The disrupted is disrupting the disruptor in the multiplex market. How about that for the mother of all plot twists? AMC Entertainment (NYSE:AMC) has been locking horns with Helios and Matheson Analytics(NASDAQ:HMNY) MoviePass since the latter rolled out a subscription plan through which folks could watch a movie a day for just $9.95 a month last summer. 

MoviePass exploded in popularity, likely peaking at 3.2 million members earlier this summer. AMC and Helios and Matheson have taken jabs at one another over the past year, but things got kicked up a notch in late June when AMC introduced AMC Stubs A-List, its own movie subscription offering. The country's largest multiplex operator had been vocal about MoviePass being disruptive to the industry by devaluing the moviegoing experience. AMC's offering has grown to 260,000 members in just a matter of weeks. With MoviePass reeling, let's go over how the prey became the predator. 

Exterior shot of AMC 14 at Saratoga.

Image source: AMC Entertainment.

1. Incentivized marketing on the big screen  

AMC has been promoting its subscription service -- with which folks pay $19.95 a month to catch as many as three movies a week -- before all of its screenings. The short video ad offers patrons the ability to apply the purchase price of the movie they're watching to the first month of service, a smart move that theme parks, museums, and zoos often use to turn day guests into repeat visitors. The value proposition is right, and there's no feeling that you overpaid for the single screening if it can be applied to a monthly subscription plan.

AMC Stubs A-List is able to promote the service because, well, it owns the theaters. MoviePass would have to pay a pretty penny to get its brand blasted on video ads shown to millions of weekly moviegoers at AMC, and the one thing we do know is that Helios and Matheson is running tight on funds these days.

2. MoviePass has devalued itself this summer 

AMC has promised to keep its prices and terms in place for at least 12 months, something that might be a subtle jab at MoviePass with its ever-changing program. It's been a cruel summer for MoviePass, and not just because Helios and Matheson has been this year's worst-performing stock that hasn't gone to zero. 

MoviePass fans initially scoffed at AMC Stubs A-List. Why pay twice as much for access to less than half the number of movies? AMC Stubs A-List was still able to woo early subscribers by offering access to premium 3D, Dolby, and IMAX screenings that aren't available on MoviePass. AMC also allowed repeat showings, something that MoviePass nixed earlier this year. 

MoviePass was still the smarter per-movie value when AMC launched three months ago, but the math changed when Helios and Matheson briefly introduced surge pricing before capping monthly viewings to just three movies a month. The value proposition has shifted entirely in AMC's favor for MoviePass members with an AMC theater nearby, and that's before considering the tactics that MoviePass is resorting to that make viewing even three movies on its plan a monthly challenge. 

3. Only one of the two models is sustainable

The fatal flaw with MoviePass's original model is that it doesn't have full control of its input costs. It has to pay retail for the movie tickets it's buying for its members, and that easily adds up to more than $9.95 a month. MoviePass has tried to get exhibitors to discount admissions or give them a piece of the resulting concession sales, but the larger multiplex chains have balked. 

AMC naturally controls its own operations. There are studios and technology partners to satisfy, but AMC is the one that scores the high-margin concession sales and profits from preshow advertising. AMC Stubs A-List offers a 10% rebate on purchases in the form of in-theater credit. It also offers discounted concessions. AMC can plug the numbers into a spreadsheet until they work, unlike MoviePass, which will never turn a profit until it's a product that its members no longer want. 

Rick Munarriz owns shares of Helios and Matheson Analytics. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.