Can MoviePass give movie theaters an even bigger boost on the second go-around? The newly rejuvenated subscription-based program is attempting a slow-rolling comeback.
They recently nabbed additional seed funding from Animoca Brands, a Hong Kong-based game software, blockchain and venture capital company. The seed round also included Claritas Capital, Emerald Plus, Gaingels, Harlem Capital, PKO VC and Sandhill Angels. More financing rounds are expected at the end of 2023 or in 2024.
“$10 a month for unlimited movies at any participating theater was always doomed,” co-founder, former owner and now current CEO Stacy Spikes argued during a conversation with TheWrap.
Spikes, whose book “Black Founder: The Hidden Power of Being an Outsider” debuts on Jan. 24, stated that “unless you own the theaters, you need some kind of variable pricing. One thing I can tell you is that putting the price below a single ticket just wasn’t logical.”
What went wrong the last time?
The company was acquired by Helios and Matheson Analytics in 2017. The $10-a-month model soon followed that summer. Membership ballooned to three million subscribers and Spikes was fired in early 2018, right around when the company realized that the revenue brought in by subscriptions couldn’t keep up with comping the full price of every movie ticket purchased by every user.
Any presumptions of monetizing user data for targeted advertising or coaxing theaters to play ball in terms of discounted tickets, a cut of concessions or paying to hype certain movies hadn’t remotely paid off.
They declared bankruptcy in 2020. Spikes bought it again in 2022, in the hopes that he could return it to something closer to the initial vision, the initial price point upon the company’s launch was $30 per month for one movie a day, might work better.
“I got burned too,” Spikes stated. “It was a brand that we all loved.” He has enough trust in the value of that brand not to even bother changing the name.
How will the new MoviePass work?
As Spikes explained to TheWrap, the system will involve a tiered point system, where for around $10, $20 or $30 a month, customers get a certain number of points that can be applied to theatrical moviegoing.
For example, a Wednesday matinee will cost fewer points than a Saturday night showing. Those points can be applied for yourself or a third party and roll over for up to two months. Subscribers can hoard their points and blow them all on a date night showing of “Renfield” or a multi-kid matinee screening of “Ant-Man and the Wasp: Quantumania.”
Among the two fixes or upgrades that the company wants in place before the summer is the ability to use points for IMAX, 3D and related premium showings — for now it’s just non-premium showings — and allowing consumers to purchase additional points should they run out before the next month.
That’s more complicated than “$10 = unlimited movies for a single user.” The hope is that, assuming it can attract subscribers again, it’s also more sustainable while providing a boost to non-event films.
“We won’t change the destiny for a ‘Star Wars’ or a ‘Batman’ movie,” noted Spikes. “However, we can be a game changer for a film like ‘Ladybird.’”
What’s different this time?
The CEO swears that he’s not trying to monetize data, stating that the company will make money through subscription revenue and advertising. The new pitch is that MoviePass helps theaters by driving consumers to more and more varied movies and helps consumers by giving them a discount on the ticket price.
There also will be no attempts to produce or distribute movies this time. “We are a software technology company,” he noted. “We are not content creators.”
So don’t expect a repeat of John Travolta’s infamous “Gotti,” which MoviePass invested in, and received miserable reviews and poor box office and incited controversy in the summer of 2018 via post-release ads declaring film critics to be proverbial enemies of the people.
A core problem that MoviePass hopes to alleviate…
Pre-COVID moviegoing saw overall box office rising and overall ticket sales declining, while audiences spent a larger portion of their annual moviegoing budget on a smaller portion of big-deal event movies. In 2011, the top six grossers accounted around 17% of the overall domestic $10 billion box office. By 2018, that figure was up to almost 26% out of $11.6 billion with audiences choosing theatrical for only the most explicit IMAX-worthy movies and watching the rest on their HDTVs or smartphones.
The pandemic and a Wall Street-driven rush to streaming only exacerbated this phenomenon. Spikes argued MoviePass can be a “discovery tool” for moviegoers.
“We take the risk out of the decision-making process,” he said. “We turn it from ‘why?’ To ‘why not?’”
He said that MoviePass accounted for up to 50% of New York area sales for the $25 million-grossing Mister Rogers documentary “Won’t You Be My Neighbor?” He also argued that those who use MoviePass to see a tentpole like “Avatar: The Way of Water” are then more inclined to buy concessions.
If only it were that simple!
However, one unnamed exhibition executive who spoke to TheWrap argued that many MoviePass users, specifically during that peak 2017-2018 period, were comparatively lower-income moviegoers who were less inclined to spend extra money along with their “free” ticket.
Conversely, consumers in a higher income bracket who cared less about subscription savings were also more likely to splurge on a large popcorn or an extra pretzel. Overall, MoviePass for a single consumer doesn’t save much money for a family of five checking out “Puss in Boots: The Last Wish.”
A distribution executive noted that at least some theater chains experienced a boom amid peak MoviePass popularity. Those customers stopped showing up once the subscription service stopped being useful for those multiplexes. MoviePass may not turn users into lifelong moviegoers, but it temporarily created new consumers who otherwise wouldn’t go to the theater.
MoviePass is no longer the only game in town
Discussing the handful of chain-specific competitors like AMC A-List and Regal Unlimited that popped up in MoviePass’ wake, Spikes stated that MoviePass still makes sense for audiences living in areas with multiple theater chains. He also argued that “the movie theater says, ‘I want to put butts in seats.’ They don’t care if they come through Fandango or Atom, or their own ticketing service. They want all those avenues to drive traffic. If I were running one of the big three, I wouldn’t care where [the ticket sale] comes from.”
As for when the new and hopefully improved MoviePass will come to a theater near you, they started in the middle of the country and have been slowly working outward as they work out bugs and discover problems to be fixed until they reach New York City and Los Angeles by early next month.
Simplistically speaking, those currently on the waiting list will be able to sign up nationwide by February, while the more general availability is planned to go into effect by summer.
Spikes argued that MoviePass “was an idea that the industry loves, needs and wants. Consumers love it. Theaters love it. Studios love it.” We’ll find out this year if any of those three declarations remain true.
