The Hollywood box office is certainly in need of a driver to get audiences in to cinemas and multiplexes.
Movie theater subscription service MoviePass is tearing a page right out of Netflix Inc.’s
book in hopes of providing that much-needed jolt.
Mitch Lowe, a former founding executive at Netflix, president at Red Box and now MoviePass chief executive, said on Tuesday the company will lower the price of its subscription service to $10 a month from its previous $30-and-up.
With MoviePass, moviegoers can see a movie a day for $10 a month (excluding on Imax and 3D screens), and MoviePass will pay theaters the full price of the ticket. In 2016 the average ticket price in the U.S. was $8.65, and nearly double that in some major U.S. cities.
“Movie theaters have been very slow to innovate in the pricing model, but if you can build a subscription to do the same thing for theaters that Netflix did for independent films, that’s great,” Lowe told MarketWatch.
The MoviePass app that accompanies the service uses location data to show available theaters and what’s playing and pulls in ratings from Rotten Tomatoes.
Of course, subsidizing customers to see as many as 30 movies a month won’t be cheap. Lowe, who took over his role in June of last year, said MoviePass has been testing different offerings and price points to learn what will fit. The company has also sold a majority stake to data and analytics firm Helios and Matheson Analytics Inc.
Lowe declined to disclose financial terms of the deal, but said it pumped a lot of cash into the bank account that he plans to use to build out staff and to fund acquisitions. MoviePass plans to build up a subscription base in the millions, and then go public in March 2018, although Lowe said the company has a long way to go.
The ultimate goal is to be a partner to the pillars of the movie industry. The MoviePass app can help studios with marketing films and create an Uber-like experience for cinemas where customers can do everything from the app and don’t have to reach for a wallet, making it easier to pay for things like concessions.
Stocks of cinema chains have taken a beating in 2017, especially during the summer months, as returns at the box office have slumped.
In the year to date, shares of AMC Entertainment Inc.
have fallen nearly 61%, while Imax Corp.
shares have declined more than 41%, Regal Entertainment Group
and Marcus Corp.
shares are both down nearly 19% and shares of Cinemark Holdings Inc.
are down 5% in the year to date.
The S&P 500 index
is up more than 10% in the year.
The fear, which analysts and studio executives say is overblown, is that with the advent of streaming services like Netflix and Amazon.com Inc. and other entertainment options, audiences are not interested in going to the movies like they used to.
Theater admissions were down last year compared with 2015, and though the box office saw a record year in revenue for the second year in a row, admissions haven’t been able to reach the record levels set in 2002, according to data from the National Association of Theatre Owners.
Lowe said MoviePass has data that suggests that audiences want to go to the movies—they just aren’t willing to pay upward of $16 for a ticket.
Attendance among the coveted 18-to-35 year old demographic is slumping, but Lowe said that’s not because they don’t want to go to theaters, but rather that they see the value in the subscription model and don’t like being nickel-and-dimed.
“[MoviePass] isn’t the solution,” Lowe said, “but I think for the first time in a while we’ve found a way to increase ticket sales.
“It’s a single digit percent increase in a $13 billion business, but it’s one way to combat people saying ‘I’ll just wait for that movie to come out on Netflix’… I truly believe this can be a $1 billion company.”