One of the entertainment industry’s most unlikely stories at the end of the summer season is the revival of MoviePass. Subscription to the disruptive multiplex buffet peaked at 3.2 million subscribers in 2018, but it wasn’t sustainable the first time around. It ran out of money in 2019. Now the brand is back under new management with a plan to do it right the second time around, but don’t bet on success.
The service is expected to launch next week, initially only in select markets. MoviePass opened a no-obligation waitlist on its site Thursday, but little is known about the benefits of the relaunch beyond the $10, $20 and $30 price points. While it seems unfair to be disappointed in a plan before you’ve heard the brand’s new vision, it’s not wrong to make assumptions. Let’s go over three reasons why MoviePass probably won’t stick around for long this time around.
1. MoviePass will never be a win-win-win platform
Three parties are involved in the MoviePass model. Subscribers originally paid $9.95 per month for access to at least one showing from any theater every 24 hours. MoviePass itself would gain popularity. The third party, the cinema exhibitors, would be the recipient of the additional ticket sales.
The best business models are those where everyone wins. In the original MoviePass revolution, only subscribers won. They had plenty. They could see a ton of theatrical releases on the big screen for just $10. The average member saw four to five movies a month. At peak MoviePass, AMC Entertainment (AMC -4.18%) (MONKEY -4.83%) said it collects an average of more than $12 per ticket for admission purchased with MoviePass. The value was clearly there for a subscriber, even though MoviePass required members to go through extra steps to secure their tickets.
MoviePass naturally didn’t fare so well. It was collecting far less money from its members than it was paying cinemas for tickets, and that’s before we consider the true costs of running the business beyond the negative gross margin. MoviePass hoped to make up the difference by selling user data to Hollywood, but what value could that data have had? Advertising was another source of income, but what do you sell to people who pay an average of $2 per movie?
The last hope for MoviePass was to get exhibitors to take over. MoviePass put backs in the seats. Would these multiplex operators be willing to give MoviePass a slice of the action, including high-margin concession stand sales? This never happened, because movie channels hated MoviePass. It devalued the product. The perceived value of a movie night has been erased by MoviePass, making it harder to sell tickets to non-MoviePass members.
The whole pattern was a short fuse, followed by the kaboom of creditors tired of paying for the multiplex frenzy of a young audience. The new MoviePass will meet a similar fate. People will only sign up if they think they will get more screenings from the plan than they pay for. Popularity and durability will never coexist here.
2. Multiplex Operators Cracked the Code
MoviePass hasn’t been able to make a subscription model work, but the major channels have figured this out. AMC Stubs A-List charges $20 to $22 per month, allowing members to watch up to three movies per week, including premium formats that weren’t included in MoviePass. Cinemarkit is (CNK -3.45%) Movie Club costs $10 per month, but it includes credit for only one non-premium movie per month. It also offers concession discounts, and AMC and Cinemark are waiving online ticketing fees for its members.
Neither platform is as popular as MoviePass four summers ago. Cinemark has just reached one million members. AMC was closing in on a million before the pandemic hit. However, these are enduring models. AMC and Cinemark don’t need to negotiate with each other to get a piece of the gate. They are the ones who control the box office. They are the ones shoveling popcorn into buckets.
AMC can run up to 12 movies per month with A-List. MoviePass can’t sustainably offer anything close to that for its mid-priced $20 tier without going broke. After all, today’s creditors won’t make the same mistakes as the original MoviePass bag holders.
3. Ticket sales have only gotten worse since MoviePass disappeared
The number of tickets sold for national screenings reached nearly 1.6 billion in 2002. In 2019, the last full year before the pandemic, only 1.2 billion admissions were purchased. Ticket prices have increased slightly over the years, so revenue has held up. However, the trend over the past two decades has been problematic.
People have started returning to local cinemas since the industry’s initial shutdown in early 2020. This summer got off to a promising start, but things quickly went downhill with the growing popularity of streaming services and shrinking windows. theatrical exclusivity. Quarter-to-date, domestic admissions revenue is the lowest it has been pre-pandemic since 1998, and that’s unadjusted for inflation.
These are tough times for movie stocks, but at least they have monetization levers and channels not available to MoviePass. We’ll learn more about the new model soon, but there’s no available path to a Hollywood ending.