There's plenty of buzz for today's launch of AMC Entertainment's (NYSE:AMC) monthly subscription plan. AMC Stubs A-List will be taking on Helios and Matheson Analytics' (OTC:HMNY) MoviePass, but that also means taking on some of the industry demons that have weighed on multiplex operators in recent years.
AMC Stubs A-List seems amazing on the surface, and since the exhibitor's website was down for a spell earlier today, it's fair to say that film buffs slamming the site to sign up for the plan feel the same way, too. Members pay $19.95 a month to watch as many as three movies a week. It's going to be an easy sell, especially for active movie goers. The ability to watch a dozen movies a month is a pretty sweet deal, especially since folks were spending more than that by the time they hit the local multiplex for the second time in any given month. The subscription service will be a hit, but it may also come at a cost. MoviePass disrupted the value proposition of a night at the movies, and now AMC will be doing the same thing.
Helios and Matheson argues that it's not worried about AMC. MoviePass has gone from 20,000 to more than 3 million members since slashing its price to $9.95 a month last summer. MoviePass offers access to as many as a movie per day, as long as you don't see the same film twice. MoviePass is also venue-agnostic. It will work at most movie houses. It also has a great name. No offense, AMC, but AMC Stubs A-List is a bit of a mouthful.
However, there are a lot of advantages that AMC Stubs A-List has over MoviePass. AMC's offering will work on Dolby Cinema, IMAX (NYSE:IMAX), RealD 3D, and other premium screenings. MoviePass is limited to standard showings. AMC will also let members purchase advance tickets online. MoviePass is limited to purchases made for screenings scheduled later that day, and outside of a handful of small chains that offer e-ticketing, folks need to check-in near the actual theater and then physically buy the tickets at the venue within 30 minutes.
Another thing going for AMC is that it won't make members feel like second-class citizens. It is the venue operator, so it knows transactions are legit. MoviePass makes members jump through several hoops to safeguard against misuse of the program, including having most of its users submit photos of ticket stubs to verify that they used the pre-loaded debit cards for the checked-in screenings. There are a lot of things that MoviePass members put up with in exchange for a well-priced buffet of movies, and now AMC is raising the bar -- even if it's also raising the price of the experience -- in terms of convenience.
One final thing working in AMC's favor is that it's profitable. Helios and Matheson is burning through cash, and that finds it doing a lot of things that aren't popular with users. Next month it will introduce surge pricing for screenings of high-demand movies. It also plans to let users watch premium screenings if they pay a couple of more bucks per film, but demand-based pricing and the option for a paid upgrade for a premium setup will start pushing prices closer to AMC's cost.
AMC Stubs A-List is great, but now let's go over why it may hurt AMC and actually help MoviePass. For starters, it will champion MoviePass' crusade that a movie-going experience is worth less than current retail prices. A big win for Helios and Matheson is that folks may decide to sign up for both plans -- I know I will -- and it will reduce the monthly burden of ticket prices on MoviePass. The move also naturally validates the MoviePass model, and bargain seekers wooed by AMC Stubs A-List for $19.95 may be even more smitten by MoviePass at half that price.
AMC is going to learn a few lessons the hard way here. It's going to realize that folks tend to go for pricier tickets when it's on someone else's dime, something that it probably already knows since it collected $2.24 per movie more from MoviePass than it did from its average movie goer in its latest quarter. The difference will be even higher here, as AMC Stubs A-List members will be encouraged to go for premium shows. AMC Entertainment has naturally thought this through, but the plan could be too good for its own good.