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As movie theaters struggle with tepid sales, Mitch Lowe has an extreme proposal for how to get more people into seats: Let them come to all the showings they want for about the price of a single ticket each month.

Lowe, an early Netflix Inc. executive who now runs a startup called MoviePass, plans to drop the price of the company’s movie ticket subscriptions on Tuesday to US$9.95. The fee will let customers get in to one showing every day at any theater in the U.S. that accepts debit cards. MoviePass will pay theaters the full price of each ticket used by subscribers, excluding 3D or Imax screens.

MoviePass could lose a lot of money subsidizing people’s movie habits. So the company also raised cash on Tuesday by selling a majority stake to Helios and Matheson Analytics Inc., a small, publicly traded data firm in New York. The companies declined to comment on terms of the financing but said MoviePass intends to hold an initial public offering by March. Helios and Metheson shares rose 5.7 percent to US$2.95 at the close Tuesday in New York.

Ted Farnsworth, chief executive officer at Helios and Matheson, said the goal is to amass a large base of customers and collect data on viewing behaviors. That information could then be used to eventually target advertisements or other marketing materials to subscribers. “It’s no different than Facebook or Google,” Farnsworth said. “The more we understand our fans, the more we can target them.”

Theater operators should certainly welcome any effort to increase sales. The top four cinema operators, led by AMC Entertainment Holdings Inc., lost US$1.3 billion in market value early this month after a disappointing summer. The number of tickets sold in the U.S. and Canada last year declined slightly, while box office revenue rose just 2 percent thanks to pricier tickets, according to the Motion Picture Association of America, a trade group. The cost of a ticket has almost doubled in the last two decades, according to the website Box Office Mojo. The average price is about US$8.89 this year, though it can be much higher in some cities. Shares of theater companies fell Tuesday on concerns that MoviePass’s pricing would hurt studios or exhibitors. AMC’s stock declined 2.6 percent to US$13.25 at the close. Investors may be misinterpreting the MoviePass business model, Eric Wold, an analyst at B Riley & Co. wrote in a note to clients. If MoviePass can drive more people to theaters that would benefit the exhibitors, although the overall impact is “more negligible than anything,” Wold wrote.

MoviePass was founded in 2011, originally with a business model similar to a gym membership. The company hoped to turn profit from subscribers who paid US$30 or more per month but didn’t use the service often enough to justify the cost. Lowe, a fixture of the home video business who helped get Netflix off the ground and served as president of rental-kiosk operator Redbox, was named CEO last year. The privately held company declined to disclose subscriber numbers or financial information. Lowe said the data-based business model is still “years in the future.”

With the new strategy, MoviePass hopes to resolve what Lowe sees as the biggest factor to blame for the theater industry’s decline. He said the high price of tickets, not competition from Netflix or Amazon.com Inc.’s Prime Video service, is a big part of what’s keeping people away. “People really do want to go more often,” Lowe said. “They just don’t like the transaction.”

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AMC Theatres is threatening legal action against MoviePass, a subscription based service for cinema-goers.

In a statement, the world’s largest exhibitor dismissed MoviePass as “a small fringe player” and said that its model “is not in the best interest of moviegoers, movie theatres and movie studios.”

On Tuesday, MoviePass announced that had sold a majority stake to Helios and Matheson Analytics Inc., a publicly traded data firm, for an undisclosed price. It said it was using the capital injection to fund an overhaul to its pricing model. It will now enable customers to see movie a day in a theater for a $9.95 monthly fee, far less than the cost of a ticket in many major markets.

MoviePass re-sells the tickets to customers. It claims it boosts attendance by 111% and that its customers buy more concessions. But exhibitors have preferred to bolster their own loyalty programs instead of aligning themselves with the service, with AMC investing heavily in its Stubs rewards program.

In the statement AMC said it is consulting with its attorneys to determine if or how it can prevent a subscription program offered by MoviePass from being used at its locations.

“MoviePass envisions paying AMC its full ticket price without discount,” the company’s statement reads. “The AMC average ticket price for watching a movie at AMC Theatres in the most recent financial quarter was $9.33. From what we can tell, by definition and absent some other form of other compensation, MoviePass will be losing money on every subscriber seeing two movies or more in a month.”

In an interview on Tuesday morning, MoviePass CEO Mitch Lowe acknowledged that his company was subsidizing ticket buyers. He argued that it will be able to prove its value to movie theaters and studios, and that in the future they will cut the company in on their additional profits.

“We’re hoping that if we can drive a meaningful increase in attendance we can share in that success,” said Lowe.

AMC does not sound like it wants to endorse MoviePass’s ambitions.

In the statement it said, “that it is not yet known how to turn lead into gold,” adding, “In AMC’s view, that price level is unsustainable and only sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled.”

The company said that reducing pricing to accommodate the MoviePass model would negatively impact the customer experience and would leave them unable to “operate quality theatres” and will have a chilling effect on the creative community by cutting them out of the income they receive from movie theaters.

“While AMC is not opposed to subscription programs generally, the one envisioned by MoviePass is not one AMC can embrace. We are actively working now to determine whether it may be feasible to opt out and not participate in this shaky and unsustainable program,’ the company’s statement reads.

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quote: Dennis Benjamin

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clicking around to see what theatre locations accept movie pass was impossible.

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The fee will let customers get in to one showing every day at any theater in the U.S. that accepts debit cards.

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quote: Travis Cape

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there's a noticeable difference in the behavior and appearance of the crowd between the cheapest matinee and the later shows.

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quote: Rick Cohen

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Behave or leave won't work with this business model. They will just come back tomorrow, for free, because they can.

