Most of the big chain now offer Moviepass-esque premium services. AMC now charges like what, $12 a month for 2-3 movies / week? That's how much individual tickets cost in the bay, so as long as a person watches even a single movie a month they're breaking even!
It might be too early to say that for sure. The AMC service was created when MoviePass was still a player and was very much a response to them. I believe AMC also only committed to that pricing for a single year and we just recently passed that 1 year anniversary. Now that MoviePass is functionally dead, there is little stopping AMC from raising prices to the extent that basically kills this model for the average consumer. We might soon find ourselves back in a market similar to the early days of MoviePass when one of these unlimited subscriptions costs $30-50 and is only viable for an incredibly small group of moviegoers.
I read a study a few years back and the average American adult sees 1-2 movies per year in a theater. I dont have the info anymore but I agree wholeheartedly
I can't decide whether this would be more or less likely to convert (and also, whether it would be more or less profitable) than "$11 for the movie, or $10/mo for unlimited movies."
Obviously you'd think "more likely to convert" because it's cheaper, but maybe actually less likely because the fact that it's cheaper than a movie would give you pause, and make you think "Oh, it's a subscription," and then realise it's $120/year -- probably more than you spend on going to the movies.
We only have to go to three regular movies a month to save money or one IMAX movie and one regular movie a month.
Case in point: timeshares.
As a result, I am trying to consume all the tickets in one account, still not there, and sitting holding double digit tickets in my other account. Oh I will get out of this ... on to my last ticket in account #1, just need to find one more movie to watch, but this is not how I expected life will work when I signed up.
Many people like me in this world. [ Thanks Disney/Marvel for the burn rate this year]
This is what a lot of people leave out when discussing the gym membership analogy. There is a societal and personal pressure to be in shape and have a gym membership. Many people also don't enjoy the actual process of working out. Therefore people feel guilted into purchasing the service but disincentivized from actually using it.
There is no societal pressure to go to the movies regularly (maybe there is a little pressure to see a handful of blockbusters a year, but not enough to justify the service) and people generally enjoy the experience. So the only incentive to purchase the service is to save money and people have a positive incentive to use the service. That is totally different than the gym membership model.
"So, why did you stop taking your health seriously?"
I’ve had a treadmill in my house/apartment for years -that I actually used - when we moved I made sure that we had a spare bedroom that I could turn into a gym.
I love working out at home, in front of my TV or listening to a podcast. I can work out anytime, I’m still at home with my family and my wife will work out with me occasionally. She still likes going to the gym and working out with her friends.
For example, if subscribing induces people who like going to the movies enough to do it at least monthly to go more often--maybe 2 or 5 or 10 or 20 times a month--the main liabilities seem like: subscribers displacing people who buy full-price tickets, turning frequent full-price purchasers into subscribers, and hard-core min/maxers who refuse to buy anything else at the theater.
I'm not sure how the plans work, but the first is probably mostly-fixed by things like not letting pass members reserve seats, and no-pass stipulations for new releases, etc.
There's not much you can do about the third, but I'd guess most people are more likely to get a snack or drink if they aren't explicitly paying for the movie, and even more so if they know they're watching 8 movies a month for $13.
If the profit on those exceeds the studio's cut of ticket sales, and if the majority of subscribers are attending more, they might come out better the higher the average number of subscriber-monthly attendance goes?
Consider that for a regular movie ticket, the movie probably made more from the concessions (which cost the theater pennies and can get marked up by up to 100x) than they do from the ticket.
https://www.bizjournals.com/losangeles/news/2018/06/25/amc-s...
If you’ve been following the media industry, you would know that there are very strict agreements between producers and distributors about everything.
Virtually every point you've tried to make is contradicted by this WSJ article: https://www.wsj.com/articles/hollywood-studios-fear-amcs-new...
There's no point in speculating when AMC can just decide what's in its best interests based on the facts that it has.
MoviePass proved the demand. They simply lacked the data or leverage to make their business model work.
AMC and Regal have both. Crucially, they can negotiate with the movie studios re the payouts for ticket purchases; MoviePass could not. This is probably the biggest and most important factor behind why AMC/Regal can make these plans work but MoviePass never could.
[1] https://www.cineworld.co.uk/static/en/uk/unlimited (unlimited 2D movies for ~£20/month)
MoviePass proved there is demand for free money. They didn't prove that this model could be profitable and therefore sustainable at this price.
Also important to note is that both AMC and Regal subscriptions are twice as much or more per month as MoviePass was...closer to the original/sustainable MoviePass pricing (when it was a lot smaller and not very popular).
Well yea, they lowered the price of the supply - OF COURSE there's more demand.
But they lowered the price of the supply at cost to themselves. I believe the idea was that once they had enough market share they're be able to negotiate ticket prices and actually turn a profit.
