> I appreciate the fact that it did end up disrupting the market as it died.
It might be too early to say that for sure. The AMC service was created when MoviePass was still a player and was very much a response to them. I believe AMC also only committed to that pricing for a single year and we just recently passed that 1 year anniversary. Now that MoviePass is functionally dead, there is little stopping AMC from raising prices to the extent that basically kills this model for the average consumer. We might soon find ourselves back in a market similar to the early days of MoviePass when one of these unlimited subscriptions costs $30-50 and is only viable for an incredibly small group of moviegoers.
I'm not sure AMC would want to kill off this service. First, having subscribed customers is a much more reliable source of revenue than depending on the next big blockbuster so you can profit off the popcorn. Second, AMC doesn't lose nearly as much money per movie because they make money back on refreshments and there are almost always extra seats in the theaters. Furthermore, what's to stop AMC from saying a person who saw Avengers 3 times from really reporting that they only saw it once? I'm not sure how that whole process works but in theory, AMC could hide how many movies are actually seen in order to limit payment to studios for tickets purchased.
Also, like gym memberships, the utilization is almost certainly nowhere near 100%. I bet they make far more money from people who have the pass but average <1 movie per month than they lose from people who maximize the "free" movies.
> the utilization is almost certainly nowhere near 100%
I read a study a few years back and the average American adult sees 1-2 movies per year in a theater. I dont have the info anymore but I agree wholeheartedly
But AMC will be dealing with adverse selection. People who only see a couple movies a year will not subscribe. Only those who spend more (plus a few who miscalculate) will be subscribing.
>People who only see a couple movies a year will not subscribe.
This is what a lot of people leave out when discussing the gym membership analogy. There is a societal and personal pressure to be in shape and have a gym membership. Many people also don't enjoy the actual process of working out. Therefore people feel guilted into purchasing the service but disincentivized from actually using it.
There is no societal pressure to go to the movies regularly (maybe there is a little pressure to see a handful of blockbusters a year, but not enough to justify the service) and people generally enjoy the experience. So the only incentive to purchase the service is to save money and people have a positive incentive to use the service. That is totally different than the gym membership model.
I'm also reminded of the high-pressure, guilt-ridden sales tactics I had to endure when I had to set an appointment just to cancel my recurring 24-Hour Fitness membership in person.
"So, why did you stop taking your health seriously?"
When I stopped teaching fitness classes part time and move to the other side of town (ie metro Atlanta - an hour drive) where the gym wasn’t the meeting spot for my social circle, I started really not like going to the gym and having to squeeze it in with everything else.
I’ve had a treadmill in my house/apartment for years -that I actually used - when we moved I made sure that we had a spare bedroom that I could turn into a gym.
I love working out at home, in front of my TV or listening to a podcast. I can work out anytime, I’m still at home with my family and my wife will work out with me occasionally. She still likes going to the gym and working out with her friends.
We use it as a commitment device. Too often “life happens” and we don’t have date nights or we may just feel like staying at home. But since we pay a combine $46 a month (including tax), we think we might as well go to a movie. We will usually go out to eat and have drinks while we are out.
Not sure that's a bad thing. It probably hinges on the unit economics of their ticket obligation to the studios.
For example, if subscribing induces people who like going to the movies enough to do it at least monthly to go more often--maybe 2 or 5 or 10 or 20 times a month--the main liabilities seem like: subscribers displacing people who buy full-price tickets, turning frequent full-price purchasers into subscribers, and hard-core min/maxers who refuse to buy anything else at the theater.
I'm not sure how the plans work, but the first is probably mostly-fixed by things like not letting pass members reserve seats, and no-pass stipulations for new releases, etc.
There's not much you can do about the third, but I'd guess most people are more likely to get a snack or drink if they aren't explicitly paying for the movie, and even more so if they know they're watching 8 movies a month for $13.
If the profit on those exceeds the studio's cut of ticket sales, and if the majority of subscribers are attending more, they might come out better the higher the average number of subscriber-monthly attendance goes?
Yes, but AMC and Regal can (and did) negotiate ticket revenue shares with the studios. They also have additional revenue streams like advertising, private events, and especially concessions that are independent of or benefit from increased subscription attendance.
Consider that for a regular movie ticket, the movie probably made more from the concessions (which cost the theater pennies and can get marked up by up to 100x) than they do from the ticket.
AMC did not negotiate with the studios, regarding A-List subscription reimbursement. AMC decided on its own to base reimbursements on an average 8.99. Studios haven't fought back or pulled films yet, but there is no guarantee they won't.
You keep taking things way too literally. There is no way that AMC “decided” to give the studios less than they were contractually obligated to and none of the studios sued. That’s not how business works.
