If MoviePass sounded too good to be true when it offered unlimited movie tickets for $50 per month back in 2011, it really sounded dodgy when the service announced on Tuesday that it had lowered its price to $9.99.
“MoviePass will be losing money on every subscriber seeing two movies or more in a month.”
“While AMC is not opposed to subscription programs generally, the one envisioned by MoviePass is not one AMC can embrace,” the theater chain said. “We are actively working now to determine whether it may be feasible to opt out and not participate in this shaky and unsustainable program.”
About that “shaky and unsustainable” part they’re not … wrong?
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For $9.99 per month, MoviePass subscribers are allowed to go to any theater or showtime listed on its app, a maximum of once per day. That’s a potential 30+ monthly movies for less than the price of a single ticket. Notice I didn’t say “participating theaters” — because these exhibition chains have been fighting MoviePass from the start.
So MoviePass found a workaround.
A handful of years ago, the service partnered with a major credit card company to purchase tickets on behalf of MoviePass subscribers. So every time a member would choose a showtime, the third-party credit card paid full price for the seat to the movie theater, which was none the wiser.
And if that seems like a terrible business model — reselling multiple $10-plus tickets per month to people paying back just $9.99 — well, congratulations, you’re proficient at basic math. And so is AMC.
“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,” the chain said in its sharp-tongued statement.
It’s not clear just exactly how AMC plans to stop MoviePass from buying tickets on behalf of its customers, since it has no way of knowing who’s a subscriber and who’s not. If they can get a court to agree that there’s something hinky going on here, then maybe MoviePass will abide.
Less clear: How MoviePass plans to make a business out of this model. Initially they had hoped that under-use across the board would make up those margins, but that was at a higher price point. At $9.99, most city-dwellers only need to use it once to put the service in the red for that month.
What’s more, the exhibition industry is already standing on the precipice of a streaming cliff; if consumers get it in their heads that $9.99 per month is the price point, will they be willing later to pay $15 for a single ticket later? This business already has enough problems looming, the likes of which I predict will capsize it within a decade.
For now, MoviePass holders, go ahead and take your fancy new subscription to the AMC theater near you. Just know that up in the C-suite, you’re technically not welcome there.
Article posted came courtesy of Mashable