TechCrunch: MoviePass cuts price by teaming up with Fandor on a bundled subscription deal

The controversial subscription service for movie-goers, MoviePass, is still chasing new customers as it attempts to rapidly grow its user base before its funding runs out. After growing from 1.5 million to 2 million users in less than a month’s time, the company has now teamed up with streaming service Fandor to appeal to potential subscribers with a bundled offer.

The two companies announced a “limited time offer” which includes both a MoviePass and Fandor subscription for less than $116 per year.

However, some users were confused about the new pricing plan worked.

Like MoviePass says, the deal will lower the MoviePass subscription down to $7.95 per month from its usual $9.95 per month. But the full annual fee has to be paid upfront, not monthly.

The company hasn’t decided how long before this offer expires, but it’s not the first time that MoviePass has tried a bundle. The same offer was originally tested back in November 2017, and was well-received, says MoviePass.

The Fandor subscription includes access to a collection of over 5,000 independent films, documentaries, classics, international features and shorts.

The deal arrives at time when MoviePass’ business model is being increasingly scrutinized. The company claims its users now drive more than 5 percent of the total box office and is continuing to grow its user base. But MoviePass is subsidizing the cost of those tickets for now, while betting on the fact that it will be able to monetize in other ways.

For example, it aims to make money from studios who want to target its customers with their marketing efforts, or access user data to learn about trends; it’s taking a cut of ticket sales and concessions at some theaters; it has begun to acquire movies; and it hopes that eventually, users will slow down their movie-going to their usual once per month (or less), after the initial rush of having an all-you-can-watch subscription wears off.

Not all theater chains are thrilled with MoviePass, however. MoviePass recently pulled out of several high-traffic AMC locations as the chain refused to negotiate on a rev-share deal.

“We already know in past testing that MoviePass subscribers are not theater-loyal; they’re happy to drive by a theater that may be closer to a theater that will accept MoviePass -because of the MoviePass value,” MoviePass majority owner HMNY’s CEO and Chairman Ted Farnsworth said, threatening AMC.

The company has also more recently faced issues with customers using the pass to offset the cost of IMAX or Fathom Events movies, which is prohibited; or were buying tickets that they exchanged for gift cards. MoviePass canceled these users subscriptions, it said. Meanwhile, some users claimed they were seeing too many movies, which is why they were kicked off.

Subscribers who sign up for the new Fandor offer will be billed $115.35 ($7.95 a month plus a sizable $19.95 processing fee); They will then receive one full year of MoviePass and one full year of unlimited streaming from Fandor.

Engadget: MoviePass adds 500,000 subscribers within a month

But can it keep up with its growing user base when it pays for every ticket at full price?

Photo Credit: Jovo Marjanovic

Photo Credit: Jovo Marjanovic

MoviePass' $10-per-month subscription service was a hit from the start, enough to crash the company's website when it was first announced. It looks like demand isn't slowing down anytime soon either: it has gained500,000 more subscribers merely a month after it reached 1.5 million users. The fact that MoviePass cut off members' access to some popular AMC theaters had little effect, if any. It's easy to see why 2 million would sign up: for 10 bucks a month -- an ongoing promo even cuts the price down to $7.95 -- they're entitled to see one 2D film a day, every day, without paying extra.

In 2017, members bought $110 million worth of tickets and generated an additional $146 million in ticket sales by bringing non-members to showings. MoviePass chief Mitch Lowe said in a statement:

"We're giving people a reason to go back to the movie theaters, and they're going in droves. With awards season here, we hope we can make Hollywood and exhibitors very happy by filling seats with eager audiences."

As Bloomberg said, though, all these new users are both a blessing and a curse to the company. Every time a member watches a movie, the service pays for that subscriber's ticket at full price. It loses money for every member that watches two movies a month, and its accountants apparently already warned the company that its system might not be viable in the long run. AMC shares the same sentiment and once called the business model unsustainable. It's like turning "lead into gold," the theater chain said in a statement last year. 

So, how does MoviePass plan to make money if subscribers aren't bringing in the cash? It's hoping to sell ads, merchandise and data on moviegoers' habits, as well as to get a cut of theaters' refreshment sales as they go up from all the viewers it brings to cinemas. The company is also hoping to convince theater chains to sell it tickets for its members at a discounted rate.

It's unclear if MoviePass is already making headway with those plans, but when it dropped several AMC locations from its list, it said that the theaters it works with is subject to change as it "continue[s] to strive for mutually-beneficial relationships with" them. AMC chief Adam Aron has been quite a vocal critic of the service and already proclaimed that the chain has no intention of sharing its admissions or concessions revenue.

MarketWatch: MoviePass defends abrupt subscription cancellations over terms-of-service violations

Some users insist they’ve done nothing wrong, but MoviePass says they’ve defrauded the company by reselling tickets, ordering multiple cards and other infractions

MoviePass says it’s making a concerted effort to crack down on fraud, and the subscription cinema service has already brought the hammer down on a handful of subscribers. 

A report by Business Insider on Friday shed light on the fact that some MoviePass subscribers were complaining on social media that their subscriptions — under which, for $10 a month, they’re entitled to attend as many movies as there are days in that month — had been canceled abruptly.

MoviePass reportedly sent those users emails saying their memberships had been canceled effective immediately for terms-of-service violations. Specifically, at least some of the subscribers were told they’d used MoviePass cards in the purchase of premium ticket. “You cannot sign back up for MoviePass,” the emails reportedly concluded.

Ted Farnsworth, chief executive of MoviePass’s majority owner Helios & Matheson Analytics Inc. HMNY, -7.31% , told MarketWatch that the number of users whose subscriptions were canceled was in the hundreds and that the subscribers had definitely violated the company’s terms of use and had committed fraud. 

“The thing is, with the size we’re getting to now we have to crack down or these people will ruin it for everybody,” Farnsworth said. “I mean, we’ve been out to theaters in [New York City] and watched people do it.”

Farnsworth said the canceled subscribers had been using MoviePass cards at concession stands, to purchase gift cards or even get cash back, or reselling tickets, or ordering multiple cards to buy other people tickets.

MoviePass has grown much quicker than Farnsworth and Chief Executive Mitch Lowe expected — the company recently passed the 2 million subscriber mark — and they’ve had to scramble to build out departments like customer service and fraud protection.

The crackdown on fraud is something Farnsworth said the company has only been focusing on in the past 90 days. MoviePass recently hired an employee who had headed antifraud efforts at Redbox when Lowe was CEO there. 

In January, MoviePass updated its terms of use — around the same time the company kicked up a feud with the nation’s largest theater chain, AMC Entertainment Holdings Inc. AMC, -2.18%  .

Its terms of use state that subscribers have agreed that MoviePass can suspend or terminate subscriptions without prior notice for a number of violations, including creating multiple MoviePass accounts, buying tickets with their passes through Fandango or other third-party services, and using the MoviePass card for to buy anything other than a movie ticket from a theater kiosk.

“A lot of times the theaters will call us to let us know when they think someone’s committee fraud, too — especially the independents,” Farnsworth said. 