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I do not see any way that this could be a sustainable business model for MoviePass,

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quote: Dennis Benjamin
clicking around to see what theatre locations accept movie pass was impossible.
Apparently all of them:

quote:
The fee will let customers get in to one showing every day at any theater in the U.S. that accepts debit cards.
It sounds like subscribers get some kind of a special debit card and just use that when they go to the show. The chap selling the tickets may not have to know or care if it's a regular sale or a subscription redemption.

quote: Travis Cape
there's a noticeable difference in the behavior and appearance of the crowd between the cheapest matinee and the later shows.
The fix for that is called properly supervising the auditorium.

Behave, or leave. I don't see that as being an exceptional policy, or is it?

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Mitch Lowe knows a thing or two about selling movies. Ever heard of Netflix or Redbox? He spent over a decade growing their DVD businesses big enough to put Blockbuster in its grave.

Now, he's helming a company with an even more outrageous idea: $10 a month for all the movie tickets you want. For that flat fee, you get one movie ticket per day for any movie in practically any US theater, the company announced Tuesday.

How can his company, MoviePass, afford all those tickets? Is MoviePass a scam?

Those were the thoughts going through my head after AMC, the nation's largest theater chain, issued a press release Tuesday proclaiming that MoviePass isn't welcome at any of its 8,000-plus locations -- a sizable chunk of the 36,000 screens Lowe's company claimed were already part of MoviePass' "Theater Network."

According to Lowe, who spoke to us Tuesday evening, the truth is even wilder. MoviePass doesn't actually have partnerships with major theaters, or much of a relationship at all.

Instead, it has a patented technology that makes a MoviePass practically indistinguishable from a credit card -- and very hard to block. And if they figure out a way, says Lowe, he'll make it even harder.

Here's an edited transcript of our interview.

(The big four US theater chains -- AMC, Regal, Cinemark and Cineplex -- didn't respond to requests for comment.)

AMC says it's looking at ways to block MoviePass, but why would AMC need to block it? How does your system work?

Lowe: Essentially, it's a Mastercard. We send a Mastercard credit card to our subscribers.

Our patent is kind of a remote, GPS-driven credit card authorization technology. Essentially what we do is tie a credit card to the unique ID in your phone. You pick the movie, the theater and the showtime, and when you get within 100 yards of the theater with your phone, you check in.

Since your bank knows exactly the credit card ID of the machines at the theater, within two seconds, it makes that credit card work -- but only at those machines, for only about 30 minutes and only for the amount the ticket costs.

If you don't buy that ticket within 30 minutes, the money comes back to us.

When our subscribers go to the box office, they hand over their MoviePass credit card, [and box office workers] swipe it and they give our customers the ticket. We pay the full price of the ticket, whether our customers want to go to one movie or ten movies.

What's crazy about AMC's statement is our customers go twice as often, spend 123 percent more on concessions each time -- which is at least 80 percent margins for the theaters -- and we pay full price.

It's absolutely crazy to say, "We don't want your money." We're not asking for a discount, we're not asking for a cut of revenue. We hope over the next couple of years we'll show ourselves to be part of the movie entertainment ecocsystem... if we do that, then we want to sit down with the theaters, the studios, and figure out how we all can make more money.

We think there's a group of customers out there who've stopped going to the movies as often as they used to -- particularly between the ages of 18 and 39 -- who'd love to go to the movies more often, but have two problems. One is the risk of seeing a bad movie, and the second is they already belong to Netflix and Amazon and they can just wait and see it later.

Usually people talk themselves out of going. "I've gotta get there. It might not be a great movie. It's going to be 10 bucks. If I'm already paying for Netflix, I'll just wait until it comes out."

We think that's hurting the movie business. By giving people the insurance... if you see a bad movie you can just walk out and trash it to your friends the next day, and not feel bad that you wasted 10 bucks. That way, it can actually be fun to see a bad movie. Or see a movie you didn't think you'd like and fall in love with it. We think we can expand people's interest in film, make it more enjoyable and result in more people going to the movies more often.

So you don't have deals with the big theater chains?

No, those are all agreements that they've done with their credit card processor, whoever they might be.

If you agree to take Visa or Mastercard, you've agreed not to discriminate between one card and another. If you're a company like AMC and you say I'll take this Mastercard but not that Mastercard, you're violating the rules of the credit card company and you've lost your ability to take any Mastercard after that.

It's almost like if I went out and said you no longer could see Warner Bros. movies at AMC. Even though it wouldn't be true, I would be damaging their business, and they would be upset. That's what they're doing to us: They're confusing customers and starting to make customers believe that MoviePass cannot be used at AMC theaters. That's not true.

Can they actually avoid serving your customers?

I'd love someone to explain how what we're doing is not legal. We're sending our customers to buy full-price tickets from them, and they're not paying us a single penny.

So you don't have deals with the big theater chains?

No, those are all agreements that they've done with their credit card processor, whoever they might be.

If you agree to take Visa or Mastercard, you've agreed not to discriminate between one card and another. If you're a company like AMC and you say I'll take this Mastercard but not that Mastercard, you're violating the rules of the credit card company and you've lost your ability to take any Mastercard after that.

It's almost like if I went out and said you no longer could see Warner Bros. movies at AMC. Even though it wouldn't be true, I would be damaging their business, and they would be upset. That's what they're doing to us: They're confusing customers and starting to make customers believe that MoviePass cannot be used at AMC theaters. That's not true.

Can they actually avoid serving your customers?

I'd love someone to explain how what we're doing is not legal. We're sending our customers to buy full-price tickets from them, and they're not paying us a single penny.

One thing that confused me: MoviePass advertises these theaters are part of its "Theater Network," as if they're participating in some way.

All we're really saying is if you're a MoviePass subscriber, you can go to the following theaters. We're not saying we have a deal with them. It's like Visa saying that you can only use your credit card at certain locations.

You can essentially use our card at any theater that uses a credit card; we've just chosen to support only 91 percent of theaters in the country because we don't include theaters that are IMAX or 3D, or some of the high-end luxury theaters that have superhigh ticket prices.

If it's just a credit card, why not allow users to tack on extras like IMAX or 3D, or popcorn and a soda?

