Distribs fear plan will hit them in pocketbook
Though tests of its controversial monthly movie passes in two cities will continue, AMC Entertainment said Wednesday the program won’t be extended to additional markets as planned and a national rollout has been shelved until the second quarter or later.
“Data from the two markets were almost identical, so we decided that introducing additional new test markets wouldn’t be of any more use than the data we’re already getting,” AMC spokesman Rick King said. “The new data we will be looking for is data from the existing test markets of Omaha and Oklahoma City through the fall and holiday seasons.”
AMC also will track renewal rates among monthly plan purchasers, King said.
Moviegoers who purchased six-month passes when the program was launched in June will see them begin to expire in December. Once some renewal data is gathered, execs will cull that evidence along with summer, fall and winter purchasing data to decide whether a national rollout is warranted, King said.
Greeted with boos
Kansas City, Mo.-based exhib originally had targeted a national rollout for January. But AMC has been hit with a chorus of Bronx cheers from distribs, who fear the plan eventually will hit them in the pocketbook.
During its tests, AMC has guaranteed distribs that their box office splits will remain based on usual ticket prices every time a pass holder attends a pic. The nontransferable passes carry monthly fees of $17.50 and $14.50, respectively, in Omaha and Oklahoma City; they allow patrons to attend up to one picture daily.
Paramount, citing fears about how even test-market sales would affect its splits, has opted out of the program. DreamWorks withheld its recent “Curse of the Jade Scorpion” from AMC theaters in the test markets, and Warner Bros. “has reservations but has not opted out,” King said.
The monthly pass was born in Europe, much like the megaplex concept AMC championed Stateside after an earlier embrace by foreign exhibs. Consumers have applauded the concept in France and England, but distribs complain B.O. splits have been diluted, while smaller exhibs without such plans also have cried foul.
AMC believes monthly passes can help the circuit extend U.S. market share and sell more concessions, thanks to moviegoers’ patronizing theaters more often. Tests show pass holders who previously went to a theater two times a month or less now average about three trips to the movies per month, King said.
“We launched the MovieWatcher Premium Card test with the intention of growing box office receipts through an increase in moviegoing frequency,” AMC theaters prexy Phil Singleton said. “We are encouraged that the test appears to be having the desired positive effect on both frequency and total admissions revenue.”
But others suggest a successful nationwide rollout by AMC would prompt other exhibs to introduce their own monthly pass programs, undermining any gains.
David Davis, an exhibition analyst and senior veep at Houlihan, Lokey, Howard & Zukin in Los Angeles, said copying of AMC’s monthly plans could create such dramatic new ticket-buying habits that B.O. grosses will be eroded.
“If the whole system moves this way, there could be tremendous pressure on pricing, which would be beneficial to exhibitors but tremendously detrimental to distributors,” Davis said. “What you could potentially have is 20% to 40% more admissions and less box office revenue.”
Popcorn sales hurt
Some even question whether monthly passes significantly increase concession sales. They say monthly plan purchasers tend to spend less on concessions than the average moviegoer.
“We don’t have a way to specifically identify concession purchases by the cardholder,” AMC’s King demurred.
Concession revenue is particularly important to exhibs’ bottom lines, as their profit margin on food and beverage sales is commonly 80% or more, Houlihan Lokey’s Davis said.
AMC said it recently shared some preliminary data from test markets with distribs and plans to do so again at the end of market testing.