When Christiansburg attorney Joseph Simmons first heard about MoviePass, the movie theater subscription service, part of him thought it was a scam.
For $9.95 a month, subscribers could see at least one movie per day in nearly any movie theater. He wondered how that could be financially feasible.
Simmons still bought a subscription to MoviePass a few months ago, believing it worth a chance. He is an avid moviegoer and is the chairman of the board of The Lyric, a nonprofit independent theater in Blacksburg.
“Despite the delay it took to receive my card, I’ve now been using MoviePass for 3-plus months and it has drastically changed my movie going attendance,” Simmons said in an email. “Going to a movie no longer requires me to do financial math on whether I think this movie will be good enough for me to pay $11.00 to $15.00 [a] ticket for. Instead, I just go when I have free time.”
“It’s honestly been an amazing experience and I think I have successfully convinced at least 10 of my best friends to sign up as well,” he said.
Since New York-based MoviePass announced it was reducing its price last summer to $9.95 per month, subscriptions have surged and news about the service has gone viral. On Tuesday, the company reported that it has acquired 1.5 million subscribers, 500,000 of whom joined in less than a month. But business analysts, theater owners and even its most contented customers have serious questions about whether the service can be sustainable with such a low price point.
Here’s how MoviePass works:
Users sign up for an account on the MoviePass website and then download the MoviePass app on their phone. After a few weeks — or months, in some cases — users receive a MoviePass card, which is an actual MasterCard. To see a movie, a subscriber goes to the movie theater, opens the app and clicks “Check In” for their movie choice, desired showtime and theater. The app then automatically puts the correct amount of money to cover the cost of the ticket on the MoviePass MasterCard. Users pay for the movie ticket using the card as they would with any other debit or credit card. The theater gets paid full price, as with any other card.
The subscription is month-to-month. However, if you cancel your subscription you can’t sign up again for nine months.
It’s sort of like Netflix, but for theatrical releases, which makes sense considering that MoviePass CEO Mitch Lowe was a Netflix co-founder and former president of Redbox, both of which were entertainment disrupters in their own right. He took the helm at MoviePass in 2016. The company has been around since 2011, but its monthly subscription used to have a tiered cost model, and users paid up to $50 a month in some cities to see unlimited movies. In August MoviePass announced the new lower price point, and subscribers signed up so fast the company had trouble handling all the new business. Its social media pages are still filled with complaints from customers who have yet to receive the MoviePass cards they ordered or to get customer service to respond to issues.
Those aren’t the only complaints. MoviePass has drawn major ire from movie theater companies, which had their theaters added to the app without any consultation and now have had the service thrust upon them. With the exception of 3D films, every theater and every movie showtime in the Roanoke and New River valleys appears on the MoviePass app.
AMC Theatres, the nation’s largest movie chain with two locations in the Roanoke area, has threatened legal action against MoviePass. After news of the summer price drop, AMC sent out a news release that said MoviePass was “not welcome” and if the company can find a way to opt out, it will. However, because MoviePass is essentially a MasterCard, the theater likely would alienate a lot of customers by declining to accept it.
“In AMC’s view, that price level is unsustainable and only sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled,” the release said.
The average movie ticket price in the U.S. was $8.65 in 2016, according to the National Association of Theatre Owners. But in large cities, the price can reach $15, and in Roanoke, most evening movie tickets are more than $10. So MoviePass users can often get their money back by seeing just one or two movies a month. Assuming subscribers go to more than one movie a month, the question of how MoviePass will eventually turn a profit remains unclear. However, the company says it remains confident.
“We believe the data MoviePass collects from these million and a half movie-goers will become an important asset to our partners and the future of the movie industry,” Ted Farnsworth said in a news release. He is CEO of Helios and Matheson Analytics Inc., which holds a majority stake in the company. However, AMC’s CEO, in the company’s third quarter earnings call, said that the theater chain has no intention of sharing any admissions or concessions revenue with MoviePass.
Over the years, movie theater chains have made attempts to enhance a trip to the theater by introducing new seating, better screens and sound systems and more concessions. But the overall process of moviegoing has not really changed much. People still go to the theater, buy a ticket and see the film. If MoviePass attracts millions of users and the data that accompanies them, it could disrupt how people go to the movies. And if it were to fold, would its users be willing to go back to paying full price for movies?
Ian Fortier, executive director of Roanoke’s Grandin Theatre, also has concerns about MoviePass, and the city’s sole independent movie theater declined to accept MoviePass for its first few months. But after more subscribers were showing up to the Grandin wanting to use it, the theater changed its policy.
“We were originally reticent to embrace the MoviePass model because we felt it was unsustainable,” Fortier said. “But being a patron-first movie theater, we wanted to provide it to moviegoers and provide them with the experience they were looking for at the Grandin Theatre.”
He said he hopes the decision will bring more patrons to the Grandin to see its unique movies, which often include smaller independent films that moviegoers cannot find anywhere else in the city. For example, the Grandin was the first theater to land critical darlings like “Lady Bird,” and “The Shape of Water.” And these represent the types of films that many MoviePass users are willing to take a risk on, thanks to their subscription.
Haley Baker, who is from in Roanoke but now lives in Colorado, said now that she subscribes, she is more willing to see flicks outside her normal genre, such as “Three Billboards Outside Ebbing, Missouri.”
“I wouldn’t have wanted to spend $20 to go see that before, but now I’m willing to go because it doesn’t feel like I’m actually spending that money now. I’m definitely more willing to buy concessions,” she said.
Roanoker Chris Saunders also said he doesn’t mind paying for a snack since he uses MoviePass. Saunders was a subscriber before the price dropped and paid $30 a month for it, thinking it was a good deal then. He said he was more selective before he subscribed to MoviePass, but now he sees eight to 10 movies a month.
How MoviePass plays out in the long term, especially regarding profitability, remains unclear, but Farnsworth said in the news release that the lower cost is bringing more people back to the theater, and he believes it will be transformational to the industry.
This could be important as theaters nationally struggled to attract customers in 2017, posting the lowest number of tickets sold in more than 20 years, according to movie tracking site Box Office Mojo and film media reports. This could partially be blamed on a lackluster crop of films, but theaters also increasingly must compete with subscription services like Netflix and Hulu for the public’s entertainment dollars.
Susan Mattingly, executive director at The Lyric, said she has seen quite a few subscribers use MoviePass already but doesn’t have exact figures.
“As for my feelings about the card, I support any program that encourages people to get out and enjoy the shared viewing experience that movie theaters provide,” she said. “Watching movies on the big screen, without interruption or distraction, in the company of community, is a very different experience than seeing it on your couch with your cellphone or device at your elbow.”