Our long-term goal is to make that card available for our subscribers to order concessions and have [those charges] appear on their monthly bill, as opposed to having to pull their credit card out.

What we really want is to build an experience where everything is done on your phone: You pick your movie, seat, concessions, and they're all waiting in the theater, all prepared for you when you walk in. A bar code pops up on your phone, you show it as you walk in and go right to your seat.

That is a multiyear process and it involves integrating with the theater's point-of-sale system. Over 6 percent of our theaters are integrated with us and are true partners. You can pick your seats, and we're working on your ability to pick concessions But that means 94 percent of our theaters are not yet at that point.

So AMC's core beef with you is that it believes you're going to fail, but not before artificially lowering the price of a movie ticket in consumers' eyes. How can you afford to do that?

Before I answer that... doesn't that sound a little bit disingenuous? That is like saying you should never take advantage of a sale, never take advantage of a company offering an amazingly low price.

It's clearly not the reason why they're coming out and making these statements.

What's the real reason?

Look at it this way: Two weeks ago, when nobody had ever heard of us, their stock dropped 20 percent. Today, their stock drops another fraction, and they come out with this statement. For a company that accounts for one-thousandth of their business, they suddenly make a big deal about us. There's clearly something else going on.

I think they're having challenges that they haven't been clear with the investment community about. Several weeks ago they lost the confidence of the investment community and now they're trying to create a distraction.

Do you think the investment community will be distracted?

When I think about the things I wish I'd done a better job with today, it's making clear we're paying full price to AMC and every other theater, except for a small group of theatres that are working in close partnership with us. Because I was startled by the impact on their stock.

We probably do as much business in a year as they do in four hours, and yet the investment community thought that somehow we were going to impact the largest theater operator in the world? It just... we've either got a lot of credibility in getting really big, or it was just one more thing to be concerned about, or I didn't make it clear that we're paying AMC full price.

AMC is going to grow as a result of this, especially given those slow months coming up. September and October are some of the slowest months in the theater business, and our subscriber base surge is going to get people to go to AMC theaters. What better time to take advantage of someone else footing your bill? It baffles me.

So, my question: How can you afford to let me have two movies for the price of one, let alone up to 31 in a given month?

I've been in the retail business for a long time, and it's a science. It's the same thing they said about Redbox... How in the world can you afford to rent a movie for a dollar a night when Blockbuster is charging $5 for a rental?

It's all about utilization, about technology, about efficiency. If we can get people to the theaters more often and make the studios more money, we believe they'll share the revenue and profits. We're putting millions of dollars on the line to prove that we can be a valuable member of the moviegoing ecosystem... and in advance we're not asking for a single cent. We're going to deliver more and more business at the same price... and when it becomes more interesting, we want to talk about sharing in your incremental profits.

When we started Netflix (in the by-mail days), we realized we had more demand for hit titles than we could satisfy, so we went to the studios and said, "Give us three times the copies for twice the price." They said, "Why should we do that?" So Netflix went out and bought its own movies at three times the norm and showed the studios that revenue sharing could maximize their returns... and now today everyone is on revenue sharing. It became the norm.

Why don't the theaters build it themselves?

They could absolutely do it. I've never been afraid of competition. When we launched Netflix, Blockbuster kept saying they could do it. We actually tried to sell half of the company to Blockbuster, and they said, "Why would we do this? We can just build it ourselves." And they did, but billions of dollars later, they closed down. Eventually, they opened 10,000 Blockbuster Express kiosks, and they failed.

They needed to build the infrastructure, though. Does it change anything that the theaters already have their own infrastructure?

It definitely makes it easier for the AMCs of the world to offer their own service. The downside for a significant number of consumers is that if you don't use AMC all the time, the service will be less valuable than a service like ours when you can go to any theater.

You didn't quite answer my question: How can you afford to offer all these movie tickets at $9.95 a month?

I've spent the last year -- since I invested in this company and became CEO -- testing out various pricing models and looking at consumer behavior, seeing who the different prices attract.

Our primary subscriber is someone who, today, is only going to between 3 and 6 movies a year, and now they'll go to between 6 and 9 instead. I think you can do that math: Divide 9 into $120. Or even divide 12 into $120, and you start to understand there's a small percentage of people who'll get an amazing deal, go to 20 movies a month and tell everybody how amazing it is, but the average consumer we're getting is going 3 to 6 times and now will go 6 to 12 times a year.

I could be wrong, but I've been in the video retail business for 35 years. I was one of the couple of people in the room that came up with all-you-can-eat Netflix. I was one of the two people who came up with the dollar-a-night Redbox. I think I spent 13,000 hours working behind a video store counter. I don't think there are too many people who know how consumers want to consume entertainment like me. I'm convinced, and I put my own money behind this to make it work.

If I'm wrong, I'm wrong, but I truly believe we can get people to enjoy going to the movies, to go more often and to support the artistic community. When our customers double the frequency, all the increase is on films that gross fewer than $20 million at the box office. They're experimenting with films they never would have seen if they had to pay $10 or $12.

Did you have a pilot program or some analysis to give you those numbers?

We've done a lot of testing: a combination of field testing at a dozen different price points in various markets and in various regions over the last year.

At every price point above $10, people sat and calculated whether it was worth it. At prices below that, people said they'd be crazy not to take this deal.

How do you think it'll play out between you and the theaters?

I think in the end, we're going to be a great partner with AMC and the other big theater chains, and especially the independent theaters. I think it'll take some time, but everyone will want to sit down and talk and figure out how we can share data and help each other, but it may go through a rough patch before we get there.

I hope you understand I'm not litigious, I think [lawsuits] are a waste for consumers and businesses, so I'm always looking for a way to work together. Primarily I want to deliver a great product to our customers and create value, and I hope other people and other businesses will see that.

Do you think they will?

