Moviepass and its Impact on the Box Office

[SLAM!]

12 hours ago, CoolEric258 said:

http://variety.com/2018/film/markets-festivals/sundance-moviepass-the-orchard-buy-american-animals-1202675489/

 

MoviePass Ventures just bought distriubtion rights for the movie "American Animals" with The Orchard.

 

American Animals seems like an interesting film so I'm gonna keep my eye on it for the time being. In my opinion, they should time an initially-limited release near X-Men: Dark Phoenix to capitalize on awareness of Evan Peters' starring role. It'd kill two birds with one stone, increasing interest and making a legitimate Oscar bid at the same time.

 

This might be a thing that keeps MoviePass around for the time being if they're successful at distributing this film.

[AniNate]

I'm guessing in the case of the theaters they have a deal with it's just an overall cut regardless of whether the customers have a MoviePass or not; the hook being the assumption that MoviePass is bringing all the additional sales to the theater.

[EmpireCity]

35 minutes ago, TwoMisfits said:

The company has struck deals with close to 1,000 independent cinemas, in which it gets a roughly $3 cut on ticket sales and/or 25% of concessions sales.

 

That's a lot more than a couple already...that's 20%ish of them, right?

 

They're lying.  

[TwoMisfits]

16 minutes ago, EmpireCity said:

 

They're lying.  

Maybe...or maybe not...CEOs of public companies can get in a lot of trouble for lying about material facts to current and potential shareholders...and that sounds like a very big material fact...

[EmpireCity]

14 minutes ago, TwoMisfits said:

Maybe...or maybe not...CEOs of public companies can get in a lot of trouble for lying about material facts to current and potential shareholders...and that sounds like a very big material fact...

Trust me, they're lying.  They haven't cut deals with 1,000 theaters.  

 

My guess is they are attempting to negotiate or have started negotiations, but they do not have 1,000 signed on any level.  

[Rumpot]

5 minutes ago, EmpireCity said:

Trust me, they're lying.  They haven't cut deals with 1,000 theaters.  

 

My guess is they are attempting to negotiate or have started negotiations, but they do not have 1,000 signed on any level.  

 I think being an early adopter of moviepass when no one else is certainly could be worth it initially. If you are the only theater around that allows moviepass users to online order, etc then you will certainly see a surge that makes this worthwhile.  But...as more theaters add this capacity then I don't see how you can possibly operate losing $3 per ticket to moviepass....

[EmpireCity]

1 hour ago, Rumpot said:

 I think being an early adopter of moviepass when no one else is certainly could be worth it initially. If you are the only theater around that allows moviepass users to online order, etc then you will certainly see a surge that makes this worthwhile.  But...as more theaters add this capacity then I don't see how you can possibly operate losing $3 per ticket to moviepass....

Or, that theater could simply offer their own subscription service and cut out the middle man.  

 

I think that is where this is headed if moviepass doesn't completely collapse first.  

 

It will collapse though, we are only a month past the Holiday season where they saw a huge influx of subscribers and cash and instead of enhancing or continuing their program, they are actually already cutting it and signaling to the world they are about to have major cash problems.  

 

Their announcement at Sundance that they are going into distribution reeks of a desperation move to coax theaters into thinking they are going to have content that MoviePass will offer up to theaters and have some sort of deal cut on the revenue split.  It is ironic that they shove themselves into the game as a middle man but then almost immediately try to implement a strategy that aims to cut out the middle man of studios and distributors by becoming one themselves.  

 

This is going to fail spectacularly and all they will have done is damage the theater industry long term.   

Edited January 26, 2018 by EmpireCity

[MyMovieCanBeatUpYourMovie]

3 hours ago, Rumpot said:

I figured this would happen, but thought they would execute with a little more tact.  They tricked a bunch of people into getting a year subscription 

I think most people using MoviePass know that there's a good chance it does not have a long life to it.

 

I paid $70 about three weeks ago for an annual subscription, and in that time, I've bought over $100 of tickets with MoviePass' money catching up on December and January releases.  So, however long it lasts after this is gravy.  It's already paid for itself.  (In fact, I haven't spent a dollar of my own money buying a movie ticket since September.)  And if it does last a year or more from this point, I'm insulated from any price increases during that time.

 

Free money was always a deal too good to be true.  But it was also too good a deal to pass up as long as it's working.  They could cut 90 percent of theaters in my area, and as long as one modest-sized one near me still worked with MoviePass, it would continue to be a steal. 

 

[EmpireCity]

I also have said for a long time that it appears they thought they could do some sort of gym membership model, but the difference there is if someone pays $9.99 per month and shows up to the gym every single day they only cost that gym pennies.  It might take a few weeks before their actual financial impact on a gym adds up to $9.99 in costs.  