Agreed. Disney is notorious for using its leverage to extract high % gross from theaters big and small, owing to its relatively unbroken streak of successful movies the past few years. There's no way they would have agreed to this without some sort of back-end make-good, especially when Disney's Marvel films draw a higher percent of high-value ticket sales (3D/IMAX/PLF, etc.) that are easily 2-3x the price that AMC says it will pay studios for each Stubs viewing.
Disney is, in fact, in a bit of a bind. The Force Awakens has sold over 100M tickets. Endgame about 95M. (source: ultimatemovierankings.com) AMC represents about half of the total, perhaps a bit less. AList has fewer than 1 million subscribers. Therefore, even though it knows AMC is likely to lowball its reimbursements on the AListers, it is not in Disney's best interest to refuse to release its next blockbuster at AMC theaters, and risk losing even a small percentage of the many, many millions of normal, traditional ticket sales.
It doesn’t matter where the power dynamic lies. No corporation would be crazy enough to unilaterally pay another corporation with deep pockets less than they had agreed on. Do you really think that Disney gives AMC a distribution license without an iron clad agreement with lots of lawyers involved?
Please define "contractually obligated" when no contract exists yet to cover the scenario of patron admissions granted via all-you-can-view subscriptions.
So I signed up for Cinemark with 2 email ids. I get 2 tickets per month and 4 people in the household so need to do only a movie every 2 months. I know Cinemark allows me to close my account AND keep the earned tickets, but I did not want to do that ... dont experiment with such things.
As a result, I am trying to consume all the tickets in one account, still not there, and sitting holding double digit tickets in my other account. Oh I will get out of this ... on to my last ticket in account #1, just need to find one more movie to watch, but this is not how I expected life will work when I signed up.
Many people like me in this world.
[ Thanks Disney/Marvel for the burn rate this year]
Debatable. If you go to the movie and the cashier says "it's $11 for the movie, or $12/mo for unlimited movies", i wouldn't be surprised if many people take that deal. That's how restaurants get you with menus & other bundles.
> $11 for the movie, or $12/mo for unlimited movies
I can't decide whether this would be more or less likely to convert (and also, whether it would be more or less profitable) than "$11 for the movie, or $10/mo for unlimited movies."
Obviously you'd think "more likely to convert" because it's cheaper, but maybe actually less likely because the fact that it's cheaper than a movie would give you pause, and make you think "Oh, it's a subscription," and then realise it's $120/year -- probably more than you spend on going to the movies.
It’s 21.95 a month. They also tempt you buy advertising that you can go to customer service after you leave the movie and apply your ticket price to the first month’s subscription price.
We only have to go to three regular movies a month to save money or one IMAX movie and one regular movie a month.
I've encountered the same thing at a theme park. It was something like $70 for a day pass and $75 for a year pass. It was such a tiny difference we sprung for the year pass, even though it was unlikely that we would go back any time soon.
The number of wide release movies shown during a given year is barely enough to make AMC lose money - especially after you consider concession sells. I have an AMC subscription and we might see 5 or 6 movies in a good month. Most of the time it’s 3.
Honestly, I could see "sure I'll subscribe for $20/mo, I would like to see more movies", then never going, and thinking you'll use it next month so why cancel now.
AMC stock has declined by about 1/3 since starting A-List, recently hitting an all-time low. The market would seem to disagree that AMC is making smart decisions. Sometimes a company and its CEO makes decisions in spite of the data, due to pride, momentum, false beliefs, inability to use the data correctly, dozens of other reasons. Further, the actual "after" data is pretty thin, given the program's limited history.
The stock market is also rewarding Uber and it doesn’t have a clear road to profitability at all. The market is a horrible proxy for the soundness of a business plan.
For new, speculative, disrupters, perhaps. For old, mature, well-understood industries? Your statement is false. The market had every right to punish AMC (a real company BTW, not a "business plan"), which earned just $1 for every $54 in revenue in 2018, and which also nearly doubled revenue over 2015, with less than a 10% increase in net income to show for it.
Competing movie chains have also introduced monthly plans.
MoviePass proved the demand. They simply lacked the data or leverage to make their business model work.
AMC and Regal have both. Crucially, they can negotiate with the movie studios re the payouts for ticket purchases; MoviePass could not. This is probably the biggest and most important factor behind why AMC/Regal can make these plans work but MoviePass never could.
It's also existed in the UK[1] (and France and other EU countries IIRC) since the 90s, which I suspect also proves the business model is viable (at least in some territories, and I don't see why in principle it couldn't transfer to the US).
AMC's been at it for a year and is still committed to it.
Regal's corporate parent has been at it for decades and just expanded it to the US (via Regal), so I assume they have the data to make the numbers work.
Also important to note is that both AMC and Regal subscriptions are twice as much or more per month as MoviePass was...closer to the original/sustainable MoviePass pricing (when it was a lot smaller and not very popular).
