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AMC Entertainment Jumps Into the Streaming Wars

By Danny Vena – Oct 17, 2019 at 9:39AM

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The theater owner plans to debut its own streaming video service, but it's not what you might think.

AMC Entertainment Holdings (AMC -1.70%), the largest movie theater chain in both the U.S. and the world, announced today that it would become the first U.S. theatrical exhibitor to launch a digital movie service -- AMC Theatres on Demand. The company said in a press release that starting this week, members of its Stubs loyalty program in the U.S. would be able to rent or buy more than 2,000 of the most popular digital movies from a variety of top studios, via AMCTheatres.com, the AMC mobile app, or Roku-enabled smart TVs. Movie purchases and rentals will allow members to accumulate Stubs points that can be used toward in-theater rewards.

The company said it had reached agreements with "every major Hollywood studio" to make a selection of their movies available to rent or buy. This deal includes both new releases and popular catalog movies.

A darkened movie theater with reclining seats.

Image source: AMC Theatres.

More to come

Both Lionsgate Entertainment and Paramount Pictures, a division of Viacom, will provide customers with an added incentive to use them first, awarding three additional movies to viewers who choose the studio for their first purchase or rental. 

AMC has plans to expand its collaborations, developing "a first-ever cross-platform marketing partnership" with AMC Networks. It's important to note that while the names of the companies are similar, they're unrelated.

Later this year, Stubs members will have access to movies from AMC Networks properties IFC Films and RLJE Films. As part of the venture, AMC Theatres will promote AMC Networks' four subscription streaming services -- which include Acorn TV, Shudder, Sundance Now, and Urban Movie Channel -- to moviegoers, both in its theaters and directly to Stubs members.

Groundbreaker or also-ran?

This marks the first foray by a major theater chain into the living room, placing AMC on a collision course with a host of other digital movie sellers. While this might seem like a groundbreaking move by the exhibitor, moviegoers already have a plethora of choices when it comes to buying or renting movies, including from such well-known providers as Amazon.com, Apple, and Alphabet's Google.

Likewise, the Movies Anywhere service -- which is supported by Walt Disney, Sony, Comcast-owned Universal, and AT&T-owned Warner Bros. -- provides customers with a digital marketplace and storage library for their movies.

The market for video rentals and sales is already fairly saturated, but AMC believes its unique relationship with consumers will give it an edge. "The addition of AMC Theatres On Demand, which extends our movie offerings for AMC Stubs members into their homes, makes perfect sense for AMC Theatres, for our studio partners, and for our millions of movie-loving guests," said AMC CEO Adam Aron. "With our web site and smartphone apps already being visited hundreds of millions of times annually by movie fans, AMC Theatres is in a unique position to promote specific movies with greater personalization than has ever been possible before. Through the launch of AMC Theatres On Demand, we can reach movie lovers directly and make it easy for them to access films digitally."

Woman wearing headphones and eating popcorn while watching streaming video on a laptop in a dark room.

Image source: Getty Images.

Not a Netflix killer

Contrary to the assertions made by a number of recent headlines, it's doubtful that AMC's move will have a significant impact on existing streaming video services. Streaming leader Netflix, along with its chief competitors Amazon Prime Video, Hulu, and Roku, provides a host of movies and television shows for a monthly subscription fee -- an entirely different business model than the one-off transactional video-on-demand proposition that AMC is offering.

The AMC Theatres on Demand service might be a perfect extension of the company's business, but it isn't in direct competition with any of the major streaming video services.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares), Amazon, AMC Entertainment Holdings, Apple, Netflix, Roku, and Walt Disney and has the following options: long January 2021 $190 calls on Apple, short January 2021 $195 calls on Apple, long January 2021 $3.45 calls on AMC Entertainment Holdings, and long January 2021 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Netflix, Roku, and Walt Disney. The Motley Fool has the following options: long January 2021 $60 calls on Walt Disney, short October 2019 $125 calls on Walt Disney, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool recommends AMC Networks, Comcast, Lions Gate Entertainment Class A, and Lions Gate Entertainment Class B. The Motley Fool has a disclosure policy.

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