AMC Theaters, the U.S.'s largest cinema chain, quickly responded by announcing that it was going to pursue legal action against MoviePass. For sure MoviePass currently loses money but its scheme is that over time movie exhibitors and the studios will recognize their value and cut them in on increased profits, principally for higher concession sales. However, one of the big stumbling blocks is that most cinemas (large or small) have their own loyalty programs and prefer to enhance these.
According to Mitch Lowe, CEO of MoviePass, "we can increase attendance on average by 111%, increasing, not only admissions, but much higher concession sales." Currently, MoviePass purchases movie tickets and re-sells the tickets to its subscribers at a much reduced rate - losing money on each transaction. But Lowe predicts that, in "the future they will cut the company in on their additional profits. We know we have to prove the value we deliver and we should be able to work together in a constructive manner so that everybody makes more money." WOW.
Well, where should I start? MoviePass may be a great idea but its implementation is unsustainable. For early subscribers it is a great deal, but how long can it last? Unless MoviePass can get the big chains on board, it's a doomed concept, and at the moment, it looks as though exhibitors are not embracing the strategy. Overhauling the cinema admission business is quite simple - produce and distribute movies that consumers want to go to the cinema to view. It's not as if the folks will go to the cinema more because of a cheap admission to films they don't want to see anyway.
CMG believes MoviePass is missing the motivation of moviegoers - it's not all about price but product.
Jim Lavorato
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