Subscribers suspected of fraud will typically receive letters letting them know that they’ve appeared on MoviePass’s fraud radar, Farnsworth said. From there, he said, the company will monitor the account.

“You don’t want to cut anyone off unless you have to,” he said. “And, trust me, we don’t want to cut anyone off.”

Business Insider: MoviePass terminated a 'small percentage' of its users for violating its terms of service — and people are freaking out

Dimension Films

Dimension Films

  • MoviePass confirmed to Business Insider that a "small percentage" of accounts were terminated due to users violating its terms of service.
  • People have taken to Twitter to object in very vocal terms.

 

On Friday, MoviePass terminated the accounts of what it described as a "small percentage" of users who violated its terms of service, the company confirmed to Business Insider. 

This was a shock to many users, who took to social media to object to being taken off the service. Many of them said they were confused as to why their accounts were deleted. 

Business Insider obtained an email that was sent out to members who MoviePass said violated its terms of service by purchasing part of a "premium ticket" on their card. However, multiple people who received the email denied they had ever done that.

Here's the email:

"Your account has been cancelled effective immediately for violating the terms of service by using your MoviePass card to purchase part of a premium ticket. You cannot sign back up for MoviePass."

Customers who then inquired via MoviePass' customer support account on Twitter were sent this via Direct Message:

"Thank you for sharing your concerns with us. Your account was cancelled due to Terms and Conditions violation. You should have received an email notifying you on this on February 09, 2018 with a description of the action that was in violation. Please remember to check your Spam or Junk folders for this email. Some email filters may prevent it from being delivered directly to your inbox. Terms and Conditions violations cannot be disputed nor can your account be reactivated. We appreciate your understanding."

Many took to Twitter to voice their frustration and confusion as to why they lost their accounts:

A MoviePass spokesperson sent the following statement to Business Insider regarding the canceling of accounts:

"A small percentage of MoviePass users have been removed from the system, due to violating the terms of service. We diligently review card transactions to prevent fraudulent activity and take our Terms of Service agreement very seriously. If individuals abuse the service, we must take action so that our model continues to be sustainable for everyone. If customers feel there has been a mistake, they can feel free to reach out to MoviePass customer service via the phone number on the back of their card."

Bloomberg: MoviePass Tops 2 Million Subscribers While Cash Burn Accelerates

The pressure is on for Hollywood disruptor MoviePass.

The startup, which allows customers to watch one film a day in a theater for less than $10 a month, said on Thursday that it has passed 2 million subscribers. But the more members the company adds, the faster it burns cash, and MoviePass has already been warned by its accountants that its long-term viability is in question.

As MoviePass directs more movie fans to theaters, the question for the company is whether studios and exhibitors will agree to share revenue from ticket or popcorn sales. MoviePass said it has yanked its service from 10 AMC Entertainment theaters because the chain won’t cooperate, while Cinemark has already started its own subscription service.

“We’re giving people a reason to go back to the movie theaters, and they’re going in droves,” MoviePass Chief Executive Officer Mitch Lowe said in a statement. “With awards season here, we hope we can make Hollywood and exhibitors very happy by filling seats with eager audiences.”

The company, which is majority-owned by Helios & Matheson Analytics Inc., pays theaters full price for tickets, which can cost $10 apiece or more. MoviePass warned in an October regulatory filing that more frequent viewing by subscribers will lead to increasing losses and the need for more financing. The company plans to earn money by aggregating data on moviegoers’ habits, advertising and merchandise sold through its platform, and possibly by gaining a share of refreshment sales.

Lowe said via email on Wednesday that MoviePass bought $110 million worth of tickets in 2017, generating an additional $146 million in ticket sales, mostly through members bringing non-members to the films. MoviePass customers apparently have good taste.

CNN Media: MoviePass continues its rapid rise as it surpasses two million subscribers

MoviePass is not slowing down.

The $10 a month unlimited movie service just crossed two million subscribers less than one month after passing 1.5 million users, the company announced on Thursday. 

"We're giving people a reason to go back to the movie theaters and they're going in droves," CEO Mitch Lowe said in statement. "With awards season here, we hope we can make Hollywood and exhibitors very happy by filling seats with eager audiences." 

Thursday's announcement did not include any information on how many subscribers are actually using the service to watch movies. CNN has reached out to MoviePass for further details. 

Ted Farnsworth, the chairman and CEO of MoviePass' majority owner and analytics firm Helios and Matheson, said that the service is bringing people back to theaters by "lowering their cost," which the company believes is "transformational for the industry." 

The data the company collects from these two million movie-goers "will become an important asset to our partners and the future of the movie industry," Farnsworth said. 

MoviePass has been the talk of Hollywood and movie-goers since it lowered its subscription fee to $9.95 a month in August, setting off its tremendous growth rate. 

Lowe told CNN last month that the company is buying one in every 35 tickets sold in the country. He also said that the company is playing catch up to its own growth by investing in areas like its unstable MoviePass app and its unreliable customer service. 

Related: MoviePass CEO: $10 unlimited movie service is playing catch up to its own growth

Despite its successful rise, the service has found itself in a contentious relationship with mega movie chains like AMC while also answering questions about just how viable its business plan is. MoviePass sells its user data to third parties to make money. 

"Our service is really low because we are going to use our understanding of you as a customer to be able to give you relevant suggestions that you might find valuable in your life," Lowe told CNN last month. "We might say there's a great restaurant across the street from the movie. If you go over there and show them your card, you're going to get a free appetizer."

Forbes: MoviePass Generates Almost $130 Million For Oscar-Nominated Films

A view of signage at the MoviePass House Park

A view of signage at the MoviePass House Park

MoviePass, the subscription service that allows moviegoers to see one movie per day for a monthly fee of $9.95, has undergone incredible growth through the end of 2017 and beginning of 2018.

Its membership skyrocketed from 600,000 in October 2017 to 1 million the following December and grew to 1.5 million by January 2018. That growth is now being seen during the peak of Hollywood’s awards season. According to Deadline, since November 2017, MoviePass has drawn in $128.7 million for select Oscar-nominated films.

The acclaimed films include nominees for Best Picture, Best Animated Film and Best Foreign Film. MoviePass subscribers have also been able to see films featuring nominees for Best Actress, Best Actor, Best Supporting Actor and Best Supporting Actress as part of their monthly subscription.

According to Deadline’s calculations of the percentage of domestic box-office sales contributed by MoviePass, the coming-of-age drama Call Me By Your Name garnered the highest percentage at 8.79% ($1.1M), with The Shape of Water coming in second, at 7.87% ($3.5M). Three Billboards Outside Ebbing, Missouri accumulated 6.89% ($2.8M), followed by Lady Bird at 6.18% ($2.7M). Steven Spielberg’s star-studded political drama The Post totaled 5.57% ($3.7M).

