AMC Theaters doesn’t want to be part of Moviepass, but it may not have a choice

Things are getting hot

via UnsplashAMC

Just a few hours after MoviePass, the company that sells a subscription-based movie ticket service directly to consumers, announced that it was lowering its plan to $9.99 and AMC Theatres voiced concerns about the model. AMC stated that any company reselling movie tickets “is not in the best interest of moviegoers, movie theatres and movie studios,” but that may not be true. As of right now, AMC is consulting with its attorneys to determine if or how AMC can prevent a subscription program offered by MoviePass from being used at AMC Theatres in the United States. AMC is the largest movie theater operator in the United States, so not being able to buy tickets from that theater chain would be a serious blow to MoviePass, and its subscribers.

This could be AMC wanting to squash any third-party company from making money off its theaters, and AMC could turn around and offer the same plan once it shuts down the service from MoviePass. This would eliminate any competition before AMC even starts its own subscription service, which would be more in the benefit of AMC, and not the consumer. After all, competition is what keeps prices low.

MoviePass announced a change to its “subscription model” that would allow consumers to see up to 365 movies a year for a monthly fee of $9.95. MoviePass’ plan is to pay AMC its full ticket price without a discount. This means that MoviePass is buying the tickets at full price, but you only pay $9.99/month no matter how many MoviePass tickets the company buys for you that month. The idea is kind of like insurance, the people paying and not going, are paying for the people that are. There is a way to make money there, but it’s an untested model and AMC doesn’t want to be part of it.

The legal problem is that MoviePass is paying full-price for the ticket, and there are little to no existing scalping laws for Movie Theatres at this time. That could vary from state-to-state though, and will be a lengthy and costly process for both parties to fight for control in all 50 states. The AMC average ticket price for watching a movie at AMC Theatres in the most recent financial quarter was $9.33. From what AMC can tell, by definition and absent some other form of other compensation, MoviePass will be losing money on every subscriber seeing two movies or more in a month. MoviePass says it will increase theater attendance, and everyone will win.

AMC believes that holding out to consumers that first run movies can be watched in theaters at great quantities for a monthly price of $9.95 “isn’t doing moviegoers any favors”. In AMC’s view, that price level is unsustainable and only sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled. AMC also believes that promising essentially unlimited first-run movie content at a price below $10 per month over time will not provide sufficient revenue to operate quality theatres nor will it produce enough income to provide film makers with sufficient incentive to make great new movies. Therefore, AMC will not be able to offer discounts to MoviePass in the future, which AMC claims is their long-term goal.

“While AMC is not opposed to subscription programs generally,” the company added, “the one envisioned by MoviePass is not one AMC can embrace”. AMC ended the statement adding, “We are actively working now to determine whether it may be feasible to opt out and not participate in this shaky and unsustainable program.”