Fandango is emerging as the winner in its decade long battle against chief rival MovieTickets.com, dramatically altering a rapidly growing sector of the movie business.
For years, the online movie ticketing space has been divided between the two major players, but several steps by Fandango in recent months has shifted the momentum, analysts and studio executives privately say.
“There may not be room for two companies anymore,” a studio exhibition executive told TheWrap. “Isn’t it easier to have one and not confuse audiences? They want one-stop shopping.”
So how did the tide turn in Fandango’s favor?
One acronym: AMC. In February, Fandango managed to convince the country’s second largest theater chain to jump ship from MovieTickets.com, adding 3,000 more screens to its rolls. Making the defection particularly painful is the fact that AMC was one of the companies that founded MovieTickets.com in 2000 and remains a part owner.
Then, in short order, Fandango announced it has partnered with three former MovieTickets.com cohorts, AOL Moviefone, Yahoo! Movies and MSN Entertainment, to sell tickets, putting it substantially ahead in the battle to establish a foothold on the major portals.
Also read: Fandango, MSN Strike Movie-Ticketing Deal
Fandango now represents roughly 70 percent of the online and mobile movie ticketing space in the United States, the company says. On Tuesday it will announce that it has enjoyed the best quarter in company history, with ticket sales surging 28 percent and traffic to its site jumping 26 percent year over year.
“As with most success stories, it all starts long before the results are apparent to the general public,” Rick Butler, Fandango’s executive vice president and general manager, told TheWrap. “We began significantly investing in the business four to five years ago, and our focus has remained making the movie-going experience as seamless and frictionless as possible.”
Not that MovieTickets.com is giving up AMC without a fight. Along with National Amusements, the company is suing AMC for breaching its joint-venture agreement. The suit claims that as part of that pact, MovieTickets.com has the right to be the exclusive seller of the theater chain’s ticket inventory.
The legal scuffle is a sign of how great a factor the AMC decision was in Fandango’s rapid rise this year.
“It is going to be really hard for MovieTickets to come back from this,” an online executive who has worked with both companies told TheWrap. “The only way I see them being able to do it is to steal a big AMC-like chain away from Fandango. It may be that some contract comes up and is in play soon and then everything could swing back, but otherwise I don’t see it happening for them.”
Neither Fandango nor AMC would comment on the litigation. However, Ryan Noonan, a spokesman for the theater chain, told TheWrap that the decision to offer domestic tickets exclusively through Fandango was part of an effort to prevent users from having to go through multiple sites to buy tickets.
“We were really operating with two different ticketing sites, and we had different locations in the same market selling on different sites, so it created confusion,” Noonan said. “It made sense to have one set partner, and we wanted to work with a ticketing platform like Fandango that gave us the broadest reach.”
Beyond the impact of the AMC deal, Fandango has also benefited from a larger shift in consumer behavior that has allowed it to thrive while the overall domestic exhibition industry has struggled. Attendance in the United States has been declining in recent years, slipping to a near-20-year low in 2011, but users' growing comfort with shopping online is allowing Fandango to buck that downward trend.
Also read: Fandango, Moviefone Partner for Ticket Sales
“While attendance has been relatively flat, we have consistently grown, because we are on the forefront of technology,” Butler said. “It is more convenient to buy tickets online or on mobile device, so that allows us to be on the right side of that curve.”
The need by theater chains to be perceived as being on the winning side of the turf war may be a bigger reason for Fandango's flood of new deals than any specific differences in user experience. Indeed, some studio executives and analysts gripe that given the $1.25 surcharge Fandango generally imposes for its services, there’s room for improvement and an opportunity for a new competitor to emerge.
“Fandango has cornered the market, but in a frustratingly incomplete way," a studio executive told TheWrap. "They add random surcharges. It’s the current market leader, but nothing about the user experience suggests it's a permanent power.”
Butler would likely disagree with that assessment, maintaining that Fandango has invested a great deal of time and money to pump up its offerings. In particular, he touts Fandango’s emphasis on mobile ticketing and reserved seating. When it comes to reserved seating, where users can select their seats in advance, Fandango boasts 400 screens and hopes to add to that number over the course of the year.
But its mobile growth is more impressive. Since it first began selling tickets through mobile devices in 2005, the company has worked to stay ahead of the curve when it comes to the next technological wave. All told, mobile purchases comprise 27 percent of the company’s ticket sales.
Beyond allowing customers to buy their tickets on a smartphone or tablet, Fandango currently offers paperless ticketing, where customers can check into theaters with their phones by using a barcode, on 2,600 screens. It expects to increase that number to 4,000 by the end of year.
“A few years ago, we didn’t have a single app. Today we have 25 million downloads,” Butler said. “We have clearly differentiated ourselves through our products. We are offering 2,600 screens that have mobile tickets, which I’m pretty sure is 2,599 more than anybody else.”
Another key factor in its success has been persuading users to use Fandango not only to find out movie times but to actually buy tickets online. In the past, industry veterans say, the conversion rate was roughly 10 percent. Fandango does not release those numbers, but Butler told TheWrap the company’s has tripled its conversion rate in the last three years.
It has also turned its website into a more attractive destination for advertisers. Since purchasing Movies.com in 2008, Fandango has also made a big push into content. It now offers trailers, stories on movie trends and user surveys. Butler declined to say how much revenue advertising provides the company, but said it was “fairly evenly” split.
“We understand that as a business we need to have a balance of revenue streams,” he said. “Less than 10 percent of ad supported online models have succeeded, so we’re very fortunate to have a mixture of commerce and advertising.”
MovieTickets.com declined to comment, but in the past it has emphasized its international footprint. The company currently is available across 20 countries and territories, such as the United Kingdom, Spain, Argentina, and the Caribbean.
Fandango is a domestic enterprise, and Butler said he has no plans to change the formula anytime soon.
“We’re focused on increasing our domestic footprint,” Butler said. “Online ticketing still just represents five to six percent of the box office, so there’s tremendous potential for growth right here.”