Who knows? I think it's 50/50. The thing I feel terrible about is that their stock suffered today. That is absolutely the last thing I thought would ever happen.

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Since your bank knows exactly the credit card ID of the machines at the theater, within two seconds, it makes that credit card work -- but only at those machines, for only about 30 minutes and only for the amount the ticket costs.

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quote: Monte L Fullmer

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the cinema could lose twice:

Missing that revenue percentage at the gate and the possible reduction of conc sales by patrons walking by.

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quote: Martin McCaffery

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As Frank asks above, how are they going to track things. The local AMC changes $3.99 during the day, and $5.99 at night. Then there are the Fathom events where they usually charge $12.50. I've seen specials in the $40 range. What keeps AMC from having a Movie Pass rate?

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It loads the matinee/evening price for a 2D standard movie at the location, not sure how they keep up with it however they have been around for at least 2 years now and i've never seen someone's card get declined at one of my locations. They actually load an extra $1.00 in case there was a price change they missed.

As for what stops AMC from having a movie pass rate is that it is a prepaid mastercard. Per the merchant agreement you cannot charge an additional fee for using a specific mastercard, they would be in violation of that and could lose the ability to take mastercard in the future. Also as the Moviepass CEO said, there's nothing stopping them from making multiple card styles and taking the moviepass name/logo off the card making them indistinguishable from a regular credit card (as of right now they're bright red with a huge logo).
 

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Posted by Justin West (Member # 920) on 08-21-2017, 02:06 AM:
 
A couple issues include: 1) As Netflix (and, later, Redbox) took off, sales of DVDs dropped. The idea of owning a DVD was to have it available to play at your leisure, at your whim. Their value in the eyes of the consumer became limited as Netflix and Redbox exploded. Why do I need a hard-copy when for my monthly subscription, I can stream a copy instantaneously (or rent one 24/7 on the cheap from any kiosk nearby)? The same reaction could be expected with the proliferation of cheap subscriptions to MoviePass! Why pay full-price at the door when for a few clicks on my smart phone, I'll have a ticket waiting for me? Just swipe my MoviePass! Paying MoviePass, not the theatre will be the mindset developed in the public's psyche!
2) Poorer or less than top of the line theatres (I'm especially thinking hardtops, here) will take a hit. If I could watch a movie with stadium seating, top of the line sound and picture, maybe in toney surroundings all for the same flat monthly price as going to the shoestring-budget indie that can't compete on services but makes up for it by otherwise offering a discounted admission price...well, the MoviePass customer won't have that key factor to consider, and so, expect attendance for the lesser, smaller, indie ops to suffer. Maybe I don't offer stadium seating and multiple-channel surround sound but I am also not charging $10.50 a ticket...but the MoviePass customer won't know this, nor would he or should he care!
 

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Posted by Marcel Birgelen (Member # 6801) on 08-21-2017, 07:59 AM:
 
Around here, the price for a regular ticket without any supplements like 3D hovers somewhere between EUR 8 and EUR 11, so it's pretty much comparable to the price of an average ticket in the U.S.

Pathé, part of the French Gaumont Pathé chain and a major player in France and the Netherlands, introduced the concept of an "all-you-can-watch" subscription in the Dutch market a few years ago. They're still actively marketing those subscriptions, and while their offering has been inflation-corrected, the price has essentially been stable. Furthermore, other chains like Vue Cinemas, have adopted essentially the same "flat-fee" subscriptions. So, the model works and people seem to be happy with it.

The basic subscription is EUR 19 a month and offers unlimited access to all shows and a 10% rebate on all concessions. There is a surcharge for supplements like 3D and "IMAX" though. The premium version goes for EUR 26/month and includes all supplements for e.g. 3D and IMAX and offers a 25% rebate on all concessions.

They still have to pay the full price to the studios and RealD and IMAX where applicable off course. So, for the real heavy users, there is no way they still make money on "ticket sales" this way. But since they're getting a bargain on their admission, many of them will spend more on concessions. Also, even with 10 or 25 percent rebate, there will still be sufficient margin left on those. Obviously, they can keep the money of those subscribers, who underutilize their subscriptions.

Initially, I was pretty sceptical about this "all-you-can-eat movie buffet", but we're living in a world were flat-fee is becoming the norm in everything. So, whereas I had my doubts, I now think that a subscription model could become an essential part and maybe even the saving grace for the exhibition industry at large.

Obviously, this MoviePass concept is not going to be that saving grace, it will only amplify a race to the bottom.

Their current proposition is just half of the basic price those subscriptions I mentioned earlier. Also, MoviePass is not a lock-in subscription, as they claim to support practically all movie theaters.

Even if they sell all your personal data to the highest bidder and load their app full of adds, their current model cannot be profitable in the current market. They cannot make a profit, unless they drastically change the market, so it better fits their model.

It's obvious what their plan is. They're currently using investor money to push out a deal to the market that's too good to be true. They're trying to gain a customer base as big as possible, to essentially get a foot in the door.

Once they've reached some kind of critical mass and they assume themselves to be in a leverageable position, you'll see how they'll try to squeeze out both the exhibition industry, the studios and their customers to get some "deals". In the end, they'll get a nice profit margin, without really adding anything to the value chain...

What they're trying to do, is essentially what they did with Netflix. They started to offer monthly subscriptions at a price which was far below the average market price. They could do so, because of big investments from external investors. They undercut practically everybody and essentially forced everybody to partake into their race to the bottom or to be left holding the bag.

The remedy is simple enough, but it requires some kind of common understanding, which is unfortunately something hard to achieve. If all the other parties involved with this scheme simply keep the door shut, it will eventually just go away. Once they sold sufficient souls their semi-freeloader subscriptions, they'll start their negotiation tactics with both Hollywood and the exhibition industry. By then, they'll be pissing out millions and millions of dollars each months, to cover for the free tickets.

If nobody takes their bait, they'll be stuck with a defunct business model and it will be over and out for them rather sooner than later.