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But yeah, there's a demand for unlimited movies @10$/mo when single movie tickets cost 12$+ :P
IOW, they're doing this starting in the black, or already close to it.
In contrast, A-List is mostly cannibalistic. Via self-selection, the most common subscribers are people who were most likely to actually purchase multiple AMC movie tickets each month, that now pay less overall. A-List members take up seats in sold-out, opening-weekend showings (including higher-priced IMAX and 3D) that could otherwise be sold individually. And AMC has to market and administer the program, which also costs money.
I signed up for a chain's movie club due to the value, and I now exclusively go there. Before I signed up I'd switch it up.
I imagine that AMC worked out a subscription-sharing model with the studios, where the subscription fee is split across the movies attended. As long as people show up to movies, a percentage are buying concessions and AMC is making money.
Here is a complete write up of the financials.
https://www.fool.com/investing/2018/07/10/theres-1-potential...
Both ticket sales and concession sales have positive gross margins, and contribute to the bottom line.
If you artificially separate a cinema business into two pieces, making the 'ticket sales' business responsible for 90% of the overheads (rent etc.), and the concessions part responsible for 10%, then it would appear that the 'ticket sales' business does not make money.
But, in reality, the tickets sales revenue is required in order to run the business, not just to draw in customers for the 'concessions' business, but also to help pay for rent.
At which point, someone "rediscovers" MoviePass 2.0 (probably with some artificial twist to let everyone know that THIS IS NOT MOVIEPASS), an obliging VC materializes to huck a couple more unicorns on the fire, and it's deja vu all over again. I mean, nothing in this article suggested that the practice is going away any time soon...
So, even if AMC assumes 3 movies are seen a month on average across those card holders, it might be that they can conceivably break even with the distributors at that price. If that's the case, it's a major net win as those people are not only likely to spend money at the concession stand, they are probably going to spend more, since they don't feel like it's already been an expensive endeavor to go to the movies (not only is it much cheaper, it's also time shifted away from the time you might want to get snacks for the movie, so you feel like you're there for free basically).
In the end, there's a lot of interesting ways movie theaters might be able to leverage these memberships to their advantage. That said, I imagine the distributors will probably push for slightly different payment contracts if that becomes the norm.
I'm not sure how these deals are structured, whether there's a per-viewing cost or a bulk "we rent this movie and show it as many times as we want to whoever we want".
So while you're right that most of the costs of a ticket go to the distributor, that's not related to number of tickets sold, it's that tickets are priced to cover the costs already paid.
If someone knows more about this and has a source confirming, clarifying, or correcting me, please share, as I've been interested in this for a long time.
What is true is that the studios take a higher percentage of ticket sales during opening week, possibly 55-65% or more in some cases. I believe it depends on the movie. The percentage starts to flatten out back below 50% in the following weeks. So it's true that the theater chains do want to optimize for concession sales, since so few films have legs these days.
EDIT: I originally wrote that the studios sometimes take 90% during opening week. I found an article that purports this to be a very rare if not apocryphal number: https://stephenfollows.com/how-a-cinemas-box-office-income-i...
I thought that the deal between the movie theaters and the production companies were that they paid a flat rate per head that views the movie, with almost 100% of ticket sales going to the production company, where the theater only makes a profit on concession sales.
Is that no longer the case?
For other blockbusters, somewhere between 50-75% is the norm, with the range varying based on the chain's size/leverage and the movie's expected performance.
For all other films, the cap is 50% of ticket sales for the first weekend.
With all of the above, the studio gets a smaller % of ticket sales each weekend. Somewhere around 8-12 weeks in, the studio's share drops below 10%, which is why some films will stay in theaters for months if there aren't any new big films to replace them.
These days I believe movie theaters makes a lot of money on advertising as well as concessions. Now that everything is digital advertisements can be changed on a whim and moved around and updated. Many chains (at least in Europe) are now selling premium advertisement spots. Like after the trailers just before the feature film starts.
If you pick the most expensive tier, then you don't pay any extra fees for tickets at that tier of theaters or any lower-tier theaters. If you get all your tickets at the theater itself, you pay no fees at all beyond the monthly subscription. (However, 4dx, 3D, and "PLF"/Imax showings are always treated as "higher" tier than your current plan, even on the highest-tier plan, and always incur an extra fee. Per Deadspin, Regal is still trying to decide whether to offer those as part of an unlimited monthly plan.)
If you have a Regal membership, you still get points for purchases at 100:$1, including your monthly subscription payment.
It's still offered, and at £17.99 (and a 20% discount on food) it's a good price if you watch more than 2 movies a month.
