It's a blast from the multiplex past. MoviePass is coming back, rising from the dead nearly three years after calling it quits. We still don't know much about how Movie Pass will work this time, or how it will survive the inescapably bad math that doomed the multiplex subscription service the first time around.
What we know so far is that the service is expected to debut around Labor Day. A waitlist will launch this Thursday. The service is expected to have three pricing tiers, but we don't know what will come with the $10, $20, and $30 monthly plans. All movie theaters that accept credit cards for payment will be available for MoviePass-subsidized screenings, so that does mean that members will be able to use it at AMC Entertainment (AMC 8.22%) , Cineworld's (CNWGY) (CNNW.F) Regal, Cinemark (CNK 0.55%), and most other chains.
Will this be a positive or a negative development for the industry, and AMC in particular? Is the question moot, because it seems highly unlikely that MoviePass can gain traction with anything close to the original model? We'll have more answers soon, but it doesn't seem like a model that was doomed to fail a few years ago will fare any better the second time around.
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Let's all go to the lobby
If you missed the MoviePass mania the first time around, you may as well buckle up for the sequel. MoviePass was a fledgling platform, charging subscribers between $40 and $50 a month for unlimited movie theater screenings. Members had to present their MoviePass -- a physical credit card that would pre-approve charges -- at the box office to purchase tickets.
The service wasn't doing so hot, but MoviePass did something crazy in the summer of 2017. It dropped the price to $9.95 a month. The price cut turned heads. MoviePass would go from 20,000 members to 3.2 million at its peak a year later. All the movies you can watch for less than $10 a month? It was a deal that sounded too good to be true, because, well, it was.
MoviePass was paying retail for its tickets, and that meant that it was typically in the hole the moment a member bought a single ticket. MoviePass was hoping to scale to the point where it could negotiate ticket discounts from the multiplex operators or a cut of the concession stand sales, but the major players never flinched. If anything, they taunted MoviePass. AMC Entertainment once mentioned in an earnings call that it was collecting an average of $12.02 per ticket from MoviePass buyers, when its own average price was $9.78. Customers didn't seem to care about going for cheaper matinees or exploring discounts when they were on MoviePass' plastic.
The model was doomed. What do you think consumers will get for a monthly subscription of $10, $20, or $30 today? If it's something along the lines of a single monthly movie for the $10 plan, three for $20, and six for $30, that won't be aggressive enough to make a difference. Offering more than that will just be a matter of counting the days until it bleeds out.
The MoviePass model was popular but a financial flop. It's not likely to repeat its mistakes, especially now when movie theater prices are quite a bit higher than before. Let's say that the $30 monthly plan offers unlimited daily screenings -- and it might -- do you think the people going for that will see just two or fewer films a month?
MoviePass had dreams of monetizing its large audience by selling consumption data and ad targeting, but who would be buying? Studios know their audiences. Theater chains now have their own platforms like AMC Stubs A-List, Regal Unlimited, and Cinemark Movie Club. Folks pay $20 to $22 a month for AMC's plan that lets its members catch up to three movies a week, and unlike MoviePass, the chains know they can score high-margin concession sales from every subsidized admission.
The original MoviePass failed for very good reasons. The math never made sense. Movie theater stocks saw it as a pest and an enemy, one that may have filled seats but also devalued the value proposition of going to the movies. It's not a surprise that box office receipts declined the year that MoviePass went out of business. Multiplex operators are finally starting to stage a comeback. They're going to make sure that MoviePass -- in any form -- loses its shirt again.
