There was a time when the first place to see new movies was the local theater. Previously known as a prime spot for socializing and enjoying fresh content, the movie theater has become a shadow of what it once was.
Movie ticket sales have continued to plummet as digital mediums make it easier to view the newest content in the comfort of one’s own home. The cost-efficiency, convenience, and comfort offered by these alternatives has caused movie theaters to feel the pressure.
Plummeting ticket sales have been cause for concern, with some theaters even lowering prices in an attempt to bring back their once-faithful droves of moviegoers. Now that movies can go to the viewer instead of the other way around, theaters are looking for any way possible to reverse the trend.
The digital age has done more than affect the entertainment industry – it has also made long-beloved business models more viable through modern technology. One example of this is subscription services. Increased transparency, affordability, and reliability have led more people to pay sign-up fees for monthly books, movies, and even boxes of physical goods.
Netflix co-founder Mitch Lowe has recently announced a new solution, which seeks to use this method to revive the failing theater business. Lowe’s business model is known as MoviePass, and it would allow individuals to see a movie a day in any theater that accepts debit cards (excluding IMAX and 3D showings) for only $9.95 per month.
Although some theaters tried to roll back costs, the average cost of a movie ticket in 2017 is $8.84. This makes MoviePass a great deal from an economic perspective, at least for the customer. Movie theaters, however, are not as excited about this idea.
AMC Theaters, the largest movie theater chain in the U.S., has recently announced it would attempt to block the service if possible. The company has consulted with attorneys, claiming the pricing system is unsustainable and sets consumers up for disappointment in the long-term.
MoviePass would have to do huge advertising business to sustain itself financially, as a moviegoer seeing even two films per month under the system would cause theaters to take a loss. The service had 20,000 subscribers at the end of 2016. Back then, MoviePass utilized a tier-based system which had pricing options ranging from $15 to $50. Tiers were based on the user’s location and the amount of movies they wanted to see each month.
This model seems a bit more sustainable, and puts the large price drop in perspective. MoviePass recently announced that it had sold the majority of its stake to Helios and Matheson Analytics, a big-data firm. This will help with the nationwide rollout of the new pricing plan.
Other popular theater chains such as Cinemark and Regal have not yet commented on the service or whether they plan to try and block it.
If MoviePass succeeds, it may prove that subscription services are powerful enough to revive failing industries even if the face of a changing market.