by Chris Dyer
August 17, 2018
MoviePass, a subscription-based service originally designed to allow subscribers to view unlimited movies in theaters nationwide for a single monthly rate of $9.95, sounds too good to be true. Maybe it is?
Before MoviePass, no company had ever tried to launch a service in which a subscriber pays a flat rate and is able to visit unlimited movie theaters to see unlimited movies each month. A user selects a showtime at a theater within a certain geographic vicinity and checks in on the MoviePass app using a smartphone, which then loads credit onto a special branded debit card used specifically for purchasing tickets at full price – at the company’s expense. The hope was that with enough subscribers and users of the service, theaters would be pressured to play nice with MoviePass, given that a theoretical majority of moviegoers would be utilizing the service.
While it’s tempting to make the comparison to health insurance – the service might attract plenty of subscribers who pay the monthly fee but don’t actually go see a movie, thereby subsidizing those that do and providing profit for the company – it should not be surprising that healthcare and recreation have different consumer spending dynamics. MoviePass attracts frequent moviegoers. With theaters often charging over $12 per screening, it’s easy to see how a $10 per month, all-you-can-eat policy might not be sustainable.
The company launched a beta version of its app in 2012, with monthly pricing ranging from $29 to $34, before eventually pressuring AMC into a partnership at the end of 2014. By 2017, that relationship dissolved. MoviePass lowered prices to $9.95 per month – a move AMC recognized early on as a poor choice for the business. Lowering the price drove floods of new subscribers to the company’s website, crashing it in the process. AMC grew concerned, and began refusing to accept MoviePass cards at their box offices.
Taking it one step further, AMC announced their own competing program – more aligned with the original AMC-MoviePass partnership pricing – while MoviePass began experiencing significant financial difficulty due to an unsustainable business model. In a desperate attempt to survive, the company has limited moviegoers to three films per month, but further limits film choices and showtimes to less desirable options. Current subscribers have faced limited choices, errors in the app – which some accuse as being deliberate attempts by the company to curtail usage – and changes to their subscription plan.
AMC’s own program appears to be performing well. Could such programs be the future of theaters? One thing is for certain: MoviePass succeeded in shaking up the box office. Will its business model be remembered as innovative, reckless, game-changing, or forgotten? Will the company miraculously survive? Time will tell.
Don’t worry, we have you covered! For additional information and analysis of US industry trends, see Recreation: United States, a report published by the Freedonia Focus Reports division of The Freedonia Group. This report forecasts to 2020 US personal consumption expenditures on recreation services in nominal US dollars. Total spending is segmented by service in terms of:
To illustrate historical trends, total PCE and the various segments are provided in annual series from 2005 to 2015.
Expenditures include services financed by third parties (eg, business group visits) as well as services provided without a financial intermediary. Spending on other services – such as accommodation, dining, and shopping – offered by a recreation service provider is excluded from the scope of this report.
While you’re there, check out some of our related reports, which include:
Chris Dyer is a Market Research Analyst for Freedonia Focus Reports. He holds a Master of Arts in Security Studies, and his experience as an analyst covers multiple industries.
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