EXCLUSIVE: Two years ago when Disney’s Star Wars: The Force Awakens was in play, the Lucasfilm title spurred the overall domestic theatrical marketplace to a massive $1.33 billion over a three-week frame (Dec. 18-Jan. 7). Last Christmas’ Rogue One: A Star Wars Story was just as strong, leading all films to make $1.1 billion over a similar period.
So, how is MoviePass — a subscription service that for a new lowered monthly price of $7.50 a month allows its subscribers to attend the cinema an unlimited number of times — going to survive the mad rush at the holiday box office?
Disney’s Episode VIII, Star Wars: The Last Jedi, is projected by industry insiders to open to $200M-plus, potentially becoming the second or third best opening ever at the domestic box office. Then there’s other big titles in the mix such as Sony’s Jumanji: Welcome to the Jungle and 20th Century Fox’s original period musical The Greatest Showman starring Hugh Jackman. MoviePass currently counts 600K subscribers and climbing. How can a service which charges a monthly fee that’s lower than the current average ticket price of $8.93, going to sustain so much traffic at the B.O.? While a MoviePass subscriber only pays their monthly flat fee, each time they go to the movies, MoviePass funds the MasterCard debit card provided to their subscribers with the individual movie ticket price amount. Clearly, on a per unit basis, MoviePass is operating at a loss should their subscribers attend the movies more than once.
MoviePass CEO Mitch Lowe isn’t wincing about the anticipated stampede, in fact he expected it given the seasonal nature of the theatrical business.
“We’re funded properly to pay for that,” says Lowe about the upcoming holiday box office period.
One potential reason why? Last month MoviePass majority stakeholder Helios announced that the company had secured a $100 million convertible debt commitment from institutional investors for the purpose of further funding MoviePass.
In addition, most advance ticket sales for the last two Star Wars movies are for opening weekend showtimes and Christmas day. However, when it comes to MoviePass holders, Lowe says, “Our subscribers don’t attend during the busy weekend, but during the midweek.”
Lowe also adds that “subscribers will go to see Star Wars and the big pictures, but they get to see the smaller films too that typically gross under $30M.”
“It’s a low risk way to see films,” said Lowe about pulling MoviePass members into indie films, “Seventy five percent of our subscribers attend movies that they wouldn’t normally go to if it wasn’t for MoviePass.”
Film distributors are divided about MoviePass. On one hand, they’re agnostic: they’re still collecting their film rental on each moviegoer. On the second hand, they along with exhibition, don’t like the fact that an outside company such as MoviePass (a majority of which is owned by Helios and Matheson Analytics Inc) is dictating a marketplace price to consumers. The fear is that consumers will fall in love with the idea of only paying $7.50 to $9.95 a month (the latter the regular monthly MoviePass price) for an unlimited number of visits. Note, one of the hurdles for MoviePass right now is that it only works for an individual ticket buyer; one can’t buy multiple tickets for say a family. AMC Theatres reportedly shopped around their idea of a flat monthly unlimited movie ticket program to the majors, but was met with a cold response. Why? In that case, it impacts the amount of money a studio would earn per admission. Right now, there’s not risk with MoviePass.
Some exhibitors, like AMC, aren’t wild about MoviePass either for determining the market value of movie tickets. But there’s hardly anything they can do about MoviePass in regards to boxing them out. How is that? Well, MoviePass members carry a specific MasterCard Debit Card (see above) which is funded with the price of their ticket after they purchase it on the MoviePass app, 100 yards within the cinema. As along as a theater accepts the MasterCard Debit Card, MoviePass is as good as gold.
“I’m buying millions and millions of movie tickets every week; exhibitors should be thrilled and happy about it because now the money that MoviePass consumers aren’t spending isn’t for tickets, they’re spending 123% more on concessions. Exhibition should be doubly thrilled.”
In regards to that whole notion that MoviePass is only intended for loners at the multiplex, Lowe also served up other stats this morning, specifically 40% of MoviePass subscribers attended with a friend who aren’t a MoviePass member. Overall, 60% of MoviePass members over the last four months recommended the service and they’re “dragging their friends along” says Lowe.
The key to MoviePass’ short-term profit lies in selling its marketing data related to its subscribers and by partnering with studios and other parties that require the attention of consistent moviegoers.
One cautiously optimistic distribution boss said this morning that if MoviePass “improves attendance, I’m all in. If 30% of all admissions go through MoviePass, that’s huge. Ultimately studios will have to partner with them. It gives a studio a direct access to moviegoers, and that becomes a pretty good marketing platform. Right now, they’re trying to raise awareness among a critical mass. I give them a 50/50 shot that they survive.”
Lowe also mentioned on his call with Deadline that it was “still early” to get into specifics about MoviePass’ anticipated streaming service which he spoke about on CNBC earlier this week.
As of 3:04PM EST, MoviePass’ majority shareholder Helios and Matheson Analytics, Inc. was trading at $12.95, +4.28% from closing yesterday.