Unfortunately, if one of the major chains takes the bait and switch, then I'm afraid we're in for a whole new world of hurt in the long term.
 

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Posted by Jonathan M. Crist (Member # 413) on 08-22-2017, 11:29 AM:
 
One of the primary benefits of the internet has been the elimination of the ‘middle man’ in any number of ways and given transactions. Moviepass has been designed to create a middleman where none existed before nor is such a middleman needed. And when Moviepass reaches a critical mass of frequent moviegoers they will then sell these customers back to the theatres that they took them from in the first place.

Maybe exhibitors deserve what is going to happen with this. With a ‘convenience fee’ for online ticketing of up to two dollars per ticket in some cases….. just having the buyer to show up and not buy online is already slaying a major ca$h cow. Adding insult to injury, some sites charge the fee for each ticket even if you buy multiple tickets at the same time as part of the same transaction. Frankly I have never understood why movie ticket buyers even put up with ‘convenience fees’ in the first place. It is nothing but pure profit and greed on the exhibitors part. Most other businesses reward their customers for lowering their costs by engaging or using online commerce.
 

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Posted by Martin McCaffery (Member # 37) on 08-22-2017, 11:53 AM:
 
Both the Online Ticket Sales and Credit Cards are, in effect, middlemen and have to be paid. Whether the convenience fee overcharges for that service is a different question, but selling online is not pure profit.

I never buy movie tickets online because I rarely go to a movie that is going to be crowded.
 

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Posted by Marcel Birgelen (Member # 6801) on 08-22-2017, 02:10 PM:
 
Large convenience fees are often justified with reserved seating, which is, in many cases, the only way to book a ticket on-line anyway.

In reality though, similar processing fees would apply if you pay with anything other than cash at the box office. Handling large amounts of cash isn't free either though.

Still, on-line bookings allow them to eliminate FTE, so those extra charges for on-line reservations are simply a way to squeeze some extra margin out of your ticket sale, while "cost optimizing" the other side of the operation.
 

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Posted by Mike Spaeth (Member # 524) on 08-22-2017, 02:54 PM:
 
I have a theatre in Fremont, CA that caters to a very specific demographic of customer which was kicked off the system because the incidence of fraud among the customers was out of control. And this was at the $30-something price point.
 

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Posted by Frank Cox (Member # 6258) on 08-22-2017, 03:37 PM:
 
Fraud among the customers?

You're subscribing to this thing and I'm using your card? If it's tied to the subscriber's phone (as described in the article) then it would be pretty inconvenient for you to have to come to the theatre with me or lend me your phone for the evening so the card can be authorized.
 

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Posted by Mike Spaeth (Member # 524) on 08-22-2017, 05:18 PM:
 
Scalping tickets, trying to buy confessions with the tickets on discount day, buying tickets in advance and later trying to refund for cash. Among other things.
 

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Posted by Marcel Birgelen (Member # 6801) on 08-22-2017, 05:54 PM:
 
It's a while back I sold my last confession, I usually only deal in alibis.
 

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Posted by Mike Spaeth (Member # 524) on 08-23-2017, 08:18 AM:
 
Oops...concessions!
 

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Posted by Jonathan M. Crist (Member # 413) on 10-21-2017, 01:26 AM:
 
MoviePass Backer Helios' Shares Off 23% On News Of Strong Netflix Growth 10/18/2017

Helios & Matheson, the big data analytics company that is the largest shareholder in movie ticket subscription service MoviePass, saw its shares drop 13 percent to $18.23 at the close of trading on Tuesday, and an additional 10 percent to a close at $16.23 on Wednesday, on news that streaming video giant Netflix saw better than expected subscriber growth in the past quarter.

The news that Netflix added 5.3 million subscribers in its most recent quarter, compared to previous guidance of 4.4 million, underscored the challenges MoviePass faces as it plays out its David vs. Goliath battle for the attention of movie viewers. Although the two services don’t compete directly with each other, both seek to engage the patronage of entertainment consumers through their respective subscription offerings.

Helios & Matheson has made a big bet on the nascent prospects of MoviePass, by investing $28.5 million, to acquire a 53.7% stake in the movie ticket subscription service, according to its recent 8–K filings. Prior to August, when Helios initiated its investment, MoviePass had a revenue run-rate of under $10 million annually, and a staff of just nine people.

All of that changed on August 15th, when MoviePass announced that it was dropping the price of its movie-ticket-a-day service from as much as $50/month down to $9.95. Consumer reaction was swift, and the company received initial payments from over 400,000 new subscribers in a matter of days.

When MoviePass announced its new numbers the next month, Helios' stock reacted just as swiftly, rocketing by 1400% from $2.50 on September 14 to an all-time high of $38.66 on October 11.

Investors Business Daily suggested that the huge run-up in the Helios share price may have been spurred partly by short sellers being forced into covering their positions. According to shortsqueeze.com, 62% of Helios shares are held by short sellers.

The stock has been in a volatile price and volume pattern over the past few weeks as investors digest the MoviePass economic model and the company's longer-term prospects. Prior to Tuesday's 13 percent decline, Helios had plunged by 45 percent on October 12th, on news that the company had met the financing conditions necessary for it to consummate its investment in MoviePass.

The Netflix news and subsequent pummeling of Helios' stock must come as particularly ironic for MoviePass CEO Mitch Lowe, who earlier in his career had served as a senior, founding executive at Netflix.

The Beginning of the End?
 

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Posted by Justin Hamaker (Member # 2165) on 10-21-2017, 05:34 PM:
 

quote: Jack Ondracek

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Only problem with it was... we didn't think about putting an expiration date on the coupons.

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quote:

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MoviePass seemed like the deal of the century: $10 a month to see one movie a day at the theaters? No contest. But in the three months since the start-up company seeking to disrupt the theater market with a Netflix-like service launched its new business model, MoviePass has been plagued by technical hiccups, backed-up deliveries, and potential lawsuits.

