Not so fast, MoviePass: AMC Theatres, the world’s largest exhibition company, says that it’s talking to lawyers to see if it can block ticket sales to users of the service that enables subscribers to see a movie a day.
The announcement follows MoviePass’ disclosure today that it sold itself to a data firm and reduced the base price of its consumer service to $9.95 a month from $14.95. MoviePass pays the full ticket price for its subscribers to see one movie a day on a conventional 2D screen — not 3D or Imax.
“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,” AMC says in a statement.
It adds that “it is not yet known how to turn lead into gold. AMC believes that holding out to consumers that first run movies can be watched in theatres at great quantities for a monthly price of $9.95 isn’t doing moviegoers any favors. 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.”
Indeed, AMC says, the price “over time will not provide sufficient revenue to operate quality theatres nor will it produce enough income to provide film makers with sufficient incentive to make great new movies.”
The chain says that it doesn’t object to the concept of movie subscriptions: But the one from 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.”
AMC and Landmark opposed the MoviePass concept when it was introduced in 2011. The subscription firm still was able to do business by offering subscribers debit cards that it says are accepted at 91% of U.S. theaters.
Data firm Helios and Matheson Analytics agreed to pay $27 million for a 51% stake in MoviePass. The service, which had about 20,000 subscribers in December, aims to enlist at least 100,000 with its lower price — and new publicity.
The deal also calls for MoviePass to go public by the end of January 2018.
AMC has reason to be skittish. Its market value plummeted 35% so far this month following a worse-than-expected Q2 earnings report. Many investors also fear that Hollywood studios will introduce premium video on demand — offering new releases to home viewers in the 90-day period when theaters usually have them exclusively.
Other theater chains have also fallen from favor, and were down again today. Stock prices for AMC, Imax, Regal Entertainment, and Cinemark each touched a 52-week low.
B. Riley analyst Eric Wold said some investors “could be misinterpreting” MoviePass’s announcement thinking that it would be “a negative for box office and exhibitor profitability if it takes hold with consumers.”
In his view, it would help since “exhibitors get full price for their tickets and the studios get their usual film rent splits” — and higher attendance should also improve pop corn sales.