If you can't join them, beat them. AMC Entertainment (AMC +0.37%) is rolling out its own subscription program for multiplex buffs. The country's largest movie theater chain will be introducing AMC Stubs A-List on June 26, allowing members to pay $19.95 a month to watch as many as three movies every week.
Simple math would tell you that this is inferior to Helios and Matheson Analytics' (HMNY +0.00%) MoviePass, a platform that costs half as much and allows as many as seven movies a week -- as long as none of them are repeat screenings. MoviePass is also available across most theaters across the country, while AMC Stubs A-List is naturally limited to showings at AMC properties. However, AMC has two things going for it, and MoviePass can't take its pole position for granted in this race.
Image source: AMC Entertainment.
Feature presentation
MoviePass has gone from 20,000 members to more than 3 million since slashing its price to $9.95 a month last summer, but it's also losing a lot of money. AMC has taunted MoviePass in previous earnings calls, most recently pointing out that it's collecting an average of $12.02 from MoviePass for every ticket it has sold through the subscription service. AMC CEO Adam Aron pointed out that MoviePass members hit its theater 2.72 times in April.
"I took a calculator out, and I multiplied 2.75 times 12.02," Aron said. "I got to a number that was considerably larger than $9.95."
We don't need Aron's calculator to figure out that MoviePass is burning through its greenbacks. Its latest financial filing shows that its spending roughly three times as much in movie tickets as it's collecting in subscription revenue. MoviePass knows this, and attempts to curb usage -- like a test in March where it was limiting new members to just four screenings a month -- have been met with member resistance.
MoviePass remains a value, and perhaps it's too good a value. AMC has taken exception to MoviePass in the past because it claims to devalue the moviegoing experience, but its own plan may also be doing the same thing.
One of the two things that AMC has over MoviePass it that it's willing to go where MoviePass doesn't -- covering premium screenings including Dolby Cinema, IMAX (IMAX 0.03%), RealD 3D, and more in its $19.95-a-month price. This is actually good news for IMAX and RealD that have been missing out as 3 million MoviePass members flock to traditional 2D screenings.
Another thing that's working in AMC's favor is that it can aggressively market AMC Stubs A-List to its theatergoers. You can expect in-theater displays and theatrical ads ahead of the feature presentations this summer pitching the new subscription service.
This doesn't mean that MoviePass -- 92% owned by Helios and Matheson Analytics -- is toast. AMC may sway some existing MoviePass members with its promises of high-end screenings, but it's ultimately aiming at the rest of its customers. Folks intrigued by AMC's offering may do a little research and soon find a rival offering at half the price that allows for more movies a month across more than just AMC theaters.
AMC is becoming what it never wanted to be. It's pushing out a plan that when used by active celluloid fans -- three times a week -- will result in proceeds of less than $2 a flick. However, it's necessary. The industry was dying before MoviePass used a buffet model to smoke out multiplex sitters. This may even breathe new life into Helios and Matheson. The stock took a big hit on Wednesday in response to AMC's news as well as plans to push for a reverse stock split, but if all of the chains are now lining up with subscription plans, it opens the door for one of them to acquire MoviePass to take advantage of its 3 million diehard theater regulars.
There's never a dull moment here, and now AMC is jumping into the fray with a surprisingly compelling plan that will devalue premium screenings the same way that MoviePass did on the standard front. Grab some popcorn. The action's just getting started.
