AMC Entertainment (NYSE:AMC) is making it easier to purchase movie-theater tickets through a new partnership with Facebook (NASDAQ:FB), which recently launched a new ticketing platform that allows users to search for movies and viewing times.
It might not mean much for either company by itself at the moment, but every opportunity AMC and Facebook can find to keep their customers engaged seems vital at this point.
An opportunity to grow
AMC is the first theater operator to sign onto Facebook's new platform, though online ticket sellers Fandango and Atom Tickets are also onboard. Because AMC operates 1,000 theaters with 11,000 screens, there's a broad opportunity to move a lot of tickets if Facebook's 1.47 billion users find the service convenient.
Despite the apparent apocalypse surrounding recent Facebook's earnings surprise, when it widely missed Wall Street's targets, the deal actually shows a possible path of growth for the social networking platform. Monetizing the billion of users it has across all of its platforms, through e-commerce deals like this one, could be lucrative. Instagram, for example, has a reported 1 billion monthly users; WhatsApp and Messenger have reported over 1 billion monthly users each.
The ticketing platform is simple. Facebook users can search for movies by location and showtime by expanding the Explore tab and choosing Movies. Once the preferred showtime is selected, users have the option of checking out with links to AMC, Fandango, and Atom Tickets.
Rather than completing the checkout through Facebook, however, users are directed to the respective ticketing or theater sites, depending on the option they choose.
Putting people in the seats
AMC needs something to spark a turnaround, after its stock lost half its value last year -- a lackluster performance by Hollywood hurt theater ticket sales and dragged AMC's earnings down. This year is on track to surpass 2017, and it's had some notable blockbuster successes so far, including Black Panther and Avengers: Infinity War, yet AMC's stock has traded sideways for the first seven months of the year.
It's faced competition from MoviePass, which launched a movie-ticket subscription service that AMC first scoffed at, then fought. Then AMC finally launched a competing service, the AMC Stubs A-List, which allows users to see three movies a week for $20 a month.
AMC has made a number of high-profile acquisitions over the past few years, acquiring Carmike Cinemas, Odeon & UCI Cinemas, and Nordic Cinema Group. While investing in those theaters created the world's largest movie-theater chain, that also came as Hollywood experienced its slowdown. Coupling that challenge with the increasing spread of streaming movie options, which give consumers more options for entertainment without having to go to the theater, AMC Entertainment has been hard-pressed to respond.
Both companies need this
The partnership with Facebook isn't likely to make a big difference in AMC's results or performance. But giving consumers more chances to easily purchase a ticket -- particularly on a platform where people could influence others' decisions to go see a movie, namely their relatives and friends -- is an opportunity it needs to exploit.
Yet it's also a competitive advantage that's probably not going to last for very long if Facebook continuously expands participation to include other theater operators, as it should.
Facebook is suffering from a slowdown in usage of its own. Combating continuous data privacy issues and scandals, the social networking platform saw only an 11% increase in users, with 2.23 billion monthly active users falling short of analyst expectations of 2.25 billion. That's leading to a deceleration in revenue growth rates, as Facebook implements costly programs to protect user privacy and comply with new government regulations.
Yet the AMC deal clears the path for Facebook to grow once again, becoming a hub for e-commerce on a platform with highly engaged users. It's smart at this moment for Facebook not to facilitate the payments itself, as concerns about how it handles user data continue to fester. But this is certainly a step toward future transactions where payment information is housed on Facebook, allowing simple, one-button processing.
The show must go on
The movie-ticket partnership is a somewhat mundane development at the moment, and it won't move the needle for either company yet. But if AMC Entertainment can further smooth the friction of buying tickets for moviegoers, and if Facebook can learn to use its platform to monetize its most engaged users, both can use the partnership to ease the pressures each is feeling -- and use it as a guidepost for future growth.