UPDATE — MoviePass has withdrawn its subscription service from 10 high-traffic AMC theaters, asserting that it’s doing so because the movie chain won’t collaborate.
The service, which costs $9.95 per month, was no longer available on Thursday the AMC Century City 15 in Los Angeles; AMC Mercado 20 in Santa Clara, Calif.; AMC Disney Springs 24 in Orlando, Fl.: AMC Loews Boston Common 19 in Boston; AMC River East 21 in Chicago; AMC Mission Valley 20 in San Diego; AMC Tysons Corner 16 in McLean, Va.; AMC Veterans 24 in Tampa; AMC Loews Alderwood Mall 16 in Lynwood, Wash.
MoviePass pays theaters the full price for a ticket, so it is in essence subsidizing its users’ moviegoing and losing money each time they check out a film.
CEO Mitch Lowe issued a statement in response to reports, writing, “As of today, you’ll find a small handful of theaters are no longer available on our platform. Our number one goal as a company is to provide an accessible price-point for people to enjoy films the way they’re meant to be seen: on the big screen. Many exhibitors have been receptive to this mission, and we’re excited to keep working with theater chains that are closely aligned with our customer service values.”
“As we continue to strive for mutually-beneficial relationships with theaters, the list of theaters we work with is subject to change,” Lowe said. “We advise customers to always double check the MoviePass app for the most up-to-date list of participating theaters.”
AMC, the country’s largest chain, threatened legal action against MoviePass in August and predicted that the company would fail because its business model was not sustainable. There is anxiety among exhibitors that customers will get accustomed to paying a discounted rate for tickets, which will depress prices.
AMC said in a response to a Twitter complaint that customers should contact MoviePass for clarification.
Some of our guests say MoviePass may be blocking the use of their service at a handful of AMC locations. AMC has not restricted MoviePass acceptance at our theatres, nor have we heard from MoviePass about this. MoviePass customers should contact MoviePass for clarification.
— AMC Guest Services (@AMCHelps) January 25, 2018
The move comes a day after its newly-launched MoviePass Ventures teamed with The Orchard to nab North American distribution rights to “American Animals,” an art heist drama that premiered at this year’s Sundance Film Festival. The deal cost $3 million and involved a significant P&A commitment, according to a knowledgeable source.
MoviePass announced on Jan. 9 that it had more than 1.5 million paid subscribers, adding 500,000 in less than a month. The company, which is majority-owned by Helios and Matheson Analytics, allows subscribers to purchase a single movie ticket per day for a flat monthly subscription fee by using a mobile app.
U.S. movie admissions slid 6% last year to 1.24 billion for the lowest number since 1995, according to the National Association of Theatre Owners. North American box office for the year declined 2.55% to $11.09 billion and the average 2017 ticket price jumped 3.7% from $8.65 to $8.97.
The news about the AMC locations was first reported by Deadline Hollywood. Helios & Matheson CEO Ted Farnsworth, the parent of MoviePass, issued a statement Friday morning blasting AMC.
“When HMNY acquired the majority stake in MoviePass, we made the strategic decision to reduce monthly subscription fees to $9.95 a month to get movie fans back into the theaters. As we’ve grown our subscriber base, we’ve seen a dramatic increase in movie theater attendance among our subscribers, which proves to us that MoviePass is working to revitalize a declining industry. Other theater companies have seen this attendance resurgence and have approached MoviePass to collaborate. Since the get-go, AMC has not been interested in collaborating with MoviePass – a move that is not in the interest of our subscribers and AMC theater-goers.
We know that we currently represent approximately 62% of AMC’s operating income, assuming that AMC is flat year over year. This equates to $34.4 million of gross profits to AMC in the upcoming quarter. On an annualized run rate basis, that’s over $135 million to AMC’s gross profits – which doesn’t include concession sales from MoviePass subscribers. In publicly disclosed 2017 financial documents, AMC claimed each customer spends $4.88 on concessions each visit – meaning MoviePass subscribers could bring an additional $17.1 million in AMC concession revenues for Q1 of 2018, which on an annual run rate means $68.4 million more — an annualized run rate going forward of over $203.4 million revenue from MoviePass subscribers.
We’ve pulled 10 AMC theaters — less than 2% of theaters. We already know in past testing that MoviePass subscribers are not theater-loyal; they’re happy to drive by a theater that may be closer to a theater that will accept MoviePass –because of the MoviePass value.
From day one, MoviePass has been 100% for our subscribers – they are the most loyal fans we’ve ever seen and we’re honored to remove a price barrier than had been preventing the average movie-lover from going to the movies. We’re here for them and will fight battle for them every day of the week.”