However, what studios and theater chains are more open-minded to is the idea of a monthly movie ticket subscription service for the latter’s patrons.
They just don’t want any third-party players butting in on their turf.
“Whatever MoviePass is doing, can be accomplished without them,” declares a big chain executive.
At the same time, the industry can thank MoviePass for changing the way they think. For quite some time, studios have been trying to figure out a way to attract more millennials to the box office in a mobile-streaming era, and the key to unlocking this demographic may lie in more theater chains offering monthly movie ticket subscription programs whereby a one-price-fits-all monthly cost yields several visits a month to the multiplex.
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Unlike last year’s conversation about premium video-on-demand, a plan rebuked by exhibition but championed by the majors (except Disney) to bring movies into the home shortly after theatrical release, both sides are more open-minded when it comes to hammering a monthly movie ticket plan.
PVOD brought plenty of baggage with it, chiefly that such a plan would capsize what has been a lucrative box office business with the last three years annually grossing $11 billion-plus. There was also a debate over whether to cut exhibition in on PVOD revenues (for any of their losses at the box office), and if so, how to divvy up such monies. At the start of the year, leading exhibitor AMC said the convo for PVOD was dead.
But when it comes to the idea of a monthly movie ticket plan, there’s arguably fewer irritable terms to work out between studios and theater chains. Our sources say that by having a third party between the two would force each side to give up a portion of their box office returns.
The movie business in the 1980s and 1990s was built on the backs of the under 25 demo, however in the millennium they’ve only shown to come out in numbers for event films. A monthly subscription ticket service offered by an exhibitor would hopefully change this, and cater to the demographic’s price sensitive needs. In addition, movie theaters could feasibly offer 3D or PLF tickets in their subscription plans, options which MoviePass has yet to enable on their mobile app, and extras which young moviegoers shell out for when they watch Marvel superhero movies and Star Wars films. “This precludes MoviePass as being a ticket service for big night movies,” says one exhibition insider.
“Millennials love to plan what they want to do,” adds the same source regarding MoviePass’ limitation to sell tickets within minutes and yards of a movie theater, “Millennials want to do an activity when they want to do it, not to it when someone tells them they have to do it.”
So what is the appropriate subscription price point and ticket allotment monthly that makes exhibition and studios content? Those distribution executives in the know won’t spill the beans, because they don’t want a third party like MoviePass emulating their Coca-Cola business formula.
Cineworld has a subscription program called Unlimited for its 106 UK cinemas whereby moviegoers pay $25/a month (or $300 a year) to see any movie any time, as many times as they like, 10% off snacks and drinks, and invites to exclusive screenings. This excludes Imax, 3D upgrades. It’s a decade old program that the chain claims has spiked admissions. “I think when one talks about subscription programs, the first rule is that it should be directed to cinema lovers, to people who really want to go a lot to the cinema and you cannot do it for $10,” Cineworld boss Moshe “Mooky” Greidinger said in a recent interview with Deadline. In regards to margins on a subscription program, Greidinger told us, “It’s not an issue of the margin, it changes because we need of course to settle with the distributor. It depends, there will be customers who one month will come to us once and
another month will come six times.”
Cinemark introduced their own monthly movie ticket club for $8.99/a month late last year, but many consider it to be a heightened loyalty club with one 2D ticket a month, and several discounts. Word is that they have received a number of memberships and will reveal that data on their next earnings call.
If a theater chain is going to offer unlimited movie tickets a month (or 1 a day), one distribution insider says “you have to charge more than the $9.95 a month that MoviePass is charging.” In the recent 10-K filed by MoviePass’ parent Helios and Matheson, the independent auditor raised concerns: ““MoviePass currently spends more to retain a subscriber than the revenue derived from that subscriber and MoviePass’ other sources of revenue are currently inadequate to offset or exceed the costs of subscriber retention.”
However in testing different subscription plans, MoviePass recently put a pause on their unlimited subscription plan and are currently offering four tickets a month for the price of $9.95 which includes access to iHeart Radio’s digital streaming service. “Now, that’s a plan that could economically work,” says one major studio distribution chief.
The biggest sticking point that studios want from exhibition before they commit to their idea of a monthly subscription plan is whether or not it increases attendance at their theaters, and so far studio executives argue they haven’t seen real proof of that stateside. MoviePass has argued that they’ve spiked admissions at big city theaters, but distribution counters that the service has just shifted the share of regular moviegoers over to MoviePass, not increased actual attendance.
AMC Theatres reportedly shopped their own version of a subscription service to the studios last fall, one which they declined. Distribution insiders said that the business plan entailed the studios to shave dollars off their share of the B.O. equation. If there’s a better plan out there, it would be one where the studios and exhibition compromise on a box office share that’s based off the incremental increase in attendance versus a share of a ticket price.
In addition such a plan may only apply and be helpful to those distributors of indie or non-event films. “People are going to see Avengers: Infinity War, Deadpool 2 and Jurassic World 2 this summer whether they have a subscription plan or not, so I don’t see where a subscription plan spikes attendance,” refutes another studio distribution suit.
Despite the industry’s dinging of MoviePass as a third party outsider, they realize that if the company ever goes out of business, it will leave consumers with a notion that the real price of movie tickets is a flat fee paid every month, and it’s for that reason why exhibitors and distributors are open to having discussions. Nonetheless, MoviePass is relentless about finding a seat at the table, and they believe that if they stick around long enough and control enough of the ticket supply, that studios will have but no choice to respect them. Distribution executives say that at 25M subscribers, MoviePass is a serious profitable force, while the ticket service’s executives defend that figure is really 5M. Industry folks slam MoviePass for not having a stake in how the movies are made or marketing them, but the subscription ticket club is looking to take a financial stake in independent movies so as to drive traffic toward them with promos on their apps.
Recently, Helios and Matheson CEO and Chairman Ted Farnsworth told Deadline at the MoviePass Tribeca party that his service “controlled 26% of Warner Bros./Village Roadshow’s Ready Player One‘s Wednesday opening night box office” a number which equates to approximately $3.1M of its $11.9M first day sales. That’s a serious number which studios can’t prove on their side, and that their exhibition counterparts are telling them is actually smaller.
“It’s so interesting, after you come up with an idea that’s the best thing that happened to the industry, their response is ‘don’t’ save it!’ because it wasn’t made by them. What we’re essentially doing is what everyone thought of way before us,” MoviePass CEO Mitch Lowe told Deadline recently.
MoviePass has succeeded in boarding a number of indie chains, and high-end exhibitors like Landmark and Studio Movie Grill.
However, studios and big theaters are adamant about keeping their business affairs among themselves, and nobody else.
Says another major studio distribution suit, “If exhibitors take another pass at subscription plan with the studios, it will be with a better conceived model than last time.”
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