I, Tonya, the biopic about infamous US figure skater Tonya Harding is also a sweet spot for MoviePass: the service contributed 11.48% for the film. Chronicling the allegations that Harding was indirectly involved in an attack on fellow skater and opponent Nancy Kerrigan before the 1994 Winter Olympics, the film nabbed acting nominations for title star Margot Robbie and Allison Janney, who played her embittered and overbearing mother. The Square, nominated for Best Foreign Language Film, also racked up 7.57% of its sales through MoviePass.

At such a low cost of $9.95 a month – less than a single movie ticket in many cities – and available at 91% of theaters in the United States, to many, MoviePass has seemed too good a deal to be true. The subscription does include a few limitations: Subscribers cannot see 3D movies and they cannot watch more than one per day.

MoviePass has been consistently evolving since it was first launched in 2011 when its sliding scale cost up to $50 more expensive cities. The monthly subscription fee was lowered to a flat rate of $9.95 in August 2017. It recently experienced conflict with film exhibitor AMC and removed some of their locations from the service’s availability. And more changes are possible: MoviePass is considering expanding to include 3D and IMAX films in its services.

Forbes: At $9.95 Per Month, Can You Afford Not To Subscribe To MoviePass?

Credit: Shutterstock

Credit: Shutterstock

When someone told me I could see several movies a month at nearly any movie theater in the country for just $9.95 a month, my first instinct was, what's the catch — this deal sounds way too good to be true.

After looking into how MoviePass works, I'm now wondering: why would anyone not sign up for this service?

What Is MoviePass?

MoviePass is a subscription service that allows you to see any 2D movie at nearly any theater, for $9.95 a month. You could technically watch up to 31 movies a month, but there is a limit to one movie per day. In addition, there is no ongoing commitment required.

MoviePass' network coverage is impressive, allowing you to watch a movie at over 91% of movie theaters in the country.

Why Haven't I Heard Of MoviePass Before?

MoviePass has actually been around since 2011, but it's gone through several different price and service changes. At times, MoviePass limited the number of movies you could see in a month to two or three and historically, the service was as much as $50 a month.

In August 2007, a majority stake in the company was sold to Helios and Matheson, an analytics company. At the same time, the company introduced its current pricing structure, allowing subscribers to watch up to one movie a day for just $9.95 a month.

Read full article here

Vulture: What’s Behind MoviePass’s Latest Power Moves?

Credit: Vulture

Credit: Vulture

Credit MoviePass with continuing to confound Hollywood with grand gestures. Last summer, the app-based ticketing service stunned the industry by slashing its subscription price to just $9.95 — a ludicrously inexpensive and (for the company) certainly unsustainable monthly fee entitling subscribers to see one film a day, every day, at a time when the average ticket price hovers around $9. By early January, its customer base surpassed all expectations, growing to more than 1.5 million subscribers (500,000 added in just three weeks). And with its ticketing said to account for between 3.5 and 12 percent of a given film’s total domestic box-office gross, MoviePass has proven it can lure people back to the theatrical moviegoing experience even at a time ticket sales have been in a death spiral.

But over that same six-month period, AMC, America’s largest theater chain, essentially declared war on MoviePass, castigating the service as a “fringe player,” threatening legal action, and refusing to cut it in on any profits resulting from the surge in attendance MoviePass takes credit for creating. “AMC has no intention, I repeat, no intention, of sharing any — I repeat any — of our admissions revenue or our concessions revenue with MoviePass,” AMC chief executive Adam Aron said during an earnings call late last year.

Then last week MoviePass flipped the script again: At the SundanceFilm Festival, the ticketing service made the unprecedented move of partnering with indie-film distributor the Orchard to buy North American distribution rights to the heist drama American Animals. The $3 million deal is set to include half the film’s prints and advertising costs but, more importantly, also changes the calculus of MoviePass’s business operation by shifting part of its focus to putting out movies — rather than just getting people into theaters to see them. MoviePass followed that power move (under the aegis of a new division called MoviePass Ventures) with a shot across the bow at AMC: Last Thursday, after the theater chain once again rebuffed MoviePass’s call for revenue sharing — specifically, a $3 cut of every ticket and 20 percent of concessions sales — the ticketing app blocked service at ten of the highest-traffic AMC theaters across the country, effectively driving business to AMC’s competitors.

To hear it from MoviePass chief executive Mitch Lowe, however, the service shutdown was more of a tactical display of strength than the onset of combat. Over the last month, he tells Vulture, MoviePass purchased 1 million tickets from AMC. And according to his own back-of-the-envelope estimation, the net result is at least $14 million in additional ticket sales and concessions profits for the theater chain — money that would never have materialized but for MoviePass. “We wanted to let them know that viewers have a choice,” says Lowe. “You can either work with one of the companies that’s reengaging and reenergizing moviegoers. You can get them to spend a lot more money with you. Or you can not work with them. We’d love to work with AMC! We would love to push tons of our customers to their locations.”

He continues: “If you take a small percentage of that increased profit and share it with us, that would ensure that we could continue to drive more activity to the movie theater business. But if you don’t, there are others who would love our business. And in fact, the majority of those subscribers who would’ve gone to AMC went to Regal and Cinemark.”

AMC declined to speak to Vulture but said in a statement: “AMC has taken no action to block the acceptance of MoviePass at our theaters. We have no further comment about MoviePass’s unilateral actions. We are, however, disappointed that MoviePass continues to make false statements about AMC, including recently when MoviePass greatly exaggerated its contributions to AMC’s profitability.”

One unexpected upshot: The partial AMC blackout took many MoviePass subscribers by surprise. And they, in turn, took to Twitter to vent about the unannounced discontinuation of service.

 

Washington Post: MoviePass has 1.5 million subscribers but is it worth it? Here’s everything you need to know.

The AMC Loews Uptown, shown here during the opening of “The Hunger Games,” is one theater where you can now use MoviePass. (James Buck for The Washington Post)

The AMC Loews Uptown, shown here during the opening of “The Hunger Games,” is one theater where you can now use MoviePass. (James Buck for The Washington Post)

In the face of Netflix and other formidable forces, I refuse to abandon the movie theater experience. The Twentieth Century Fox fanfare on the big screen makes my heart swell, the “Star Wars” crawl brings tears to my eyes and don’t even get me started on how much better popcorn tastes when consumed in a plush red chair.

Frequent moviegoing is an expensive habit, so imagine my excitement when I discovered MoviePass, a service that charges $9.95 a month and allows you to see one film a day. That’s cheaper than a single ticket in most major cities. The company now has more than 1.5 million subscribers and pays the theaters full price for each ticket, hoping to eventually make money by attracting studios as investors.

But MoviePass recently sparked a hullabaloo when it realized it would do just fine if it pulled out of 10 high-traffic AMC theaters in cities such as Boston and Los Angeles. While one might assume it’s because MoviePass bleeds money at popular locations, CEO Mitch Lowe attributed the decision to the company’s desire to “strive for mutually beneficial relationships.” AMC executives have explicitly stated that the theater chain has no intention of sharing the admissions and concessions revenue that MoviePass claims it has had a hand in generating. 

