Sustainability is the glaring question
MoviePass has a problem, and it’s not just the widening gap between income and overhead. Sure, that alone makes them high on everyone’s “How Are Those Guys Still In Business” list, and with a rightful cause. In 2017 the average movie ticket in the United States cost $8.97, which falls right in between MoviePass’ current (as of publication) offers of $7.95 and $9.95 monthly subscription options.
In the last two years, MoviePass has changed its pricing in a variety of ways. There were multiple tiers where cost was based on the movie market an individual lived in, with the unlimited movie option topping out at $50 a month. Fast forward a year and execs for the company slash the price 80 percent to build up their subscription base.
Beyond the theater regulars, MoviePass allows the fringe movie fans to feel better about taking a trip and catching more flicks without breaking the bank. Many theater owners and managers feel that the service isn’t sustainable and that when it does go bottoms up, the customers conditioned to the MoviePass experience may find it harder to fork over the dough for full priced tickets.
Now, instead of spitting constant vitriol at the service, theaters are taking things into their own hands and joining the subscription market.AMC announceda new service offering 3 movies a week for $20 a month, and fellow chain Alamo Drafthouse is working on a beta version before revealing any official price.
While AMC’s Stubs program is still twice the cost of MoviePass with marginally less usage, the fact that another option is out there is a big deal. And with the Alamo program in the works, it’s only a matter of time until other theater chains follow suit. With theaters offering their own deal, they have the ability to provide discounts on concessions, which the Stubs program offers. The cooperative deals are what MoviePass had been hoping to engage in after boosting their customer base and presumably driving more foot traffic to the theaters, but the script is changing.
It’s no different than Uber’s price-hike when glazy-eyed patrons are kicked out of the bar and find a ride home costs three times as much. From MoviePass’ point of view, this makes sense, and it’s probably not as bad as it sounds. They could have simply raised the price across the board, but then face the potential backlash from their base (not unlike the backlash they received when they attempted to change their service to one movie a week. That was quickly eradicated). While the new process may not sit well with some, and until the surcharge figures start seeing the light of day, MoviePass will likely remain the most cost-effective option.
So what happens next? The MoviePass business model will need to change if they want to survive. Right now they’re using investor money to stay afloat, but at some point, the numbers will need to trend towards the black, lest the ink in the pens writing the checks ceases flowing. So far that hasn’t happened, and just last week parent company Helios and Matheson made the move to sell more shares in an effort to raise $1.2 billion over the next two years. In an interview withThe Hollywood Reporter, CEO Ted Farnsworth laid out the plan. The $1.2 billion will help float the company for the foreseeable future while allowing them to expand the MoviePass Films and MoviePass Ventures properties.
It’s in those two subsidiaries that would likely keep MoviePass from being one gigantic faceplant. One a production company and the other focusing on investments, these doorways into potential windfalls of cash could–eventually–turn the company into something more than just a cheap way to see movies. MoviePass Ventures has already invested in two recently released films inAmerican AnimalsandGotti(they went one for two on those, the latter under heavy fire for a ridiculously large disparity between a critic and audience scores–0 percent and 80 percent–that voting manipulation conspiracies were thrown around. The audience score has since been lowered to 55 percent, with the critic score holding fast at 0 percent).
How accurate those numbers are is anyone’s guess, and it’s extremely possible that they fluctuate one way or another in any given quarter. Not to mention creeping increases to the cost of movie tickets themselves year over year, which the company will have to account for. MoviePass’ stock hasplummetedsince last fall from $20 a share to $0.20 this summer as the market reflects skepticism of their survival chances.
Though hope does abound, as Netflix’s stock prices were once $0.77 in November of 2002, and are now over $400. Regardless, a billion dollar boost means the company isn’t going anywhere soon, so provided they make some smart investments in the right films, they can start bringing in some extra cash to alleviate those 12 percenters and build their own content in the likeness of Netflix, Amazon, and Hulu (or, you know, they could just make some cash onmerchandise). It’s an uphill battle where the smallest slip could cause a downward tumble, but Farnsworth is betting onmountain goat-likefooting to find their way near the top.
