The marginal cost to a theater, sure. But, as the 3rd paragraph points out, MoviePass is paying those theaters full price for each ticket. They're losing money hand over fist.
They can't just solve this by squeezing theaters, either. They're already struggling, if not barely surviving. If MoviePass simply tries to strong-arm them into accepting less than full price, without offering some other source of revenue in return, that's a lose-lose strategy for them. If they fail, they lose their ability to supply customers in that market with the service that they signed up for. If they succeed, they risk bankrupting the people who actually supply their customers in that market with the service that they signed up for, and so they still lose it.
If you believe what MoviePass is saying, they’re not losing money hand over fist. They claim most people stop going to the movies after the first couple of months. If someone doesn’t see 12 movies in a year, they aren’t losing money. They say the average is closer to 4.
When the subscription price was higher, they have fewer members and the people that signed up went to a lot of movies and MoviePass was losing a lot of money. When the dropped the price, a lot more people signed up and most of these were casual movie goers.
In every way they are better off with two million subscribers that go to 8 movies a year than a hundred and fifty thousand subscribers that go to 25 movies a year.
And this is exactly why they pulled out of the top AMC theaters. No surprise they're also the most expensive ones. The AMC at citywalk in LA is almost 20 a ticket for a basic 2d showing.
It's apparently not the ticket price that they care about. They removed support for the River East 21 in Chicago, which has 21 screens and shows a lot of foreign and limited releases. You could probably go there every couple of days and see a new movie you haven't seen before. Ticket prices there are actually cheaper than the 600 N. Michigan AMC which they still support. But that theater only has 9 screens and basically only shows blockbusters.
Likewise, the Webster Regal in Chicago is about $3 more per ticket than theater they dropped support for. But they don't carry all the limited/foreign releases that River East does.
That has no effect on MoviePass. As per the article, what’s “interesting” (for certain definitions of interesting) is that MoviePass pays the theatres for the full price of the tickets for each user.
And the theatre companies are complaining about this, which blows my mind. It’s a phenomenally good deal for them at the moment — tons of free revenue they otherwise wouldn’t see at all, courtesy of VC capital. What a bunch of whiners.
> It’s a phenomenally good deal for them at the moment
The problem here is in the at the moment. MoviePass trains consumers to see the experience of going to the movies as effectively worth nothing. That is very bad for theaters, because when MoviePass goes away they will be left with a product---with small margins---that consumers see as incredibly expensive.
And the insidious part of this is that MoviePass doesn't have to fail. If they achieve sufficient market dominance they can ruin any theater that refuses to play ball by removing their ticket "subsidies".
The article quotes AMC about why they're complaining: they worry that if MoviePass fails, people will sour even more on theaters and that could be their death knell (btw, love the use of harrumphed!):
> The largest theater chain in the US instead described MoviePass as as an existential threat. “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 company harrumphed.
I did read that and understand the potential downside for them in the long term. I still think publicly complaining about free money is a really bad look and just exposes them as the curmudgeonly dinosaurs they are.
It's amazing how curmudgeony they've been. Their comment that MoviePass is an "existential threat" is fascinating as a window into the minds of people just trying to survive rather than thrive.