Basically, mom and dad are fighting about money again, and MoviePass subscribers are caught in the middle. I’m inclined to stick with the service amid this epic feud — seriously, Ryan Murphy, take notes — but won’t deny that dropping theaters affects its overall value. So, in the spirit of fairness, here are some points to consider if you’re on the fence about signing up.

As of now, MoviePass still works at a good number of theaters.

If you live in a city like Boston, where the most accessible theater is one of the rejected 10, you’re out of luck. Same goes for those of you who prefer ArcLight Cinemas or Landmark Theatres. But for moviegoers who are fortunate enough to live in areas like Washington, where the MoviePass app says it works at AMC Loews Georgetown, AMC Loews Uptown, AMC Mazza Gallerie, Regal Gallery Place, the Avalon Theatre, Miracle Theatre and the Angelika Pop-Up at Union Market, plus more in the suburbs, it’s worth the 10 bucks. (Or, if you’re a Costco member, $89.99 for a full year.)

Read more here

Deadline: MoviePass Vs. AMC: Ticket Service No Longer Covers Chain’s Busiest Theaters; Exhibitor Rips “False Statements”

FRIDAY PM UPDATE with AMC statement: AMC Theaters has gone wide with a release doubling down on its side of the ruckus with monthly movie ticket service MoviePass. The exhibitor reiterates the the decision to block sales at 10 AMC locations was made by MoviePass, and accuses the company of making “false statements” about AMC.

“AMC has taken no action to block the acceptance of MoviePass at our theatres,” AMC said in a release this afternoon. “We have no further comment about MoviePass’s unilateral actions. We are, however, disappointed that MoviePass continues to make false statements about AMC, including today when MoviePass greatly exaggerated its contributions to AMC’s profitability.”

On Thursday, MoviePass shaved 10 of the busiest AMC locations off its app in an effort to take a hard position against the nation’s largest movie theater chain. MoviePass is seeking a $3 cut on AMC tickets that it covers, plus 20% of concessions given the foot traffic it sends to AMC (a total estimated at about $2 million a week, per MoviePass insiders).

FRIDAY AM UPDATE with statement by MoviePass parent company CEO: Despite reports this morning, monthly movie ticket service MoviePass has not cut 100% ties with AMC Theatres per some Wall Street reports. Yesterday the monthly movie ticket service shaved 10 of the busiest AMC locations off its app (theaters such as the Boston Common and Empire 25 in New York City) in an effort to take a hard position against the nation’s largest movie theater chain.

If you thought relations between MoviePass and AMC were tense, buckle up, it’s going to be a bumpy ride.

MoviePass has reportedly asked AMC for a slice of admissions and concessions given the foot traffic it sends to AMC, which is around $2 million a week per MoviePass insiders. MoviePass is seeking a $3 cut on AMC tickets that it covers, plus 20% of concessions. AMC boss Adam Aron said in an earnings call late last year, “AMC has absolutely no intention, I repeat no intention, of sharing any – I repeat, any, of our admissions revenue or our concessions revenue with MoviePass.”

Ted Farnsworth, CEO of MoviePass parent Helios & Matheson, has said in reports that AMC has been ignoring MoviePass for a while and he has considered sending a letter to its board. MoviePass reportedly struck deals with close to 1,000 indie cinemas, in which it gets a $3 cut on ticket sales and/or 25% of concessions sales. Here’s the rub: While the major studios don’t mind MoviePass as they drive traffic (some in fact are shuffling marketing dollars toward them), exhibitors don’t like an outside company coming in and dictating the price of movie tickets to the public.

For $9.95 a month, MoviePass subscribers receive unlimited tickets. MoviePass counts 1.5 million subscribers, and that figure is growing.

MoviePass has refused to cover the following AMC venues: Empire 25 (New York City NY), Century City 15 (Los Angeles City CA), Mercado 20 (San Francisco-Oakland-San Jose CA), Disney Springs 24 (Orlando-Daytona Beach-Melbourne FL), Loews Boston Common 19 (Boston MA-Manchester NH), River East 21 (Chicago IL), Mission Valley 20 (San Diego CA), Tysons Corner 16 (Washington DC (Hagerstown MD), Veterans 24 (Tampa-St. Petersburg (Sarasota) FL) and Loews Alderwood Mall 16 (Seattle-Tacoma WA).

 

The monthly movie ticket service’s research has shown its subscribers aren’t loyal to any theater: They’ll literally drive past two theaters to get to the showtime or title that they want to see.

Helios & Matheson (HMNY) was down 4% in trading this morning at $8.56 whereas AMC was down 4% at $12.62 at 7:56 AM PST.

In the midst of this melee this morning, Farnsworth released the following statement against AMC:

“When HMNY acquired the majority stake in MoviePass, we made the strategic decision to reduce monthly subscription fees to $9.95 a month to get movie fans back into the theaters. As we’ve grown our subscriber base, we’ve seen a dramatic increase in movie theater attendance among our subscribers, which proves to us that MoviePass is working to revitalize a declining industry. Other theater companies have seen this attendance resurgence and have approached MoviePass to collaborate. Since the get-go, AMC has not been interested in collaborating with MoviePass – a move that is not in the interest of our subscribers and AMC theater-goers.

We know that we currently represent approximately 62% of AMC’s operating income, assuming that AMC is flat year over year. This equates to $34.4 million of gross profits to AMC in the upcoming quarter. On an annualized run rate basis, that’s over $135 million to AMC’s gross profits – which doesn’t include concession sales from MoviePass subscribers. In publicly disclosed 2017 financial documents, AMC claimed each customer spends $4.88 on concessions each visit – meaning MoviePass subscribers could bring an additional $17.1 million in AMC concession revenues for Q1 of 2018, which on an annual run rate means $68.4 million more — an annualized run rate going forward of over $203.4 million revenue from MoviePass subscribers.

We’ve pulled 10 AMC theaters  — less than 2% of theaters. We already know in past testing that MoviePass subscribers are not theater-loyal; they’re happy to drive by a theater that may be closer to a theater that will accept MoviePass –because of the MoviePass value.

From day one, MoviePass has been 100% for our subscribers – they are the most loyal fans we’ve ever seen and we’re honored to remove a price barrier than had been preventing the average movie-lover from going to the movies. We’re here for them and will fight battle for them every day of the week.”

 

PREVIOUS EXCLUSIVE, Thursday 1:41PM: Is a surprise twist for MoviePass coming out of the Sundance Film Festival where they announced they would be co-acquiring indie movies, such as The Orchard’s American Animals, some of the monthly movie ticket’s subscribers learned today that their app and cards no longer work at certain AMC venues, i.e. the Empire 25 in New York City. See tweets below.

From what Deadline has gathered, it’s not AMC turning off the spigot, rather it appears to be coming from the MoviePass side. The MoviePass debit Master Card is accepted by any and all venues that are listed on the ticket agency’s mobile app. Essentially, MoviePass will no longer cover ticket purchases at certain big market AMC theaters such as the Empire 25 in NYC, AMC Loews Boston Common and the AMC Century Plaza. It’s not as though MoviePass won’t work at other AMC venues. Note, MoviePass doesn’t cover ArcLight Cinemas, Landmark Theateres or iPic, and that doesn’t have to do with the exhibitor, but largely the high ticket price point of these theaters, and what MoviePass is willing to cover.