 

With moviepass, if someone pays $9.99 per month and shows up to use it even once they have immediately lost money on that customer.  If they show up 10 times in the month they need 10-15 other customers to pay $9.99 and NEVER use the pass to break even.  Their model is set up where they need millions and millions of subscribers to join and never ever ever use the membership to cover even a small percentage that use it regularly.  

[EmpireCity]

I forgot to add, same thing with the Netflix comparisons.  If you pay Netflix $11.99 per month and you stream a couple studio movies, those costs are pennies.  You would have to watch an insane amount of outside content to be actually costing them money outside of their standard business costs of tech and infrastructure.  The licensing payment is fairly insignificant.  

 

Again, with moviepass if someone uses it once they have lost money.  

 

This was an obvious ploy from the start to make a splash, gain data, wedge themselves in as a middle man, and then hope they grew powerful enough that they could strong arm theaters into giving over a percentage of their profits.  It didn't work and the anger from 3m-4m customers is going to be ugly when they announce they are either shutting down, raising prices or completely changing the terms of the deal.  

[Barnack]

2 hours ago, TwoMisfits said:

Maybe...or maybe not...CEOs of public companies can get in a lot of trouble for lying about material facts to current and potential shareholders...and that sounds like a very big material fact...

Moviepass is not a public company but a private one according to wikipedia:

https://en.wikipedia.org/wiki/MoviePass

 

I doubt it would be that opaque of a model if it was from a public company.

[AniNate]

I think it's too early to tell if it's actually working. They just started it yesterday.

 

And while there's the unsurprising Twitter-rage, at the moment MoviePass is still a bargain and if customers have any reason to continue their current moviegoing habits there's still little reason for them to cancel.

 

 

Edited January 26, 2018 by tribefan695

[jimisawesome]

Quote

“When HMNY acquired the majority stake in MoviePass, we made the strategic decision to reduce monthly subscription fees to $9.95 a month to get movie fans back into the theaters. As we’ve grown our subscriber base, we’ve seen a dramatic increase in movie theater attendance among our subscribers, which proves to us that MoviePass is working to revitalize a declining industry. Other theater companies have seen this attendance resurgence and have approached MoviePass to collaborate. Since the get-go, AMC has not been interested in collaborating with MoviePass – a move that is not in the interest of our subscribers and AMC theater-goers.

We know that we currently represent approximately 62% of AMC’s operating income, assuming that AMC is flat year over year. This equates to $34.4 million of gross profits to AMC in the upcoming quarter. On an annualized run rate basis, that’s over $135 million to AMC’s gross profits – which doesn’t include concession sales from MoviePass subscribers. In publicly disclosed 2017 financial documents, AMC claimed each customer spends $4.88 on concessions each visit – meaning MoviePass subscribers could bring an additional $17.1 million in AMC concession revenues for Q1 of 2018, which on an annual run rate means $68.4 million more — an annualized run rate going forward of over $203.4 million revenue from MoviePass subscribers.

We’ve pulled 10 AMC theaters  — less than 2% of theaters. We already know in past testing that MoviePass subscribers are not theater-loyal; they’re happy to drive by a theater that may be closer to a theater that will accept MoviePass –because of the MoviePass value.

From day one, MoviePass has been 100% for our subscribers – they are the most loyal fans we’ve ever seen and we’re honored to remove a price barrier than had been preventing the average movie-lover from going to the movies. We’re here for them and will fight battle for them every day of the week.”

 

 

Statement from Moviepass http://deadline.com/2018/01/moviepass-lack-of-amc-theatres-coverage-1202269412/

 

BS on the highlighted parts.  WHere are they pulling these numbers from?  If they are flat year over year how is MP exactly claiming they are responsible for 62 percent of the operating income and 34.4 profits?  ARe they saying if not for MP no one would have gone to the movies in Q4 at AMC?  That is what it sounds like they are basically claiming here that Star Wars and Jumanji are nothing.  Like who do they think is going to buy this?  Bitcoin fans? Lets specialty.  How do they jib together?

 

My personal experience at my local AMCs.  Tickets are now mostly bought online and the walk up crowd has no idea that movie pass exists.  The small exception to this is cheap ticket tuesday and most people here do not have a moviepass.  Every other theater in the country could be different but that seems to be the pattern at my two local ones.  One of which I go to probably 5 times or more a month with my moviepass.  