As the company expanded its operations, it finally began to settle into its new subscription base of more than 600,000 users. And now MoviePass is already offering up a new deal: an up-front annual subscription of $89.95, which amounts to about $6.95 a month. But how much of a discount is it really?

The MoviePass annual subscription is a limited-time promotion that will last 12 months, according to the website. Users pay $89.95 up front, plus a $6.55 processing fee. “Once your year is up, your plan will convert back into your $9.95 a month. Offer valid until it’s not. Limit two per household,” the MoviePass website says.

Current subscribers can change to the annual plan for 12 months if they want to, after which the subscription will revert to the $9.95 per month plan. According to the MoviePass FAQ, the annual plan is the only one available to new subscribers, who can’t subscribe to the monthly $9.95 plan until the limited offer expires. However canceling is another issue: ” You may cancel your annual subscription at any time. However, there are no refunds for the remaining unused time on your plan. If you change your mind, you will not be able to set up a new account for nine months,” MoviePass writes. You can, however, change your monthly plan to the annual program if you are already a MoviePass subscriber.

We reached out to MoviePass for confirmation on this promotion, and a representative confirmed to us that the company is launching annual subscription, with more details to follow on November 17.

It seems like an ambitious move for a company that is still trying to complete its overflow orders, with many subscribers still not receiving their MoviePass cards up to three months after their initial orders. The company was inundated with requests after its August announcement of the $9.95 monthly subscription and received a far greater amount of orders that the small start-up anticipated. MoviePass has since expanded operations but is still struggling to complete its orders and live up to its promise of 5 to 7-day delivery.

Signed up for @MoviePass over a month ago. Still have not received anything. Thought it was a good concept, but not sure about follow through. @MoviePass_CS

— Josh Seefried (@JoshSeefried) November 15, 2017

lol at @MoviePass offering this new annual plan when people who subscribed to the monthly plan over 3 months ago still haven’t received their cards. @MoviePass_CS

— Justin Snyder (@Justin__Snyder) November 16, 2017

@MoviePass_CS You sent me this on Sept. 18. That was 59 days ago. Did you mean to say 57 days instead of 5-7? pic.twitter.com/USSHjZsF6u

— kb???? (@gregkb) November 16, 2017

Here’s how the app works: You open your MoviePass-friendly theater’s page on the app displaying the movie showtimes. You select the showtime you want to go to, and the app sends the necessary amount of money into your MoviePass card, which you then use like a credit card at the ticket kiosk or window. However, this simple (but not quite intuitive) process isn’t foolproof: Users have complained that theaters that supposedly accept MoviePass turn subscribers away at the door. E-ticket orders don’t go through to the theater. Users complain about long loading times, or movies incorrectly displayed in the app.

These are part a series of bugs that MoviePass has been struggling to smooth over since the app was first introduced, though the problems are decidedly fewer than when it first launched.

what moviepass said was playing at my local theater vs what is actually playing OMFG pic.twitter.com/OGf4sjcj2S

— monica (@tomhardty) November 16, 2017

It begs the question of what would motivate MoviePass to suddenly announce this plan that would certainly bring the company a brand new, immediate cash flow. It could be because the company is still in the process of expanding operations, recently hiring a vice president for exhibitor relations to head outreach to independent theater chains, who could stand to grow their customer base through MoviePass. The company also announced that it had raised $100 million to fund operations.

Until recently, MoviePass was also being beset upon on all sides by major theater chains like AMC, whose CEO Adam Aron initially predicted the start-up would fail and even threatened legal action. But MoviePass CEO Mitch Lowe assured Variety that “None of the big guys are threatening lawsuits anymore.” Lowe added that the major chains still aren’t offering discounts on tickets or giving a cut on concessions, however, which may explain the new limited-time promotion.

Another possibility: Lowe hinted that MoviePass may make a pass at the increasingly crowded streaming service field, according to the Hollywood Reporter. “It may be at some point we launch a streaming service,” Lowe said Monday on CNBC. No official announcement about a streaming service has been made, but it wouldn’t be unusual, with more companies like Disney announcing their own exclusive platforms.

In the end, MoviePass’ new bid at some quick capital may just be because they’re presumably losing money — offering users tickets at the going rate doesn’t generate the company much revenue.

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quote: Frank Cox

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Or perhaps for generating immediate cash flow in time to hand out executive performance bonuses and then locking the door?

I still don't see where their profit comes from in this thing. How long can they sustain a business model that seems to be predicated on *FLUSH*?

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You don't need to be a genius to figure out their ingenious business plan.

- They're backed by a company that makes their money with "big data", so they'll milk all the data they receive from the customer. They will sell all the data they collect from their users to whoever writes them a check.
- Once they have a sufficient amount of subscribers, they'll pressure both the studios and the exhibitors to give them better deals, because THEY ARE THE FUTURE. Whoever doesn't bend over, will be dropped from their list...

In other words, they are your worst enemy. They're only here to become a new kind of middle man between you and the customer and meanwhile lower the profit margins for anyone involved except them, while not adding anything of real value in the process.
 

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Posted by Manny Montes (Member # 5639) on 11-29-2017, 01:16 AM:
 
There are two problems that no one has been able to explain to me:
1. Data - Sure, moviepass tells it's investors its going to collect and sell data but I see a few issues with that. First off, if you look at reddit and the moviepass subreddit you'll see that people are going to any movie they want since it's effectively "free" after the first one of the month, and it doesn't give accurate viewing habits. Second, every studio and major chain I know of collects this data internally already and i'm sure they have a hell of a bigger sample size than movie pass can (since they only have 600k subscribers max).
2. Making Deals - So this second part is based on movie pass trying to bully their way into concession revenue sharing, discount tickets, etc. I just don't see this happening, the big 3 know that they can simply wait out moviepass and their VC money will dry up, so why would they crack. At the rate MP is running through money they've got less than two years to capitalize on this without more funding behind them.

