The True Price of MoviePass and Who Really Pays
The recent announcements of theater chain partnerships with their technology savior MoviePass are not the saccharine, perfume soaked wedding invitations that they appear to be. Make no mistake, it’s a shotgun wedding and exhibitor hands are tied.
One of those theater’s is The Landmark on West Pico Boulevard. The Landmark has well maintained facilities, bright projector bulbs, and an eclectic selection of independent releases. They care about the movie going experience at The Landmark. I took a trip there to watch The Phantom Thread in 70mm and they had some of the award winning costumes on display in the lobby. For a long time, the Landmark has been a renegade holdout from MoviePass services. They offered a superior experience to the run-of-the-mill multiplex theater and, thus, had to price a little higher to ensure that quality. MoviePass refused to negotiate at that price point and The Landmark refused to compromise on their quality. So why the sudden change of heart by The Landmark?
The premise for MoviePass barely makes sense. They are a subscription-based movie payment service that subsidizes the full price of their customer’s ticket. They have recently offered packages for their service which drops their already bizarrely low monthly price of $9.95 to a laughable $6.95 a month. $6.95 a month to watch a movie a day. Not $6.95 a movie, $6.95 for a possible 28–31 movies.
All this at a time when the average price of a movie ticket in the U.S. has risen to $8.97. Forget 30 trips to the theater, you get more than your money’s worth after one use.
In January of this year the service had around 1.5 million subscribers and by February it topped the 2 million mark. People have taken notice of this seemingly irrational business proposition and responded by returning to theaters in droves. Just as important, MoviePass has had a marked effect on audience consuming patterns. Not only are people going to the big blockbuster films that have always garnered attention, now audiences are more likely to splurge on smaller independent films. During this year’s award season MoviePass claims to have purchased a significant 10% of the box office for award favorites that include: The Post, Three Billboards Outside of Ebbing, Missouri, Call Me By Your Name, and The Shape of Water.
From the outside looking in movie theaters and MoviePass look like the perfect couple. The theaters are seeing blockbuster and indie attendance rise and these audiences are freed up to spend more on concessions than usual. From the consumer perspective, it’s a proposition that is too good to be true. So why are exhibitors weary of their prince in shining armor?
MoviePass has forcibly imposed a shift in the dogma, a fundamental realigning of consumer expectations. The commodity price of a movie ticket has now dropped to an inconceivably low figure. Suddenly the days of an average customer being alright with consistently paying for a $13.00 movie ticket are gone forever. And while MoviePass is content to cover that now, one has to wonder for how long? With every new consumer joining the service, more leverage begins to tip towards MoviePass in their negotiations with the theaters. They can point to the statistical increases in attendance provided by their service and the utility they provide in ensuring strong box offices and extended theatrical windows.
And what if the theaters don’t submit to new demands? MoviePass will shrug and withdraw its services.
If that sounds dramatic, it’s not, MoviePass has already experimented with this maneuver. AMC theaters have long been vocal on their stance with MoviePass. They are happy to benefit from their service but see further negotiations as a slippery slope. In November, AMC CEO Adam Aron said on an earnings call that “AMC has absolutely no intention, I repeat no intention, of sharing any — I repeat, any — of our admissions revenue or our concessions revenue with MoviePass.”
In response MoviePass removed their services from 10 high-traffic AMC theaters in New York, Boston, San Diego, Washington D.C. and Los Angeles. They claimed this was a test of their consumers’ ticket-buying habits. Consumers responded by showing no allegiance to AMC, aMoviePass source claims “AMC competitors in those five markets saw a ‘23% spike’ in overall business.” MoviePass added the AMC theaters back in April but their message was loud and clear, challenge at your own risk.
MoviePass has created a world in which consumers expect to pay essentially nothing for a movie. MoviePass is pulling off an aggressive takeover, when they go to the negotiation table they come with the audiences in their pocket. Theater’s have little in the way of protection, it remains to be seen what MoviePass will do with this new, unchecked, authority.
As for The Landmark, it’s partnership was the beginning of the end. Less than two weeks after the MoviePass announcement the chain’s parent company has announced the art house movie theater group has been placed on the auction block to explore a possible sale. The Landmark couldn’t survive in an ecosystem that devalued the movie going experience so drastically. Let this be a warning for consumers and exhibitors alike. MoviePass seems too good to be true right now, but every action has consequences. Sometimes there is an unintentional payment that doesn’t take the form of currency.