 

CEO Mitch Lowe issued the following statement about the latest MoviePass outage as many took to Twitter to complain: “As of today, you’ll find a small handful of theaters are no longer available on our platform. Our number one goal as a company is to provide an accessible price-point for people to enjoy films the way they’re meant to be seen: on the big screen. Many exhibitors have been receptive to this mission, and we’re excited to keep working with theater chains that are closely aligned with our customer service values.

As we continue to strive for mutually-beneficial relationships with theaters, the list of theaters we work with is subject to change. We advise customers to always double check the MoviePass app for the most up-to-date list of participating theaters.”

MoviePass insiders have informed Deadline that the movie ticket service covers over $2M in ticket sales weekly to AMC.

When reached for comment, AMC would not return calls. However, this was tweeted out by their customer service Twitter handle:

Since MoviePass’ relaunch late last summer, the movie ticket agency has had rocky relationship with AMC. Initially, the world’s largest exhibitor tried to block MoviePass, but came around to accepting them. AMC CEO Adam Aron said in a November earnings conference call, “”MoviePass paid AMC, according to our records, $11.88 for each and every ticket that it purchased for our mutual guest. That’s quite a gap, $9.95 a month versus $11.88 a visit. I must point out that’s very gracious of them and we appreciate their business, but I think it’s also important to make clear that despite claims they’ve made to the contrary, AMC has absolutely no intention, I repeat no intention, of sharing any – I repeat, any, of our admissions revenue or our concessions revenue with MoviePass.”

Earlier today, MarketWatch announced, that MoviePass parent company Helios & Matheson Analytics Inc. filed a $400M shelf registration with the SEC on Thursday. In its filing, the company said it will, “from time to time” sell in one or more offerings up to $400M in any combination of stock, preferred stock, warrants, units and subscription rights. HMNY closed at $8.93 today, -2.4%. Current market cap on HMNY is just over $214M.

Slash Film: MoviePass Will No Longer Cover Certain AMC Theatres

MoviePass, are you okay? The very popular subscription-based movie service has been doing really well for itself, raking in the dough while also expanding into acquiring films for distribution. But now there’s a sudden bump in the road: MoviePass is no longer working with certain AMC Theatres, and it appears that this was a decision made by MoviePass, not AMC. Here’s what we know about the outages at certain MoviePass locations.

For a while now, folks have been thinking MoviePass might be too good to be true, and a sudden hiccup in the service may prove this theory correct. Deadline reports that MoviePass is no longer working with certain AMC Theatres – MoviePass will no longer cover tickets at big market AMC theaters like the Empire 25 in New York City, the Universal City Walk, AMC Loews Boston Common and the AMC Century Plaza.

MoviePass CEO Mitch Lowe issued the following statement:

“As of today, you’ll find a small handful of theaters are no longer available on our platform. Our number one goal as a company is to provide an accessible price-point for people to enjoy films the way they’re meant to be seen: on the big screen. Many exhibitors have been receptive to this mission, and we’re excited to keep working with theater chains that are closely aligned with our customer service values. As we continue to strive for mutually-beneficial relationships with theaters, the list of theaters we work with is subject to change. We advise customers to always double check the MoviePass app for the most up-to-date list of participating theaters.”

MoviePass has had some issues in the past. When the service dropped its prices, inspiring an influx of sales, AMC expressed doubts. Yet this move to no longer cover certain AMC Theatres apparently doesn’t come from AMC, but from MoviePass itself, as this Tweet from AMC seems to confirm.

This is all likely due to increased ticket prices. MoviePass stopped working at the AMC City Walk Theater at Universal Studios, Hollywood last year because ticket prices were too high. In other words, there’s only so much money in ticket sales that MoviePass is willing to cover. Per Deadline, the subscription service covers $2 million in weekly ticket sales to AMC.

Meanwhile, MoviePass continues to chart new territory. After surpassing 1.5 million subscribers, MoviePass offered people a chance to win ten 12-month MoviePasses by simply attending a screening of I, Tonya. On top of that, MoviePass recently decided to move into the distribution game by purchasing movies. Just this week, they partnered with The Orchard to purchase American Animals at Sundance.

Wired: HOW DOES MOVIEPASS MAKE MONEY? WE'RE STARTING TO FIND OUT

MoviePass has pulled support from some AMC theaters, just one of many signs it's finally serious about making money. PATRICK T. FALLON/BLOOMBERG/GETTY IMAGES

MoviePass has pulled support from some AMC theaters, just one of many signs it's finally serious about making money.

PATRICK T. FALLON/BLOOMBERG/GETTY IMAGES

WHEN MOVIEPASS LAUNCHED last summer, it introduced a seemingly impossible offer: See a movie every single day in theaters, paying only a monthly fee that, in most markets, amounts to less than a single ticket. It worked. Earlier this month, MoviePass hit 1.5 million subscribers, growing much faster than anyone expected, including MoviePass.

But amassing customers was never going to be the hard part. MoviePass now has to show that it can actually, you know, make money. A little less than six months in, it looks as though it just might have an answer—although a fresh spat with AMC shows that not everyone will like it.

Giving It Away

To be absolutely clear: The more subscribers MoviePass signs up, the more money it loses. It pays theaters full price for each ticket, whether a member visits once or 31 times a month. It has to provide for customer service to support those 1.5 million people, many of whom have lobbed valid complaints—MoviePass issues debit cards to each of its members, and initially couldn't keep up with demand—as the service struggled with its rapid expansion. And that’s on top of the usual, unglamorous costs of running any business. (Backends don’t maintain themselves.) If it seems like MoviePass is too good to be true, that’s because right now, it is.

Which is also why its explosive growth hasn’t been an unvarnished good, at least in the short term. “It’s harder in some respects and easier in others,” says MoviePass CEO Mitch Lowe, who cites the company’s customer service falterings as a primary drawback. There’s also the matter of all the cash the company must have run through by now; Helios and Matheson, an analytics company which has a majority stake in MoviePass, continues to put millions toward keeping the company afloat through the outflow. Analyst Brian Kintsligner of Maxim Group recently wrotethat the company had "an estimated seven months of cash" to cover losses incurred by heavy-usage members.

The question, then, might not be whether MoviePass has a long-term plan for success—it's if the company can stick around long enough to see it through.

Read more here

The Verge: MoviePass pulls support from popular AMC theaters

MoviePass and the AMC Theatres chain have never exactly enjoyed a rosy relationship, and the latest step in their conflict came today, as MoviePass pulled support from some of the chain’s most high-profile locations. Deadline reports that the service is no longer supporting ticket purchases at theaters like the AMC Empire 25 in New York, Universal City Walk near Los Angeles, and the AMC Loews Boston Common.

