×
You will be redirected back to your article in seconds

MoviePass May Fail, but Subscription Services Are Here to Stay

It’s been roughly 12 months since MoviePass upended the exhibition industry with its bargain-basement movie-a-day subscription plan. But what began as a year of triumph has become an annus horribilis. The company is low on cash, its stock is languishing at roughly 10 cents a share and customers are griping about service outages. Indeed, the future looks bleak for a company that once aspired to be the Netflix of moviegoing.

But even if MoviePass goes away, it will have left its imprint on the theater business. Subscription services look to be a permanent staple of the cinema landscape. AMC and Cinemark have both embraced the new way of selling tickets, and though Regal, the country’s other major chain, hasn’t announced a subscription service, it seems likely to do so. Cineworld, Regal’s new parent company, already offers monthly packages in Europe; insiders in the exhibition space believe it likely will unveil a domestic version. It’s an unprecedented period of change in an industry that has long resisted tweaks to its business model.

“We’ve evolved into a more subscription-based culture,” said Eric Handler, an analyst with MKM Partners. He notes that customers have become accustomed to shelling out for services such as Spotify and Netflix, so it stood to reason that the exhibition business would move in that direction.

“It was inevitable,” he said. “But MoviePass helped accelerate it.”

Of course, MoviePass may not be around to see the next phase of the ticketing revolution it helped ignite. It appears to be running on fumes, its stock is trading at a dime and its decision to limit the number of films its customers can see for their $9.99 plan from one a day to three a month could result in subscriber defections. The company is also flirting with barring customers from seeing Hollywood blockbusters during their first two weeks in theaters — it claims these moves would drastically reduce its cash burn rate.

“It’s tough to know how much financial cushion they’ve got,” said Eric Wold, an exhibition industry analyst at B. Riley & Co. “But these changes they’ve announced are detrimental to their offering and to the attractiveness of it.”

But MoviePass doesn’t have much choice. It doesn’t have many levers left to pull beyond bringing on a venture capital firm. It has already floated some 5 million shares and orchestrated a 1-for-250 reverse stock split that briefly had shares trading at $14. The plummeting value of its stock signals that investors have little appetite for what MoviePass is selling.

Last summer, exhibitors cried foul when the company unveiled its movie-a-day for $9.99-a-month plan. AMC railed that the model was unsustainable and dismissed
MoviePass as a “fringe player.” At the same time, AMC chief Adam Aron and his team were working on a response to MoviePass. They met with all of the major studios, trying to bring them on board with their own subscription plan. No one joined up. Ultimately, Aron moved forward without the studios’ endorsement, informing them that they would be paid a bulk rate for the tickets sold through AMC’s offering.

Unveiled last month and christened A-List, the AMC subscription service gives users the chance to see three films a week for $19.95. Customers can reserve tickets and watch films in Imax and 3D, features MoviePass doesn’t offer. On a recent earnings call, Aron declined to mention MoviePass by name, but he made it plain that A-List wants to be there to scoop up MoviePass customers who have grown disenchanted with the service’s changing rules.

“The free enterprise system is all about competition and giving consumers a choice,” said Aron. “Today AMC is giving consumers a choice and providing anybody else who is trying to sell movie tickets a new, determined competitor.”

With competition intensifying, MoviePass may struggle to attract new customers and keep building its market share. That’s a major issue given that the company’s entire business model was predicated on its ability to amass such an enormous list of users that studios and theater chains would have no choice but to cut it better deals for the tickets it sells. Unless it can keep growing, its leverage over these players will vanish entirely.

Even though MoviePass had monthly losses of $40 million in May and $45 million in June, it said it is not considering filing for Chapter 11 protection. “The company has implemented several elements of a long-term growth plan to protect the existing community and set it up for future sustainable growth,” MoviePass CEO Mitch Lowe said in a statement.

However, if it is forced into bankruptcy, experts say it will have difficulty reorganizing or finding a motivated buyer.

“There aren’t a lot of assets there,” said Paul Labov, a partner at Fox Rothschild. “All they really own is their subscriber lists and any contracts they have with movie chains.”

Moreover, it’s unclear how simply cleaning up its books would allow MoviePass to continue to operate as a going concern. The math of subsidizing moviegoing and making it up on advertising or by selling customer data just didn’t pan out.

“At the end of the day, there needs to be a viable business there,” said Robert Marticello, a bankruptcy attorney at Smiley WangEkvall. “If the business model doesn’t work, it doesn’t work. No provision of the bankruptcy code is going to change that.”

More Film

  • Hugh Jackman Sings Happy Birthday to

    Hugh Jackman Leads Massive One-Man Show Crowd in 'Happy Birthday' for Ian McKellen

    Hugh Jackman may have had to skip Ian McKellen’s birthday party to perform his one-man show, “The Man, The Music, The Show,” but that didn’t mean he couldn’t celebrate his “X-Men” co-star’s 80th. Jackman took a moment at the Manchester Arena Saturday to lead the sold-out audience — some 50,000 strong — in a rendition [...]

  • Netflix, Shmetflix: At Cannes 2019, the

    Netflix, Shmetflix: At Cannes 2019, the Movies Needed Every Inch of the Big Screen

    In the May 24 edition of The New York Times, there was a column by Timothy Egan, entitled “The Comeback of the Century: Why the Book Endures, Even in an Era of Disposable Digital Culture,” that celebrated those things that come between two hard covers as a larger phenomenon than mere nostalgia. The column keyed [...]

  • Aladdin

    'Aladdin' Dominates International Box Office With $121 Million

    Disney’s “Aladdin” is showing plenty of worldwide drawing power with $121 million overseas for the weekend, opening in first place in nearly all international markets. The reboot of the 1992 animated classic has received strong family attendance with a significant gain on Saturday and Sunday. China leads the way with an estimated $18.7 million for [...]

  • Aladdin

    Box Office: 'Aladdin' Taking Flight With $105 Million in North America

    Disney’s live-action “Aladdin” is flying high with an estimated $105 million in North America during the four-day Memorial Day holiday weekend. It’s the sixth-highest Memorial Day weekend total ever, topping the 2011 mark of $103.4 million for “The Hangover Part II.” The top total came in 2007, when “Pirates of the Caribbean: At World’s End” [...]

  • Agustina San Martin Talks Cannes Special

    Agustina San Martin Talks Cannes Special Mention Winner ‘Monster God’

    CANNES – An exploration of the ramifications of God, “Monster God,” from Argentina’s Agustina San Martín, took a Special Mention – an effective runner’s up prize – on Saturday night at this year’s Cannes Film Festival short film competition. It’s not difficult to see why, especially when jury president Claire Denis own films’ power resists [...]

  • Atlantics

    Netflix Snags Worldwide Rights to Cannes Winners 'Atlantics,' 'I Lost My Body'

    Mati Diop’s feature directorial debut “Atlantics” and Jérémy Clapin’s animated favorite “I Lost My Body” have both been acquired by Netflix following wins at Cannes Film Festival. “Atlantics” was awarded the grand prix while “I Lost My Body” was voted the best film at the independent International Critics Week. The deals are for worldwide rights [...]

  • Stan Lee, left, and Keya Morgan

    Stan Lee's Former Business Manager Arrested on Elder Abuse Charges

    Stan Lee’s former business manager, Keya Morgan, was arrested in Arizona Saturday morning on an outstanding warrant from the Los Angeles Police Department. The LAPD’s Mike Lopez confirmed that the arrest warrant was for the following charges: one count of false imprisonment – elder adult; three counts of grand theft from elder or dependent adult, [...]

More From Our Brands

Access exclusive content