Scott Norwood
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From: Boston, MA. USA (1774.21 miles northeast of Dallas)
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 - posted 01-08-2018 11:36 AM      Profile for Scott Norwood   Author's Homepage   Email Scott Norwood   Send New Private Message       Edit/Delete Post 
Frank--doesn't that screw up your inventory? Or do you use a different size container than the ones that you actually sell for the empty containers?

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