[WrathOfHan]

11 minutes ago, jimisawesome said:

We know that we currently represent approximately 62% of AMC’s operating income, assuming that AMC is flat year over year. This equates to $34.4 million of gross profits to AMC in the upcoming quarter. On an annualized run rate basis, that’s over $135 million to AMC’s gross profits

                                       

[TwoMisfits]

15 minutes ago, jimisawesome said:

 

Statement from Moviepass http://deadline.com/2018/01/moviepass-lack-of-amc-theatres-coverage-1202269412/

 

BS on the highlighted parts.  WHere are they pulling these numbers from?  If they are flat year over year how is MP exactly claiming they are responsible for 62 percent of the operating income and 34.4 profits?  ARe they saying if not for MP no one would have gone to the movies in Q4 at AMC?  That is what it sounds like they are basically claiming here that Star Wars and Jumanji are nothing.  Like who do they think is going to buy this?  Bitcoin fans? Lets specialty.  How do they jib together?

 

My personal experience at my local AMCs.  Tickets are now mostly bought online and the walk up crowd has no idea that movie pass exists.  The small exception to this is cheap ticket tuesday and most people here do not have a moviepass.  Every other theater in the country could be different but that seems to be the pattern at my two local ones.  One of which I go to probably 5 times or more a month with my moviepass.  

I think the number comes from them taking their weekly contribution to AMC and multiplying by 13...so they are giving almost $3M/week to AMC theaters in ticket sales (above the $2M originally given by insiders, which might just be a difference of when they gave that info since subscribers have been growing so fast)...

 

Since they pay full price, there's no doubt this will hit AMC, even at a small # of theaters, b/c 1. it will cause some folks to go elsewhere and 2. these are the "huge" and pricey theaters which have to sell the seats to stay afloat...and we know the vast majority of MP holders are probably in these areas, and they still have year long passes to use, so they'll use them, even if they b&tch a little...

 

Although on the issue of full vs discount tickets, like when Atom offers a $4/any ticket to Maze Runner and AMC sells on Atom...and now $20 Dolby tickets are $4...how much does Atom eat, how much does the movie maker eat, and how much does AMC eat, if anything?  Even for the regular $15 2d show, how much of that $11, which is still claimed in the box office, is not given to the theater for that ticket?  Is Moviepass asking for things which Fandango and Atom don't get already?

[Barnack]

It is not that crazy, considering that AMC had a negative operating income the last quarter they gave result and 65m for the 9 month before that.

 

But that is a strange way to presents the situations.

 

AMC is making in revenus over a 4 billion a year and around 3 billion in admissions a year.

[BXT]

I don't think Moviepass has the leverage that the company thinks it does. They have less than 2 million subscribers and they want a cut from AMC. That's not gonna happen unless you have a lot more subscribers. I wonder why they couldn't wait another couple of years to make this move. Could they be running out of cash ? If AMC stops honoring MoviePass they are fucked as there are plenty of small towns in North America that don't have any other theater chains. It will also weaken their hand against AMC's rivals. Why should Regal pay them anything if AMC isn't ?

[jimisawesome]

3 hours ago, TwoMisfits said:

I think the number comes from them taking their weekly contribution to AMC and multiplying by 13...so they are giving almost $3M/week to AMC theaters in ticket sales (above the $2M originally given by insiders, which might just be a difference of when they gave that info since subscribers have been growing so fast)...

 

Since they pay full price, there's no doubt this will hit AMC, even at a small # of theaters, b/c 1. it will cause some folks to go elsewhere and 2. these are the "huge" and pricey theaters which have to sell the seats to stay afloat...and we know the vast majority of MP holders are probably in these areas, and they still have year long passes to use, so they'll use them, even if they b&tch a little...

 

Although on the issue of full vs discount tickets, like when Atom offers a $4/any ticket to Maze Runner and AMC sells on Atom...and now $20 Dolby tickets are $4...how much does Atom eat, how much does the movie maker eat, and how much does AMC eat, if anything?  Even for the regular $15 2d show, how much of that $11, which is still claimed in the box office, is not given to the theater for that ticket?  Is Moviepass asking for things which Fandango and Atom don't get already?

Part of my comment got lost via edit and pasting.   I mention the numbers MP recently released that they are 2 percent of blockbusters and over 10 percent of specialty film box office but that does jibe with their claims in this letter. 

 

They basically claiming they are buying 400,000 tickets from AMC a week (assuming 10 dollar tickets)*.  I don't believe it with even a 2 million person subscriber base.  They announced 1.5 million on Jan 9th.  So basically they are trying to claim that about a third or more of their customers every single week went to AMC.  That does not match Moviepass claim they are 2 percent of blockbusters and 10 percent art house attendance. 

 

I can't say for certain but I think its likely that AMC gets less of a MP bump than many other chains.  The reason is the renovations.  Take my local AMCs they dropped to about a third of the capacity over the last year.  What this means is that movies that never would have sold out sell out all the time.  Den of Thieves last week I abused my MP and bought a ticket the day before and half the seats were sold.  The day of release there where only 3 single tickets left outside of the front row at noon for a 745 showing.  So pretty much only a tiny handful of people with MP saw DoT on opening day.  Same goes for that Thor war movie because this time only 1 showing was not Imax and that sold old quickly.  Again this is my market which is a top 10 market and has 4 AMCs (before the buyout) and I can be the complete outlier and most other markets have not seen the renovations yet.   I would imagine that Empire has a higher than normal online buying base than most other theaters because it is such a popular theater. 

