MoviePass Slammed by AMC for its $9.95/Month Deal Could Face Legal Action
AMC does not believe in the future of MoviePass’s business strategy and wants to make it clear.
In the hours following the announcement that MoviePass (a service offering moviegoers the opportunity to go see one film in theatre every day for a fixed monthly fee) is launching a new plan for just $9.95 a month, the movie theater chain AMC is threatening legal action.
Considered the ‘Netflix for movie theatres’, MoviePass has, until today, made available plans ranging from $14.95 to $44.99 a month. With its new, attractive offering, the company, which has been struggling for years to seduce moviegoers and met with constant hostility by theatre owners, is hoping to attract more subscribers and prove that its strategy can be advantageous to everyone – including exhibitors like AMC.
“After years of studying and analysis we found that people want to go to the movies more often, but the pricing keeps going up, and that prevents them from going more. We’re really making it more affordable for people,” said Mitch Lowe, CEO of MoviePass since 2016, who also turns out to be Netflix’s co-founder.
Calling MoviePass “a small fringe player,” AMC does not agree with this vision, stating that the company has a model that “is not in the best interest of moviegoers, movie theatres and movie studios.” The famous theater chain is now consulting with lawyers to see “if or how” they can prevent the program from being used at its locations.
Founded in 2011, MoviePass has its service available in more than 91% of all theatres in the U.S. (including AMC, Regal and Cinemark, along with independent theatres). But despite its attempt to disrupt the industry over the years, MoviePass has remained little known as exhibitors have made it clear they preferred to go with their own loyalty programs. Legal actions are also nothing new to the company, which has faced many attempts from theatres to stop its service in the past.
It’s been another tough summer for theatres, with ticket sales down to 12% year-over-year, a situation MoviePass is trying to use to its advantage by buying movie theatre tickets directly from exhibitors and re-selling them to their subscribers, claiming it will boost attendance by 111%. An action plan that AMC doesn’t think is sustainable.
“From what we 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,” explains AMC in a statement. “While AMC is not opposed to subscription programs generally, the one envisioned by MoviePass is not one AMC can embrace.”
In response to the declining number of people going to the theatre, AMC has instead recently invested heavily in growing its Stubs reward program.
Acknowledging that his company will indeed lose money in the process, Mitch Lowe strongly believes that with its new plan MoviePass will manage to prove its value to movie theaters and studios, and that in the future they will be willing to share their additional profits. But AMC’s decision to try to jump out of the deal could greatly affect MoviePass’s objective.
“I’m not worried about it killing the sale,” says Lowe. “I’m worried about it confusing customers and making them believe they can’t use this service at AMC theatres.”
For Lowe, MoviePass has great chances to positively affect how often we go to the theatre as he stated that its services are mostly popular with millennials, a young demographic that has grown up with streaming platforms and represent 75% of the company’s user base.