MoviePass Goes Netflix — Can It Avoid Theater Owners’ Anger This Time?

The subscription ticketing service hopes third time is a charm with its latest model

MoviePass is trying for a third time to come up with an unlimited-movie-ticket plan that won't cause a theater-owners revolt.

After collapsing amid exhibitor anger roughly two years ago, the company is back with a Netflix-like subscription model that relies on debit cards issued by Discover. So far, there doesn't seem to be any coordinated effort to quash it.

"The goal is to become the biggest out-of-home entertainment subscription company,"  MoviePass CEO and co-founder Stacy Spikes told TheWrap. "We're a six-year overnight success story."

Candid about past failures ​– he calls his earlier effort a "mess" that couldn't scale — Spikes insists this incarnation has a number of things going for it.

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"This version, whether you go to the kiosk or you go to the box office, it’s just how you would normally buy a ticket and it’s seamless," Spikes said. "It’s mobile. It's adaptable. It travels wherever you travel.

A previous test of the service in San Francisco came undone when theaters refused to accept vouchers that MoviePass gave its customers.

The concern at the time was that MoviePass would try to influence ticket prices. AMC Theaters publicly decried the service, while Landmark Theatres CEO Ted Mundorff told TheWrap, "We are not interested in outside entities setting ticket prices for us."

The debit card under the new plan works independent of exhibitors. Users will pay $25 to $40 a month, based on geography, for which they can see one 2D movie a day at 93 percent of theaters nationwide. All they need to do to set up the card is download an iPhone or Android app.

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The company also is experimenting with different plans at various price points that would offer consumers access to 3D and Imax films or might allow them to get a cheaper plan for weekdays-only.

Subscriptions will partially fund the program. To help grow the 10-person company, Spikes has raised $4.8 million from investors with deep entertainment ties. It's a group that includes True Ventures, AOL, William Morris Agency and Lambert Media, which invests in Village Roadshow and Rave Motion Pictures.

Spikes said the subscriptions have been growing since the beta launch last fall, with retention rates of 85 percent. He declined to give specific subscription numbers for the service, currently in invitation-only mode.

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With ticket prices in New York City theaters around $14, Big Apple subscribers who use their MoviePass more than three times a month are paying less than what they're buying in tickets.

Spikes said that his business model accounts for that and likens it to the way newspapers and magazines balance their cost by relying on multiple revenue streams. He hopes to use the data he collects on subscribers to sell advertising and film-related products like DVDs and novelizations.

"If I had to map the business, I'd say it's Netflix, it's Amazon, it's Viacom advertising, it's Nielsen and Rentrak, but you wrap them up inside one company that is focused on one industry," Spikes said.

He said that drilling down into the tastes of this passionate movie-going demographic have already yielded impressive returns.

"If you say show me people in this zipcode who saw the last three Vin Diesel films, we can do that," he said. "We’re that specific and we can drill down and be that accurate."

Ira Rubenstein, a veteran digital marketing executive who previously worked with Marvel and 20th Century Fox, is advising MoviePass on its outreach to studios. He says that those kind of results should augur well for the company as it tries to attract Hollywood players desperate to find better ways to hawk their products to consumers.

"What's going on in TV today is so fragmented that it's so hard to reach a large audience through commercials," Rubenstein said. "Buying an ad or even an online banner ad is not as efficient as targeting someone who you know is an active moviegoer and who goes at least once a month. Instead of blasting your message, you have a better way to drive conversion."

That's the pitch to studios, but Spikes does see the company eventually enlisting theater owners to become more engaged, as well. He envisions MoviePass working at any theater that accepts credit cards but predicts some chains will come on board as affiliate theaters. That would allow them to collaborate with MoviePass on different promotional pushes aimed at driving attendance during the week and other soft business days.

Both AMC and Landmark's Mundorff declined to comment for this article, but theater owners privately tell TheWrap they are taking a wait-and-see approach when it comes to MoviePass 3.0.

For his part, Spikes insists movie theaters have been receptive.

"There hasn't been a sense that it's a threat," Spikes said. "It’s a relationship building process and it’s an education process on both sides. Our meetings have been about what can we do to get more people to come to the movies."

With the box office down more than 12 percent through last weekend, that is a message that just might resonate with theater owners who could see a friend in a service they once viewed as the enemy.