In short, enjoy moviepass while it lasts, it won't make major changes in the industry in itself, however I do think that we will see some of the big 3 try this subscription model internally (and probably at a higher price point).
 

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Posted by Marcel Birgelen (Member # 6801) on 11-29-2017, 05:15 AM:
 
I guess we can all figure out how this is going to end. But I'm afraid it won't do so, without inflicting some damage to the perception of the value of a ticket.
 

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Posted by Frank B. McLaughlin (Member # 6683) on 11-29-2017, 05:47 AM:
 
. . . and I can remember when I had to have two sets of restrooms in my twin so the patron could not migrate.
 

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Posted by Harold Hallikainen (Member # 5405) on 11-29-2017, 11:00 AM:
 
Patron "migration" is an interesting topic. Is there currently a problem with people watching one movie, then going to another auditorium to see another? I can see that reserved seating could minimize this if the theater is checked for occupied seats that are not supposed to be. Also, staggered start times may help in that the end of one movie puts someone in the middle of the others in other auditoriums either discouraging entry in the middle of the movie or enforced "no late entry."

Is "patron migration" currently an issue?

Harold
 

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Posted by Marcel Birgelen (Member # 6801) on 11-29-2017, 04:10 PM:
 
I guess that in most places, it's really a non issue or at least such a marginal issue not really worth sinking a lot of money into for countermeasures.
 

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Posted by Mitchell Dvoskin (Member # 751) on 11-29-2017, 05:07 PM:
 
Of course, cinemas could crush MoviePass by no longer accepting debit cards. Cash only, and an ATM machine with a fee in the lobby. Wow, if I could use my MoviePass at a theatre's ATM to get direct free cash, I would stop by daily for my free $12/day, and not bother to go to the movies. That would crush MoviePass rather quickly.

And of course, the major circuits could create their own monthly pass.

MoviePass stated business model seem to be based upon markets where there is a lot of competition, since the only pressure they could bring to bear would be for them to eventually make the pass good only at theatres that play ball with them, thereby siphoning off customers from the others. If AMC/REGAL/CARMIKE refuse to go along, that will eventually be the end of MoviePass. Around here in Northern New Jersey, beyond a few independents with questionable presentation, you have a choice of AMC, AMC, and AMC. Other parts of NJ have a choice of REGAL, REGAL, and REGAL.
 

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Posted by Travis Cape (Member # 466) on 11-29-2017, 08:58 PM:
 
I've been using it often. A cashier at an AMC once told me that they wouldn't be taking it much longer, but that was two months ago and they are.

It's rather difficult to use if you're going with other people. You have to be very close to the theater to activate the card. You also have to buy a ticket the day of the show. Many of the better theaters in the area have reserved seating. I use MoviePass when going alone. If I am going with someone, I buy the tickets on-line and avoid MoviePass.

I am well ahead of the program. I went to an AMC yesterday and was asked if I was on their Stubs program. I could have gotten a $5 ticket. I used MoviePass, so they rang up a full price ticket. Oh well, I didn't pay it.

I understand that MoviePass has some information about me, but what value is it? I go to movies a lot to pass the time. It's much more fun to watch movies somewhere I don't work.
 

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Posted by Mitchell Dvoskin (Member # 751) on 11-30-2017, 12:28 PM:
 
I suspect their real business plan is to get a lot of people used to using the pass, and then either raising the price or limiting the number of uses per month, so that they can push themselves into the black. I don't think that will work, but that is the only thing that makes sense. I don't think that selling demographic info and attempting to pressure theatres to profit share is going to raise enough money to offset their current pricing scheme.
 

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Posted by Mike Blakesley (Member # 26) on 11-30-2017, 12:31 PM:
 
Maybe it's kind of like gift cards and rebate coupons... they hope people will buy it, then not use it nearly as often as they think they will. We have quite a few "outstanding" gift cards that I'm sure are sitting at the bottom of a drawer or down behind a bookcase.
 

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Posted by Dave Bird (Member # 490) on 11-30-2017, 12:50 PM:
 
I've always been interested in at least thinking about how a "frequent customer" deal could be done. Many businesses, even airlines and sports teams now see the value in volume, but I just keep coming back to the answer I give customers when they ask for group discounts. No way to justify it when being charged a set percentage. More visits, more dollars at a slightly lower average margin makes sense to me, but....
 

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Posted by Harold Hallikainen (Member # 5405) on 11-30-2017, 02:26 PM:
 
I think an early payment for a quantity of tickets could be profitable. A couple friends own a theater that sells a pass good for a bunch of admissions at a discounted price. The theater benefits in a few ways. They get the money now instead of later, so there's a "future value of money" advantage. A certain number of passes will be lost or otherwise never used, so you get to keep that money. The "bird in hand worth two in the bush" situation where you have less risk that tickets will not be sold since you've already sold them. The "Costco Effect" where people will tend to choose your theater over another because they have already invested in it.

Harold
 

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Posted by Justin Hamaker (Member # 2165) on 11-30-2017, 04:39 PM:
 

quote: Harold Hallikainen

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Is "patron migration" currently an issue?

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quote: Justin Hamaker

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First, you still have to pay full film rental on those tickets. By discounting you are counting on tickets not being redeemed to hold down the per capita admission prices; otherwise you wind up paying a higher film percentage.

Second, if you have a price increase you don't receive the bump for those tickets. I don't know the laws on whether prepaid tickets can expire, but this could be a major issue if they do not.

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quote: Dave Bird

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We bought a whack of gift cards and our system handles them, we can reload them, put up signage and offered them for two years. Not a single person bought one. Shocked me actually.

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quote: Jonathan M. Crist

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The standard multiplex at the suburban mall

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quote:

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UPDATED: MoviePass is offering a limited-time subscription that will allow users to pay $6.95 a month to watch a movie a day for a year. The service typically costs $9.95 a month, but the new deal comes with a catch. Users have to commit to a 12-month subscription.

