MoviePass is (all but) dead. Long live AMC Stubs A-List and Regal Unlimited?

It does appear that this is how things are playing out. Two years ago, MoviePass pioneered the concept of all-you-can-eat movie-going subscriptions. (And thanks for that.) Despite the popularity of the product, however, MoviePass couldn't quite figure out how to turn a profit from selling movie subscriptions worth as much as $360 a month for $9.95 plus tax. 

Shocker.

Father and son at the movies

Image source: Getty Images.

MoviePass dropped the ball. AMC picked it up

Into its place stepped AMC Entertainment (NYSE:AMC), the nation's largest movie chain, to offer its own variant of a movie subscription plan. For $19.95 a month, AMC allows subscribers to: 

  • See as many as three movies a week,
  • See those movies in IMAX and other "premium" formats, and
  • Reserve tickets to those movies online for free.

There's fine print of course. You have to be at least 16 to enroll, and you need to show your ID when you pick up your ticket. New members must sign up for at least three months initially. And prices are subject to change (though AMC guarantees 90 days' advance notice).

AMC also has a tiered membership charging a bit more for the right to see movies in additional states.

Did Stubs A-List save AMC?

All in all, though, it's still a pretty sweet deal. Not quite as good a deal as what MoviePass was offering initially -- potentially twice as many movies, for half the price -- but MoviePass's quick spiral toward bankruptcy forced it to curtail its benefits after only a few months of operation, negating those advantages.

So far, that hasn't happened to AMC.

Indeed, the 860,000 subscribers AMC has amassed through Stubs A-List have successfully seen some 20 million films over the past year. One imagines they may also have generated sales of potentially 20 million tubs of popcorn, sold 20 million Cokes, and moved 20 million boxes of Raisinets through AMC concession stands. (While we don't have specific data on the Raisinets, we do know the company's fiscal 2018 "food and beverage" revenue grew 8% in comparison to 2017 according to SEC filings.) 

Granted, AMC stock hasn't fared particularly well over the past year -- it's down 32%. But it appears Stubs A-List at least helped to stabilize AMC's ticket revenue, and it's clearly given a boost to AMC's concession stand sales.

The result: AMC's stock price may be down, but according to data from S&P Global Market Intelligence revenue is up 2% over the past year, and AMC has dramatically pared its losses.

Regal enters the fray

How long can that last, though, in the face of heightened competition? For, much like MoviePass's creation spurred AMC to launch Stubs A-List to compete, AMC's success in signing up members to Stubs A-List has finally prompted No. 2 cinema chain Regal Entertainment, owned by London's Cineworld (LSE:CINE), to announce its own competing subscription plan -- and amazingly, it looks like Regal's plan could be an even better deal for movie fans.

Priced at $18 for its entry-level tier, "Regal Unlimited" undercuts AMC's prices by 10% from the get-go, with higher prices for higher tiers offering access to more theaters nationwide, just like AMC's plan. And true to its name, Regal's plan is truly "unlimited," allowing members to see as many movies as they want, whenever they want. It's a true all-you-can-eat deal, as opposed to AMC's 3-a-week subscription plan. 

Like Stubs A-List, Regal requires subscribers to be 16 years of age or older, and to show ID when they buy a ticket. Like AMC's plan, it requires a minimum subscription length -- though a whole year, as opposed to AMC's three-month requirement. And like AMC, Regal reserves the right to raise its prices, though not during that initial one-year subscription period.

On the surface, Regal's new plan thus appears to mimic AMC's, but with several significant tweaks that may combine to give Regal an advantage. For example, instead of bundling IMAX, 3D, and other premium movie-viewing formats within its base price, Regal's plan opts for a low base price on traditional 2D movies, supplemented by surcharges for customers who want to buy the extras.

If it turns out that folks signing up for movie subscriptions are bargain hunters -- a reasonable assumption, in my view -- this could play to Regal's advantage. Cost-conscious consumers might well view AMC's IMAX privileges, for example, as an "extra" they don't need or want to pay for. They may prefer to pocket the $2 price difference instead.

Similarly, whereas AMC bundles free ticket reservations with its Stubs A-List offering, Regal separates that out. It charges $0.50 extra for folks who want to reserve seats online rather than just pick a seat at the theater. 

On the plus side, it appears that, contrary to rumors that have been floating around, Regal will not be requiring Regal Unlimited members to pay for a full year in advance. Rather, monthly payment will be standard. Prepayment for the year, however, rolls sales tax on the plan into the base plan price. In states with high sales taxes, such as Louisiana, Washington, or Tennessee, where combined state-and-local sales taxes approach 10%, this could mean even more significant savings for Regal subscribers over AMC.  

The upshot for investors

If you ask me, this could be the "killer app" that enables Regal to catch up to AMC after allowing its rival to romp unopposed to a one-year, 860,000-subscriber lead over the past year. The combination of prices as much as 20% below what AMC charges, with a 1-year subscription commitment that will prevent Regal subscribers from jumping ship to AMC if it tweaks its program to respond to the new challenge, should attract moviegoers in droves.

Still, there's a lot of lost ground Regal has to make up. Let's see if this pony can still come from behind to win.