 

The 4 dollar tickets are mostly eaten by the Studio and TMobile (has anyone else done this besides them?).    They might have worked out a deal with the theaters at the theater's corporate rate ticket which if that is the case a regular ticket would be around 8-10 dollars that AMC is charging but that is backroom and would be next to impossible to find unless you know someone in the room. 

 

 

*Operating income for AMC was 213 million for 2016.  I just divided by 52 but Q4 will be larger than Q1/Q3 making MP numbers even more unbelievable.  

[TwoMisfits]

1 hour ago, jimisawesome said:

Part of my comment got lost via edit and pasting.   I mention the numbers MP recently released that they are 2 percent of blockbusters and over 10 percent of specialty film box office but that does jibe with their claims in this letter. 

 

They basically claiming they are buying 400,000 tickets from AMC a week (assuming 10 dollar tickets)*.  I don't believe it with even a 2 million person subscriber base.  They announced 1.5 million on Jan 9th.  So basically they are trying to claim that about a third or more of their customers every single week went to AMC.  That does not match Moviepass claim they are 2 percent of blockbusters and 10 percent art house attendance. 

 

I can't say for certain but I think its likely that AMC gets less of a MP bump than many other chains.  The reason is the renovations.  Take my local AMCs they dropped to about a third of the capacity over the last year.  What this means is that movies that never would have sold out sell out all the time.  Den of Thieves last week I abused my MP and bought a ticket the day before and half the seats were sold.  The day of release there where only 3 single tickets left outside of the front row at noon for a 745 showing.  So pretty much only a tiny handful of people with MP saw DoT on opening day.  Same goes for that Thor war movie because this time only 1 showing was not Imax and that sold old quickly.  Again this is my market which is a top 10 market and has 4 AMCs (before the buyout) and I can be the complete outlier and most other markets have not seen the renovations yet.   I would imagine that Empire has a higher than normal online buying base than most other theaters because it is such a popular theater. 

 

The 4 dollar tickets are mostly eaten by the Studio and TMobile (has anyone else done this besides them?).    They might have worked out a deal with the theaters at the theater's corporate rate ticket which if that is the case a regular ticket would be around 8-10 dollars that AMC is charging but that is backroom and would be next to impossible to find unless you know someone in the room. 

 

 

*Operating income for AMC was 213 million for 2016.  I just divided by 52 but Q4 will be larger than Q1/Q3 making MP numbers even more unbelievable.  

Well, the AMCs said their average MP reimbursement was almost $12/ticket...so for $3M/ week, you're looking at 250,000 tickets bought at AMCs...so, 1/6th of members bought a ticket at an AMC/week.  Knowing the new 1M of subscribers (from Dec 9 to Jan 9) have been using their passes like crazy, I see that as highly possible.  If you have a million folks buying 6 movies from late Dec to late Jan, that's 6 million tickets bought.  For 1 million to be AMC tickets over those 4 weeks when they are one of the biggest chains wouldn't be crazy (and I'm not even dealing with the other 500K subscribers - we can say they picked up the slack for the newbies who weren't quite so crazy)...  

 

As for the deals for Atom/Fandango, they are now pretty much every week - some movie specific and some not - this week, Atom has deals on Maze Runner and The Post that I know of from emails sent to me (I haven't looked on slickdeals for all of them, but I might take a glance)...someone's paying for those deals now, b/c I can't imagine those 2 are getting enough in ticket fees to keep offsetting the discounts...I know businesses work with them to help prop these discounts, but that's not always the case...and they don't have a "subscription base" to draw from, they only have per ticket fees (which are also waivable - see AMC)...

 

Edited January 27, 2018 by TwoMisfits

[The Panda]

I could believe maybe 1m a week from MP users at AMC.  The issue is, how much of that 1m would have been spent anyways?  Probably at least 25-50%.

 

Further, that’s not much leverage over AMC to revenue share.  Plus, by trying to force leverage so soon, it shows MP is running out of money and trying to fast track to sustainability.  That also means, growing a subscriber base and more tickets being bought will actually just sink MP even faster, as they’re in a predicament where their costs skyrocket the more people use their product.  That’s not the same for say Netflix or Spotify, which have high cost structures but are much more tame in comparison.

 

If MP is already desperate it means they’ll be sinking soon, and no reason to cut a deal with a company with little leverage and that’s like to not exist by the year’s end.

 

I am interested if theaters might experiment with subscription services.  Even then, I doubt any of them will be as good of a bargain as MP is.