“We did a soft launch yesterday,” MoviePass CEO Mitch Lowe told Variety. “We’re discovering there’s much more interest and demand than we ever imagined. We keep hearing from customers that they want an annual plan or they wanted some way to give MoviePass as a gift.”

MoviePass is trying to become the Netflix of cinema-going, but right now it seems to be more focused on building a customer base than turning a profit. The company pays theaters the full price for a ticket, so it is in essence subsidizing its users’ movie-going and losing money each time they check out a film. The average movie ticket cost $8.60 through the first three quarters of 2017. In some major cities, such as Los Angeles and New York, it sets customers back more than $10. MoviePass said its one-year subscription plan will be available only for a limited time.

Some theater owners have been unhappy with the service. AMC, the country’s largest chain, threatened legal action and predicted the company would fail. There is anxiety that customers will get accustomed to paying a discounted rate for tickets, which will depress prices, like bargain movie rental services such as Redbox and Netflix made Blockbuster and its hefty late fees obsolete.

Last August, MoviePass sold to Helios and Matheson Analytics, a publicly traded data firm. As part of the deal, it slashed its monthly pricing from as much as $50 a month to less than $10. In the process, its subscriber rolls swelled. When it sold, the company has roughly 20,000 subscribers. Now it has north of 600,000. Recently, MoviePass announced it had raised $100 million to fund operations. Even though MoviePass is operating in the red, the company believes that it will be able to monetize the data it collects on its customers or that it will drive so much foot traffic to theaters that they will give them some kind of discount.

“There are a lot of ways to make a buck,” Lowe said. “There’s advertising revenue. There’s marketing revenue. We’ll start testing these things with potential partners in the coming months. We’ve proven that we can build a big base of loyal subscribers.”

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Linky Story
 

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Posted by Dave Bird (Member # 490) on 12-09-2017, 12:56 PM:
 
It's like a "consumption Ponzi", as long as new members sign up, you fund the losses. Why stop at movies then? Why not offer anything anybody goes out to do for $6.95/month? Then the scheme would last longer.
 

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Posted by Harold Hallikainen (Member # 5405) on 12-09-2017, 01:22 PM:
 
The Ponzi analogy is interesting.

We keep seeing comparisons to Netflix. Streaming with a fixed subscription price is interesting. I wonder what the studio licensing is. I suspect they MAY either pay an annual license fee for each title they are allowed to stream, or MAY pay a per stream fee on each title. The latter would allow them to have a larger library since they would not pay a lot for stuff that does not have a lot of demand. They could possibly have every movie ever made and just pay when someone streams it. This would be a bit similar to Movie Pass, but I suspect the stream license fee per use would be substantially less than Netflix's monthly fee (as compared to Movie Pass where the "licence" (ticket) for just one use is more than the monthly fee).

The Netflix DVD service is an interesting contrast (the same as video rental stores) in that they pay a one time fee and can continue to use the DVD forever (or until it wears out or breaks). The number of movies someone watches in a month (and Netflix's per use costs such as postage, DVD picking and return) is limited by the turnaround time on DVD return and shipping the next one.

Amazon's stream rental is another interesting approach. Again, I don't know what the studio license is, but it COULD be a free license with a share of the rental fees. This would allow them to make available every movie ever made without having to pay license fees that exceed rental income.

Back to Ponzi... for it to work, current users have to be paid for by new users. But, it appears that they lose money on the new user in the first month, so the new user can't really fund existing users. It appears investors are funding users, but they will eventually want their money back. Everyone seems to assume that advertising can be used to pay for anything. But it seems that advertising has become so plentiful that the value of any individual ad exposure has an extremely low value. There's only so much money available to be spent on advertising, and it's being spread thinner and thinner. The sale of personal data is also supposed to fund businesses. Generally, I think, personal data is promoted as allowing for targeted advertising. Even that is becoming so common that its value is dropping.

So, the different business models are interesting (especially Netflix and Amazon). But I don't see a profitable business model for Movie Pass, so we'll see how long it lasts.

Harold
 

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Posted by Marcel Birgelen (Member # 6801) on 12-09-2017, 06:49 PM:
 
I'm sure in their Excel sheet in their big business plan it all works out wonderfully.

Also, you don't need to have a valid business plan to attract investors... just look at Twitter. Heck, you don't need to have a valid business plan to do an IPO (again, look at Twitter). Double or triple heck, something doesn't even need to have any real-world collateral at all to have "value"... look at Bitcoin.

The only way this thing can ever be profitable, is if they can buy shows at $4 a pop or less and that's what they'll start pushing for. It's essentially what happened with Netflix. Mind you, some of the same guys are behind this. With Netflix, they tricked the Hollywood guys to give them their holy grail for cents on the dollar, just because they were shitting their pants. They were losing the rental and "boxed medium" markets at breakneck's pace and were too incompetent to come up with something workable themselves.

Here they clearly hope one of the big chains will break and give them their deal, which will automatically mean they'll have at least a foot between the door at the others. They obviously know AMC is in dire straits and they will probably try to work their way in and convince some execs about this bold new business model:

"You're not filling those seats now, so what are you doing? You're putting in good money for expensive refurbs so you can sell at premium rates, yet that's still no guarantee you'll get those butts in those seats. What if we've got THE solution for you... We'll easily double your attendance, whatever you'll lose on the tickets, you'll earn back double on the concessions you sell!"

That's the pitch they're going to give, in the hope someone breaks.

In the meantime they sell their investors the bullshit picture they can easily fill the gaping holes in their P&L with big time profits from advertising and big data magic. So, after a few months, the whole corporate world doesn't only know John Sharp likes Twinkies and Ding Dongs, but also likes to watch cheesy action movies with his friends and romantic love stories, but only alone and on Thursday.
 

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