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AMC Theatres CEO on Why New Monthly Subscription Plan ‘Will Be Profitable’ – Unlike MoviePass

AMC’s plan is double the price of MoviePass but has a big hook: IMAX screenings are included

AMC Theaters is entering the movie ticket subscription battle, as they announced the launch of their AMC Stubs A-List program, a plan that offers three movie tickets a week for $19.95/month. But what does AMC’s plan promise that makes it worth a price tag that’s double that of MoviePass?

Sustainability, says AMC CEO Adam Aron — and premium format screenings.

“Our program will be profitable while others struggle to be profitable,” said Aron during an investor call without mentioning the rival $9.95/month subscription program by name.

Since MoviePass announced that they would be launching a nationwide subscription program at a monthly rate below the average ticket price of many major markets, AMC has been their main rival. Hours after the plan was announced, AMC countered with a statement saying that they considered MoviePass’ business plan to be “unsustainable” and that their plan to work with theater chains in exchange for a percentage of concession sales would put the squeeze on exhibitors.

In the following months, AMC has been putting together a plan to expand their already existing AMC Stubs loyalty program with a subscription plan similar to the ones they have already rolled out at their European chain, Odeon. Aron says that at the $19.95 price point, moviegoers will enjoy a bargain at a rate that won’t disrupt the current theater system.

“Our program should be beneficial for all involved. A good deal for consumers, but being done at a sustainable price point where we will be profitable … and in turn, that we can share that increased profitability with our studio and premium format partners.”

And while Aron made an effort to keep direct comparisons to MoviePass to a minimum, he noted perks of the A-List plan that coincide with some of the technical difficulties and frustrations that MoviePass subscribers have complained about on social media.

While MoviePass subscribers can only buy tickets in advance from select partners like Landmark Theaters, AMC is promising advance ticketing at all their locations for all films. Also, while MoviePass has removed the ability to see repeat screenings of a film — in part to push subscribers toward using it for indie films rather than binges of the same blockbuster — AMC will allow repeat screenings, so Marvel fans can use the subscription to watch “Avengers 4” next year as much as they want.

But what AMC hopes will be the big draw for the program is that all premium formats, including IMAX, will be included as part of the plan. While European subscription plans include an extra charge for IMAX screenings, A-List will remove the $5-10 upcharge for premium screenings, making the monthly subscription price cheaper than a premium ticket in major markets.

“We think that the demand is going to be tremendous,” IMAX CEO Rich Gelfond told TheWrap. “The ability to get premium tickets and for IMAX in particular will be a big part of the marketing efforts for this plan and we do plan to support that plan. I expect that we will be seeing an increase in attendance immediately as this plan rolls out.”

AMC is expecting that it will take more time for them to see profits. Between the $5 million marketing campaign and the growing pains that will come with building the subscriber base, Aron says they expect a net cost of $5-10 million in ticket sales through the end of 2018. Based on their customer data — which includes MoviePass subscribers that have used AMC — they have found that the earliest subscribers are the ones that use the system the most frequently.

But starting in 2019, AMC is expecting annual earnings before taxes from A-List of $15-20 million per 1 million subscribers, and that’s assuming that subscribers use the service 2.5 times a month.

“If the average usage drops down to even 2.25 times per month, we could see that run rate grow by another $10 million,” Aron said.

The timing of this rollout is certainly interesting considering where MoviePass is. While MoviePass is moving forward on plans to create their own production wing, their parent company, data group Helios and Matheson, is at risk of being delisted from Nasdaq as their stock price has fallen below a dollar for more than 30 days. The company has presented several options to its shareholders on how to stabilize its financial structure.

But AMC is rolling out A-List now not because of MoviePass, but because the box office is white hot right now. Domestic box office revenue is set to hit $6 billion before the end of June for the first time ever, and is more than 6 percent ahead of last year’s pace. The A-List plan will open subscriptions next Tuesday following the opening weekend of “Jurassic World: Fallen Kingdom,” with early subscribers able to lock in the subscription price should it be adjusted in the future.

Early subscribers will be able to use the service on a July release slate that includes “Ant-Man and The Wasp,” “Blindspotting,” “Skyscraper,” and “Mission: Impossible — Fallout.”

“If there’s ever a time to lose money on this plan, it’s now,” Aron said confidently to investors. “AMC is on fire right now, and that fire is roaring hot.”