It's somewhat of a moot point though, my nearest cinema is a Cineworld, and the next 2 closest are as well, I'd have to travel out of my way to go to an Odeon or Showcase.
AMC is not losing money from the deal.
https://www.bizjournals.com/losangeles/news/2018/06/25/amc-s...
If I've hired you to mow my lawn for $50 every week, and then one day I choose to only leave $45 in the envelope, that's not a negotiation.
My employer decided my salary and benefits and came in with an above market offer, that they thought I would more than likely accept. That didn’t mean I was obligated to accept the offer or that we didn’t make an agreement.
I live in an at will state and never once signed a piece of paper saying that I couldn’t walk in tomorrow and say f’ it I quit. Once I do that, we terminate our agreement. That didn’t mean I didn’t have one yesterday.
My willingness to work everyday also depends on a lot of factors, there is no guarantee that I won’t go in the office tomorrow and turn in my resignation. Even if I and my employer agree to an at will work condition doesn’t mean we didn’t come to an agreement.
If a company offers me a salary and I take the job, does that mean we didn’t make an “agreement” that they pay me money and I come to work because I can walk away from the job at anytime?
If you hire me to mow the lawn for $50 and then you only pay me $45, I have every right to come after you for the other $5. If a company told me they were going to pay me $150k a year and I came to work every day and they paid me less at the end of the pay period, you better believe that they will end up in court. They couldn’t just decide to pay me less. Well they could, but they will still be liable.
Are you claiming that AMC is showing movies without the studios permission?
AList is still a small minority of overall ticket sales, studios are obviously hesitant to launch the nuclear option and pull films entirely, especially over what is now a small amount.
I’m also hesitant to leave my job and I would hope that my company is hesitant to fire me even though my employment is a small part of their budget. Part of the hesitancy on their side is hopefully that I bring value to the company. The hesitancy on my side is that I have a mortgage due on the 15th of every month. Just because I can walk out of my job tomorrow or they could fire me tomorrow (the nuclear option), doesn’t mean that my employer and I didn’t make an agreement.
On the other hand, are you implying that one day, that the studios are just going to reject AMC’s check, without setting up some type of meeting and coming to different terms - ie negotiate.
That’s the whole concept of a BATNA, that each party decides would they be better off with the deal or without it. Just because the BATNA can change when facts on the ground change and either party can come back to the table to renegotiate their agreement at any time, doesn’t mean their isn’t one. That doesn't mean they can't or won't going forward, however. Just like you would take the short-changing employer to court, so might the studios. But you'd probably keep working at 140k per year while the lawsuit is pending, because it's better than zero and you'd expect to eventually be made whole.
You really think that the studios are letting AMC pay them less than they find acceptable and they are still allowing AMC show their movies? Do you think that the studios are going to come back and sue AMC later because they didn’t get enough money from them?
Read that however you want. I'm done arguing with you, I really am not interested in your employment or mortgage situation.
AMC offered $8.99 (or more) to studios for each A-List ticket. The studios implicitly accepted this offer by agreeing to show films in AMC theaters. That is actually how many negotiations proceed in the business world
It's very possible that some studios did negotiate carve-outs or increased payouts for A-list tickets, which is something that Disney is notorious for doing with its bigger films. Indeed, since movie distribution deals are negotiated with theaters per film (a requirement of an old 1950s era law), it's very likely that at least one studio (i.e., Disney) has negotiated higher shares for A-list tickets.
If the studios were happy, they wouldn't signal uncertainty and dissatisfaction to investors by bitching to the Wall Street Journal. That can only negatively affect all parties.
Uber may try that, but real grown up businesses don’t do things like that.
Have you personally ever worked at a major corporation where someone decided to unilaterally change the terms with 6 or 7 suppliers. What are the chances that all 7 very litigious studios would have gone along with AMC making that decision and just shrugging?
You said yourself that AMC has very slim profit margins. One lawsuit would wipe their earnings out.
On the other hand, our comments are backed by reputable sources, and in my case also by actual experience dealing with theaters and movie studios, including as an advisor.
I think the idea behind movie pass was basically the same economics as behind a gym as long as most people don’t take the full advantage of their membership and are tied to a contract they’ll make money if everyone does it’s a different ball game.
The problem with movie pass is that their model is too easy to replicate by the theater chains and cut them off, i really don’t understand why they got VC funding even if they could scale to the point of making a profit this model simply can’t be easily protected against competitors especially when the competitors are part of your service supply chain.
1. get better prices from theaters to send users there
2. make deals with studios to send users to their movie
3. make deals with nearby stores to send users there
it backfired when all the theaters called the bluff and just started their own membership program, and held out until Moviepass bled out all their VC money.
And they use their power to distribute lower quality and conquer foreign markets to disrupt that market also. A theatre is only a small part in that chain.
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