Could a flat rate bring audiences back into movie theaters?
As subscription services like Netflix, HBO and others increasingly dominate how we watch television, a new battle is taking place in the United States for control of movie theaters.
In August 2017, after six years of ups and downs, MoviePass, subscription-based movie ticketing service, launched a product that seemed too good to be true: go to the cinema once a day for $9.95 a month. The offer attracted a lot of attention and by more than two million people had signed up by February 2018. Sadly, MoviePass was too good to be true, and after mounting up huge losses and generating doubts about the company’s viability, the deal was withdrawn in April 2018, with the company’s CEO, Mitch Lowe, doubting the model could be revived.
Earlier in the same month, the company bought from Oath a service called Moviefone, a trailer, film information and ticket sales system operated on Fandango, and believes it can turn into a recommendation service for movie lovers.
On May 2, MoviePass decided to revive its one-move-per-day plan, albeit with a few restrictions, such as not being able to watch the same movie twice. A few days later, Sinemia, a similar service but only available in a few markets and designed for those who saw the MoviePass offer as “too much to view”, was launched throughout the United States: $4.99 for one movie a month, $6.99 for two, $9.99 for 3D and IMAX movies in 3D and $ 14.99 for three movies per month at any theater.
Clearly, big changes are afoot in US movie theaters. Services such as MoviePass are growing, which mean that the companies that own movie theaters, like AMC, whose business model is shifting toward selling huge blocks of tickets, but who refuse to share the additional profits they make from movie-goers. In response, MoviePass has removed some AMC theaters from the app, redirecting people to other, nearby cinemas. As Mitch Lowe explains:
“Our customers want to go to AMCs, we want to work with AMC. But at the same time, we cannot keep giving millions and millions of dollars a week to an entity that says, over and over again, ‘we’re happy to take your money’ but we’re never going to share that increased profit with you.”
The economic viability of a company that offers a flat subscription fee but whose inventory is based on buying tickets at full price in theaters is nothing if not challenging: in April 2018, the company accumulated losses of more than $150 million and, despite the entry of new investors attracted by the growth of its user base, generated doubts about its CEO’s promise to generate positive cash flows in 2019 if ways cannot be found to boost profitability per user. Nevertheless, the company seems determined to be a major player even if the owners of the main movie theater chains refuse to play ball, and to attract more people back to watching films on the big screen after years of decline that have seen ticket prices soar.
Are we ready to pay a flat monthly subscription to watch unlimited movies? So far, more than two million Americans are: The secret of success will depend on consumption patterns: how many times would or could you go the cinema each month once you’d paid a flat rate? How can companies make money from a leisure option that many of us will find attractive? The movie market has been subjected to high price elasticity, Spain’s Fiesta del Cine, an industry initiative to attract audiences by lowering prices for a few days, has proved extremely popular.
In short, as many of us have been saying for years, one of the main reasons people have stopped going to the movies isn’t because they prefer to stay at home to watch pirated movies, but because in large part, movie theaters priced themselves out of the market. Who knows, maybe flat-fee subscriptions could lure them back.
(En español, aquí)
