The Economics Of A Monthly Movie Pass

Oct 6, 2017
Originally published on October 6, 2017 7:10 am
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This next story asks, who really benefits when you get a bargain movie ticket? - which you can for a monthly subscription. The price recently went down so low it's worth asking what the company is really getting. Here's Elizabeth Kulas of our PLANET MONEY podcast.

ELIZABETH KULAS, BYLINE: I'm standing in Times Square in the lobby of an AMC movie theater. It's a multiplex - 25 screens. And I'm here with Stacy Spikes. He's the co-founder of something called MoviePass. It's a startup, and here's how it works. First, you sign up and get a debit card sent out in the mail.

OK, I've got it. It's - I mean, it looks just like a Mastercard, right?

STACY SPIKES: Yes - basically.

KULAS: When you're at the theater, you pull out the MoviePass app.

SPIKES: So go through and pick a movie that you'd want to see.

KULAS: Oh, "It," "Chasing The Dragon" - "Spider-Man: Homecoming?"

SPIKES: Sounds good.

KULAS: You seen it?

SPIKES: I have.

KULAS: Worth it?

SPIKES: Yeah.

KULAS: Then I walk over to the ticket kiosk, choose a ticket to "Spider-Man: Homecoming." But to pay for it, I swipe with the MoviePass debit card.

SPIKES: Yes, it's working. It's processing. And there, your ticket's printing.

KULAS: The normal price to see "Spider-Man: Homecoming" here is $16.29. MoviePass will pay that full price of my ticket to AMC. But my price is $9.95. And that's not just for one movie. That's per month. And it lets me see a movie every 24 hours.

SPIKES: If you're going to that many movies, you do not have a job (laughter), and you're unemployed if you go to 30 movies.

KULAS: MoviePass has been around for a few years. And until recently, they charged around $40 for memberships. It was doing OK. But then a few weeks ago, a data analytics firm bought a big chunk of MoviePass, and the prices dropped. In the weeks afterward, MoviePass' customer base has grown to over half a million subscribers. Most cinemas across the country except the subscription.

Brian Schultz runs Studio Movie Grill, a theater chain based in Dallas.

BRIAN SCHULTZ: People really are flocking to it. And we really couldn't be happier. We're seeing large increases in the attendance, specifically on non-peak times like during the week. So I think it's great for the industry.

KULAS: He says, the subscription model means that people will come in and see a film that they wouldn't otherwise pay to see - you know, the kind of borderline film that falls kind of between blockbuster and B grade. And for Brian, that's more full-priced tickets - subsidized by MoviePass, of course. Still, that's more popcorn and Cokes and boxes of Milk Duds that get sold at the concession stand. Brian is so excited about MoviePass, he personally invested in the company last year. But not all theater owners are excited. AMC is America's largest theater chain. They wouldn't comment for this story, but they have come out against MoviePass' new price point. There are rumors that AMC was close to launching its own subscription service. But there are other reasons, too. Leo Kulp is an industry analyst at RBC.

LEO KULP: Well, you know, I think on the negative side, people would say that this cheapens the movie-going experience and that you're training consumers that they're only going to pay $10, and they can see as many as they want.

KULAS: Movie theaters use loyalty programs to get data on their customers. And now some of those customers are MoviePass customers first. And that data is a really big part of MoviePass' future plans. When you go to a movie, that's something a bunch of businesses want to know about - maybe the restaurant next door, maybe the studio that will sell you the movie soundtrack later. Either way, a movie ticket is now also a data point, and that's worth something. Elizabeth Kulas, NPR News.

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