“As of today, you’ll find a small handful of theaters are no longer available on our platform,” MoviePass CEO Mitch Lowe said in a statement. “Our number one goal as a company is to provide an accessible price-point for people to enjoy films the way they’re meant to be seen: on the big screen. Many exhibitors have been receptive to this mission, and we’re excited to keep working with theater chains that are closely aligned with our customer service values.” The statement goes on to clarify that the list of participating theaters is subject to change, and MoviePass customers should consult the mobile app for updates to that list.

AMC and MoviePass have been publicly at odds since the subscription service drastically cut its monthly subscription price in August 2017. (The company previously relied on a tiered model that scaled monthly pricing from $15 to $50 based on region, much like movie ticket prices can vary from one locale to another.) AMC responded by threatening to drop out of MoviePass’ deal, and potentially even file a lawsuit. The chain’s logic has been straightforward, however: mass adoption of a subscription service like MoviePass could effectively change the perceived value of movies, resulting in a situation where theatrical exhibitors wouldn’t be able to charge enough to keep their own businesses afloat. 

“AMC also believes that promising essentially unlimited first-run movie content at a price below $10 per month over time will not provide sufficient revenue to operate quality theaters, nor will it produce enough income to provide filmmakers with sufficient incentive to make great new movies,” the company said in August.

What’s interesting about today’s development is that MoviePass reportedly didn’t notify AMC or its own customers ahead of time. In fact, AMC’s own support account on Twitter wrote earlier today that MoviePass still has not contacted the chain about the development. Given the public rancor between the two companies, it seems likely that MoviePass made the change quietly as a bit of hardball negotiation, hoping customers would become angry with the theater chain and blame it for the problem. On social media, that appears to be exactly what’s happened. But in reality, the tactic could easily backfire on MoviePass, as customers realize they can’t trust the company to consistently provide access to their favorite theaters. Presenting MoviePass access as arbitrary and subject to political maneuvering is hardly a consumer-friendly tactic.

It’s been clear for some time that MoviePass isn’t simply trying to find ways to bring more people into existing movie theaters. The subscription-price reduction came after MoviePass sold a majority stake to the data firm Helios and Matheson Analytics, Inc., and the change has allowed the company to jump from around 20,000 subscribers to 1.5 million subscribers as of January 2018. MoviePass’ ability to track what movies its customers are watching, and where they’re buying tickets, is valuable data for marketers, advertisers, and distributors. And Lowe has said that selling that data is a major way that MoviePass is going to make money. Not having access to AMC — the largest theater chain in both the United States and the entire world — could make achieving that goal more difficult, since it would be clear MoviePass’ data would be incomplete. There are good reasons AMC was the first chain MoviePass signed a deal with, and that importance is likely why MoviePass is being so aggressive around AMC now.

MoviePass is already trying to add revenue streams past its data-driven approach. The company has been heavily promoting movies like I, Tonya and Forever My Girl to its users, clearly as part of a paid promotional package. And before 2018’s Sundance Film Festival, the company announced it had spun up a division that will actually acquire movies, then use a traditional distribution company to get them into theaters. During Sundance, it partnered with distributor The Orchard to purchase North American distribution rights for Bart Layton’s American Animals for $3 million, giving the company the opportunity to create a closed loop with a captive audience: it can own part of a movie that it then promotes to its own customers, driving up the ticket sales that its own subscription service helps generate.

And like most entertainment companies, MoviePass is already looking beyond theatrical exhibition. In November, CEO Mitch Lowe said on CNBC that the company would eventually launch its own streaming service as well. But as MoviePass tries to hardball AMC into going along with its demands, and as it lures in millions of customers by offering increasingly lower ticket prices, it’s important to remember that when something seems too good to be true, it often is. 

MoviePass isn’t trying to help movie theaters; it’s trying to use them to capture data it can sell. It isn’t trying to help people see more movies out of some altruistic bent; it’s hoping to spike attendance in the short term so it can expand the pool of people whose data it’s collecting. And when it doesn’t get the answers it likes from a chain like AMC, it’s willing to cut those theaters out completely, regardless of the harm that does to its customers or reputation. While a $9.95 subscription deal may sound great, it’s really only a good deal if it works consistently, at the theaters where customers want to use it. And as MoviePass’ CEO said, those theaters are subject to change.

Variety: Sundance - MoviePass, The Orchard Buy 'American Animals'

CREDIT: COURTESY SUNDANCE

CREDIT: COURTESY SUNDANCE

MoviePass Ventures and The Orchard are partnering to buy North American distribution rights to “American Animals,” an art heist drama that premiered at this year’s Sundance Film Festival. The deal was for $3 million and involved a significant P&A commitment, according to a knowledgeable source.

It’s a unique pact, combining the resources of a subscription ticketing service that’s been likened to the Netflix of the exhibition space with the indie studio behind “Cartel Land” and “Hunt for the Wilderpeople.” At the start of the festival, MoviePass announced that it was looking to buy films and was hoping to partner with a more traditional distribution company. It had talked to studios about partnering on a deal to purchase “Blindspotting,” but that film ultimately sold to Lionsgate. MoviePass’ subscriber rolls currently exceed 1.5 million people, so theoretically it has access to data on consumer habits that could help the companies pitch the film to consumers.

American Animals” hit the mountainside festival with a lot of buzz for its colorful plot, kinetic direction by Bart Layton, and the performances of stars-on-the-rise like Evan Peters and Barry Keoghan. The film unfolds in 2004 and follows childhood friends Spencer (Keoghan) and Warren (Peters) as they rebel against their suburban upbringing in a posh corner of Kentucky. The two plot to steal priceless Audubon prints and rare books from Transylvania University’s special collections library. Their exploits rank as one of the most audacious art thefts in recent history. But reality proves to be very different than fantasy, and while they had visions of pulling off a grand caper, Spencer and Warren are eventually forced to grapple with the moral consequences of their criminality.

Reviews for the film were strong. Variety’s Guy Lodge called the picture “wildly entertaining,” and wrote that it works as “a riveting college-boy crime caper that tiggers along on pure movie-movie adrenaline, before U-turning into a sobering reflection on young male privilege and entitlement.”

“American Animals” was co-financed and developed by Film4, which previously backed Layton’s first feature debut “The Imposter,” and “I, Tonya” maker AI Film. It is a Raw production, and was produced by Katherine Butler, Derrin Schlesinger, Dimitri Doganis, and Mary Jane Skalski.

The deal was negotiated by Danielle DiGiacomo, VP of acquisitions for The Orchard. Khalid Itum, VP of business development, Zac Bright, director of business development at MoviePass, represented the subscription service. Vince Holden at AI Film and UTA Independent Film Group represented the filmmakers.

Sierra/Affinity will handle international sales on “American Animals.” Those rights are still available.

Seeking Alpha: The MoviePass Narrative Has Evolved. I Am Long.

Summary

A simple reflective question made me reassess my initially bearish position on the comany - Will it be around in a year?

The company could stand to benefit from a range of revenue verticals, some of which would have a material effect on its financial story.

The risk/reward is skewed to the upside at the current price.

