AMC Boss Adam Aron On Economics Of $20/Month Movie Ticket Service: “Our Program Will Be Profitable While Others Struggle To Be Profitable”

AMC CEO Adam Aron knows that his theater chain’s new $19.95 monthly movie ticket subscription service Stubs A-List is double the price of MoviePass and that’s because he’s aiming to make the program “beneficial” for “all involved.” A good deal for consumers, and one which hopefully won’t rob distribution, studios and exhibition partners like RealD and Imax with a flat-across-the-board price structure.

A higher price is necessary a month, so as not to hemorrhage cash from AMC, a plight Helios & Matheson’s MoviePass is facing as its stock trades at a low $0.32. Not to mention, there are added perks in AMC’s subscription program that MoviePass has been slowed to adapt. Aron also mentioned that those members who sign up now for the June 26 launch of the A-List program will have a guaranteed lock on the monthly rate for the next year. The price of this monthly membership program can fluctuate up or down depending on the marketplace.

“Our program will be profitable while others struggle to be profitable,” said Aron without specifically naming MoviePass.

Aron forecast that for every 1 million A-List subscribers, AMC will generate a run rate of incremental EBIDTA of $15M-$25M per annum. This assume a steady average visit per A-List member of  2.5 visits a month. If their visits drop to 2.25, then incremental EBIDTA could spike by another $10M.

That said, the ramp up of the rewards program will bound to gain traction financially over a few quarters, and there’s bound to be a net $5M-$10M net cost in ticket revenues over the next six months for the world’s largest exhibitor. But if there’s a time to lose such money, it’s now says Aron with the domestic box office at $5.5 billion running 6% ahead of last year’s. “AMC is on fire right now, and that fire is roaring hot,” beamed Aron to analysts. Aron mentioned that AMC has set aside a $5M war chest to digitally market A-List and to target rival exhibitors’ rewards members as well as encouraging the current AMC rewards population to upgrade.

Aron has faith in the economics of his new A list program as his German and UK cinemas already have their own monthly ticket sub programs, which is how he hammered out the numbers on this. Plus, he has experience in spiking attendance with season passes at ski resorts when he was at in the travel business, plus as the co-owner of the 76ers.

In regards to how AMC’s new A-List program impacts its studio and exhibition partners, Deadline hears right now that the theater chain is leaving the upside to them, and guaranteeing any downside so that money isn’t lost.

Overall, Aron sees A-List as a means to spike attendance among millennials, who’ve fallen off in their movie attendance, relegating their visits strictly to Marvel and big event pictures, and who are attracted by low cost monthly subscription all-you-can-eat incentives like Netflix.

Aron said that the Stubs rewards program is a huge success swelling its membership from 2.5M households two years ago to nearly 15M currently.

Following AMC’s analyst call this morning, Deadline spoke with Imax CEO Richard L. Gelfond, “If you look at it, the number of blockbusters are going up, and the mid-level movies are either static or down. AMC has seen this trend and they’ve designed a plan that will incentivize people by letting them see the movies they want in Imax.” Not only will this build customer loyalty, but leverage their consumers to see more movies a year.

“They’re also selling popcorn and candy which is a high margin business they’ve cultivated and that’s going to contribute to the bottom line,” says Gelfond.

He further adds, “A lot of the exhibitors have been downsizing their capacity by putting in recliner like seats, but we’re in the blockbuster business and we have a lot of capacity and we’re looking to benefit from the increased demand.”