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.”