The aftermath of my Helios and Matheson Analytics's (HMNY) MoviePass article; "Can A Flawed Business Model Generate Investor Returns? An Empirical Analysis Of MoviePass" was to be expected. Bulls sought to defend their position, bears theirs, and words like "shill" and "manipulator" got thrown around. However, in the midst of this a simple question made me reassess my entire bearish premise; will MoviePass be around in a year? This was a watershed moment in my opinion towards the company. At face value, it is a very basic question. Bears will either answer no, go short! Or yes, go short! However, when I sought to answer it, I was fully converted to a bull.

I thought it would be prudent to write an article exploring the findings from my answer to this question as I placed an order with my broker to buy a considerable amount of calls. This article will explore how I have come to join the ranks of individuals initially described as being induced with "FOMO induced haze".

Movie Marketing-as-a-service (MMaaS) 

MoviePass should not be thought solely as a movie ticket subscription company. While its subscription offering for moviegoers could potentially break even and become profitable, central to its long-term growth is selling movie marketing-as-a-service.

The current context for movie studios is bleak as year-on-year increases in marketing costs have intertwined with year-on-year decreases in movie theater attendance. This represents a negative return on marketing investment (ROMI). Further, most of this is spent to buy television time (70% or more in most cases), which is a non-targeted form of advertising. Variety states that the "reason the marketing revolution has yet to materialize is that distributors still lack the kind of granular customer profiles" necessary for more "interesting, precise, cheaper, and efficient marketing.”

Read full article here

The Washington Post: The MoviePass deal: For less than $120 a year, you can see 365 movies. Here’s the catch.

MoviePass is a film nerd’s dream. The subscription service allows users to see one movie a day at a theater for a single monthly cost. The service isn’t new, but it’s become popular among a lot more than movie buffs in the past few months.

During its first six years as a company, MoviePass relied on the idea that most of its 20,000 subscribers wouldn’t use the service. It’s the way many gyms make money: Convince users to sign a contract, then hope they’ll never actually show up to use a treadmill.

But when Mitch Lowe, a Netflix co-founder, took over MoviePass as CEO in June 2016, he opted to flip this revenue model on its head.

First, he teamed up with data firm Helios and Matheson Analytics Inc., which bought a controlling interest in the company. Then, in August, he announced a radical overhaul to the company’s pricing model, dropping the cost from around $50 to $9.95 per month.

Instead of hoping subscribers skip out on the movies, Lowe wants MoviePass customers to visit the theater as often as possible. Because the more movies its subscribers see, the more data the company rakes in. And that’s where the real dough is.

“The big money for us was always understanding the consumers habits and the data, because no one’s ever done that,” Ted Farnsworth, CEO of Helios and Matheson, told The Washington Post.

After the pricing change, the service exploded in popularity, adding 150,000 subscribers in two days, Lowe told The Post. Since then, its user base has grown to 1.5 million subscribers. It added 500,000 of those in last month alone. (For comparison’s sake, it took Netflix about four years to reach 1 million subscribers.)

MoviePass is trying to drive customers to movie theaters at a critical time. Movie attendance in 2017 dropped by more than 6 percent from the previous year, according to Box Office Mojo, which noted about 82 million more tickets were sold in 2016 than 2017.

The average movie in America costs $8.97, according to the National Association of Theatre Owners. In cities such as New York and Washington, tickets can run $15 to $20. MoviePass customers would only need to see one or two movies a month to get their money’s worth. According to the Motion Picture Association of America, 11 percent of American and Canadian moviegoers already do just that.

Since MoviePass pays the full price for each ticket, it quickly loses money on many customers.

“They definitely need to generate revenue from ancillary revenue sources,” Eric Wold, an analyst with B. Riley FBR, a financial services company, told The Post. He added that the company will probably raise its prices over time, much like Netflix did, but even then it will still require other income sources.

The company has spoken of seeking of concession revenue from the theaters to which it sends moviegoers, according to Fortune. During the weekend, the company announced that it will be investing in movies.

But Wold — echoing Farnsworth — said data is the key to the company’s potential success.

While most theater chains track its own customers’ habits, Wold said MoviePass is the first service that can track moviegoers across nearly all theaters in America. Those insights could be valuable to the restaurants, bars and even retail outlets situated around movie theaters, according to Wold.

“That data could help local restaurants, or local clothing stores, market to the moviegoers,” he said, pointing out that many theaters are in malls or strip malls. The other businesses occupying that space would probably pay to know when certain demographics will be visiting en masse.

The service also has a direct line to avid moviegoers, which could benefit the studios themselves.

Wold said while average moviegoers are willing to shell out upward of $15 for blockbusters such as “Star Wars,” they might often wait for smaller fare like “Lady Bird” to hit streaming services. Having MoviePass encourages users to see the smaller films that they wouldn’t normally shell the money out for.

“They’ve already shown results from the non-blockbuster films getting an increase in traffic from MoviePass subscribers,” he said. For example, the service accounted for 1.7 percent of ticket purchases on the opening weekend for the comic book blockbuster “Justice League.” But it accounted for 10 percent of ticket sales of the independent film “Three Billboards Outside Ebbing, Missouri,” according to a news release.

Studios have noticed.

“In the short term, we’re already using the data to promote titles on behalf of the studios. Studios are paying us around two dollars per ticket we buy in exchange for us marketing their film,” Lowe said.

But while studios might be pleased, not all the movie theater companies are.

Cinemark, which owns more than 500 theaters nationwide, launched its own truncated version of MoviePass, called Movie Club, in December. For $8.99, moviegoers can see one movie each month at a Cinemark theater and receive a 20 percent discount on concessions, according to a news release. Like MoviePass, Cinemark’s version doesn’t apply to 3-D movies.

AMC Theatres, which has more than 650 locations in the United States that serve around 200 million moviegoers every year, loudly voiced its opposition to MoviePass in August. The company said the service “is not in the best interest of moviegoers, movie theaters and movie studios” in a harsh statement that said it was consulting with attorneys to determine “if or how” it could prevent MoviePass from being used in its theaters.

“From what we can tell, by definition and absent some other form of other compensation, MoviePass will be losing money on every subscriber seeing two movies or more in a month,” the release stated, cheekily adding, “AMC noted that it is not yet known how to turn lead into gold.”

AMC said it fears that MoviePass offers a price point that’s too good to be true and will eventually go belly-up, disappointing moviegoers who grew used to the cheaper pricing.

If MoviePass fails, “subscribers will have to return to paying between $10 to $15 for a single ticket. After three months with the service, I don’t think I could do that,” Nick Statt wrote in the Verge, adding, “once you’ve gotten something for what feels like free, it’s difficult to go back to paying for it.”

The explosive interest in MoviePass signal that moviegoers are seeking a change, and there’s no indication that it will slow any time soon — unless it proves to be an unsustainable model. AMC declined a request from The Post for comment, but recent remarks from the chain’s CEO Adam Aron hint that the company might be warming to the idea — but still has no plans to share its own revenue.