Well yea, they lowered the price of the supply - OF COURSE there's more demand.
But they lowered the price of the supply at cost to themselves. I believe the idea was that once they had enough market share they're be able to negotiate ticket prices and actually turn a profit.
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But yeah, there's a demand for unlimited movies @10$/mo when single movie tickets cost 12$+ :P
AMC and Regal both have enough market share (as the two largest US movie chains) that they actually could negotiate pricing and revenue share with the movie studios before launching their respective programs...
IOW, they're doing this starting in the black, or already close to it.
MoviePass was purely additive to theater chains. It increased demand for tickets, it marketed itself, and most importantly, the theaters GOT PAID for every MP admission.
In contrast, A-List is mostly cannibalistic. Via self-selection, the most common subscribers are people who were most likely to actually purchase multiple AMC movie tickets each month, that now pay less overall. A-List members take up seats in sold-out, opening-weekend showings (including higher-priced IMAX and 3D) that could otherwise be sold individually. And AMC has to market and administer the program, which also costs money.
A-List members are now guaranteed to choose their local AMC to see films as opposed to the competing Cinemark or Regal cinema down the street. It brings in that sweet sweet popcorn and corn syrup money.
I signed up for a chain's movie club due to the value, and I now exclusively go there. Before I signed up I'd switch it up.
Movie theaters do not make money off of ticket sales, but concessions.
I imagine that AMC worked out a subscription-sharing model with the studios, where the subscription fee is split across the movies attended. As long as people show up to movies, a percentage are buying concessions and AMC is making money.
"Movie theaters do not make money off of ticket sales, but concessions."
Both ticket sales and concession sales have positive gross margins, and contribute to the bottom line.
If you artificially separate a cinema business into two pieces, making the 'ticket sales' business responsible for 90% of the overheads (rent etc.), and the concessions part responsible for 10%, then it would appear that the 'ticket sales' business does not make money.
But, in reality, the tickets sales revenue is required in order to run the business, not just to draw in customers for the 'concessions' business, but also to help pay for rent.
My understanding, from asking my manager when I worked at a movie theater in high school well over twenty years ago, is that the vast majority of profits on movies that have recently come out are from concession (snack bar) sales. Something like 85-90% of the ticket price goes to the distributor in the first few weeks, and that percentage drops over time (until you have the rare movies that last much longer than others in the theater and are almost all profit for the theater by that point). The thing is, while I'm sure that calculation for how much is owed per ticket is not entirely simple, I'm not sure it's necessarily set as a specific dollar amount. I suspect it's a minimum but also a percentage of ticket price, so they can capitalize on theaters in more expensive locations (or that provide premium experiences).
So, even if AMC assumes 3 movies are seen a month on average across those card holders, it might be that they can conceivably break even with the distributors at that price. If that's the case, it's a major net win as those people are not only likely to spend money at the concession stand, they are probably going to spend more, since they don't feel like it's already been an expensive endeavor to go to the movies (not only is it much cheaper, it's also time shifted away from the time you might want to get snacks for the movie, so you feel like you're there for free basically).
In the end, there's a lot of interesting ways movie theaters might be able to leverage these memberships to their advantage. That said, I imagine the distributors will probably push for slightly different payment contracts if that becomes the norm.
> Now that MoviePass is functionally dead, there is little stopping AMC from raising prices to the extent that basically kills this model for the average consumer.
At which point, someone "rediscovers" MoviePass 2.0 (probably with some artificial twist to let everyone know that THIS IS NOT MOVIEPASS), an obliging VC materializes to huck a couple more unicorns on the fire, and it's deja vu all over again. I mean, nothing in this article suggested that the practice is going away any time soon...
There was a previous article going around about how Disney was forcing theaters to keep their movies up for longer theatrical runs. This coupled with the absolute dominance of Disney (aka Marvel, Star Wars, Pixar, Fox and of course Disney) means that the A-List all you can eat might be a smart move as they'll have trouble filling seats late in the run and can still make it up on concessions.
For my local movie theater, AMC's subscription is $24/month. Doesn't seem bad if you see three movies per month (it says three per week with no blackouts). Considering that I see maybe 5-6 movies/year in the theater, it's not actually worth it at all.
It might be too early to say that for sure. The AMC service was created when MoviePass was still a player and was very much a response to them. I believe AMC also only committed to that pricing for a single year and we just recently passed that 1 year anniversary. Now that MoviePass is functionally dead, there is little stopping AMC from raising prices to the extent that basically kills this model for the average consumer. We might soon find ourselves back in a market similar to the early days of MoviePass when one of these unlimited subscriptions costs $30-50 and is only viable for an incredibly small group of moviegoers.