“We appreciate their business,” Aron said in a November conference call with analysts, according to the Hollywood Reporter. He added, “AMC has absolutely no intention — I repeat, no intention — of sharing any — I repeat, any — of our admissions revenue or our concessions revenue.”

Cheddar: MoviePass Plans To Grab Film Rights

MoviePass announced at Sundance that it will officially get into the film rights business. MoviePass Ventures will acquire film rights and build out their offerings, and they have started scouting at the festival.

Ted Farnsworth is the chairman and CEO of Helios and Matheson, the parent company of MoviePass. He joins Cheddar from Sundance to explain the new initiative.

Farnsworth says this has been the plan since day one. When the announcement was made at Sundance, it immediately became a big buzz. Farnsworth says MoviePass is, "totally disrupting the whole market." MoviePass has already started to bid on some products at Sundance.

When asked if MoviePass intends to increase the price above $10, Farnsworth says he is happy with where it is now. Growth has been strong and there is no advertising, so growth has been completed from word of mouth. Farnsworth explains that MoviePass may look into more premium membership plans, but are keeping the price where it is for now.

MoviePass' focus for now: continue to build their subscription base.

Deadline: Can MoviePass Impact The Indie Film Biz & Survive In The Long Run? CEO Mitch Lowe Explains – Sundance

EXCLUSIVE: Film sales agents at Sundance, think about this: What if a potential buyer could literally guarantee a certain portion of a film’s box office opening weekend?

That’s the pitch from MoviePass, the monthly movie ticket service, which announced their new division MoviePass Ventures on Friday at Sundance, a subsidiary that will co-acquire independent films.

When it comes to film festival acquisitions, co-partnering has become increasingly more common. Amazon Studios, before they independently distributed their own slate, would acquire films with partners like Lionsgate and Roadside Attractions. 30WEST too has become a player in teaming with partners to pick up titles, read Colette with Bleecker Street at this year’s fest for mid-seven figures, and with Neon on I,Tonya out of the Toronto International Film Festival (Also announced during Sundance, 30WEST took a majority stake in Neon).

Over the weekend, Deadline sat down with MoviePass CEO Mitch Lowe who expounded on his plans for MoviePass Ventures at the company’s Sundance mansion in Haber City, Utah. Lowe has had pic co-financing aspirations for sometime and springing it at Sundance was the ripe opportunity.

“We’ve had many meetings with serious distributors who are bringing their lawyers to meetings,” says Lowe about the newfound interest in MoviePass Ventures, “That’s how serious they are.”

While Lowe didn’t get into specifics in regards to whether MovieVentures would look to co-finance entire film slates or team with a specific producer in the indie sphere, he mentions that the ideal partner would be “a distributor who understands content and who understands distribution.” Essentially, MoviePass Ventures would split the minimum guarantee on pic’s acquisition.

“If it’s $4M then we would put up $2M. Then we market the heck out of it and ensure that we sell a ton of tickets to the theatrical opening, and then we share with all the downstream revenue,” says Lowe on one potential MG scenario.

Essentially in the end it’s a means of maximizing a pic’s overall ticket sales and making sure that all “downstream revenue is higher and amplified” adds the CEO.

In recent weeks, MoviePass says that they’ve moved the needle on a number of awards contenders’ ticket sales including Fox Searchlight’s Three Billboards Outside Ebbing, Missouri, A24’s Lady Bird and Neon/30WEST’s I, Tonya. Distributors who have access to ComScore’s Rentrak live ticket sales system are unable to decipher what portion of their hourly business is derived from MoviePass customers. But that’s where MoviePass stops in regards to selling data to them.

Speaking about the struggle that mid-budgeted films have at the box office versus $100M-budgeted event titles, Lowe says, “Exhibitors and studios have not figured out a way to affordably attract an audience to the smaller titles. They have taken the path of putting a ton of money in the brand titles. We see it with our subscribers: They want the better stories, they want to see these mid-sized titles ($25M-$50M); they’re just not marketed properly.”

In recent times, those in the industry have feared that streaming has encroached on the theatrical business, particularly as Netflix champions the immediacy of watching content, and meeting consumers’ demands for it. Then there’s Lowe, a Netflix co-founder, who is taking an opposite approach, and capitalizing on the traditional side of the theatrical business, but via a monthly movie ticket subscription model ala Netflix’s.

 

As such Lowe doesn’t believe streaming is capsizing the theatrical business.

“It’s super-healthy, despite Netflix, Hulu and the fact that theaters have doubled the cost of going to the movies, it’s still an $11 billion business” says the CEO about the domestic theatrical marketplace, “I don’t believe it’s in decline.” His one piece of advice is for exhibition to embrace other big content outside what the majors are peddling, i.e. “they should do binge Thursdays of Game of Thrones,” says Lowe.

Further commenting on the supposed notion that streaming is chomping away at theatrical, Lowe says “It’s wishful thinking. They (Netflix) just don’t get the idea that watching a comedy by yourself is not like the getting-out-of-the-house-experience.”

In regards to MoviePass’ ongoing relationship with exhibition, you could say relations have smoothed. AMC, the largest exhibitor in the world, has changed their attitude: They once tried to block MoviePass, but are now more pragmatic about the ticket service. “In an October earnings call, AMC said they were happy to take our money, but they don’t know how MoviePass is making money. My response is you’re the ones who had to borrow $4.5 billion. So, how are you making money?” specifies Lowe.

While some have criticized MoviePass in that its App is only good for a solo moviegoer, Lowe says 3.0 version will be launching in the near future with ultimate updates that will include options to buy tickets for a friend at a discounted rate as well as the ability for groups to purchase tickets.

 

While it’s a challenge for theater chains to sell studios on a monthly subscription price that won’t cut into the majors’ share of film rentals, MoviePass doesn’t have this headache. As an outsider they can feasibly keep both exhibition and the studios content by paying the full price of a movie ticket. We hear the majors continue to be intrigued by MoviePass and are funneling more money toward the monthly ticket company in marketing dollars. Similar to how Imax can rep 10% or more of a blockbuster film’s opening weekend, if MoviePass can do the same ultimately, the industry will have but no choice but to take them seriously as a catalyst for business.

One cynical major studio chief told Deadline, “If MoviePass ultimately reps 30% of the box office, they’ll go broke doing so.”

What’s Lowe’s response to this?

“They (the studios) have never eaten at a buffet restaurant every night for a month. What they would find by the third or fourth night is that they are not covering their plate with food, but eating more normally. What our customers do is that they go crazy over the movies during the first month, a little bit less in the second, and little bit less in the third, fourth and fifth months. They’re doubling their frequency from what they did before but we’re edging toward a break-even model. On what we pay for a ticket and what we collect in revenue, I think they (the studios) assume everyone in the world has all the time in the world to go to the movies several times a month. In fact, that’s not what happens,” said Lowe about MoviePass’ future financial longevity.

Currently, 30% of all MoviePass subscribers are concentrated in San Francisco, Los Angeles and New York with 70% scattered across the nation.

Says Lowe, “It takes money to build any subscriber base and in the subscription business, you have to invest in the long term.”