Cinemark Starts Its Own Program to Combat MoviePass

Cinemark, owner of nearly 400 theaters in 41 states and 15 North American countries, has started its Movie Club ticket program to compete with MoviePass. Their initial offering is $8.99 a month for one ticket, with the option to buy 2 additional tickets at $8.99, plus 20% off concessions. The program was developed after the company conducted extensive consumer research, packing the most desired features of an online movie ticket program.

In contrast, MoviePass currently sits at $9.99 for a monthly subscription and members can get a ticket for one movie per day. The business model of MoviePass has been questioned for some time, as the cost of a single movie ticket in the major metropolitan areas costs well over the monthly subscription fee of $9.99. They have recently changed the Terms of Service and are offering a limited membership plan for $6.95 a month.

Naturally, there are the critics of Movie Club, saying that the program is lame. Only one ticket per month? Actually you can get 3 tickets per month if you want to shell out the extra $8.99 per ticket, which seems more like a family plan than a single user membership. But that is neither here nor there.

As a casual observer, I would like to know who goes to see a movie every single day? It sounds like the kind of person who either isn’t working or perhaps is a professional movie reviewer. The average working person simply doesn’t have the time to spend 3 hours a day to watch a movie. So this part of the complaint seems to be from underage or overage children who have nothing better to do with their time. According to the Terms and Conditions of MoviePass, you agree that “(1) you are legally capable of entering into a binding contract; (2) you are at least 18 years of age.” That pretty much eliminates the underage group.

Is it possible that the complainers are sharing their MoviePass privileges with their friends, enemies … whoever. Of course, that would mean that the terns of the agreement are being violated since there is only one “you” in the agreement — the person that signs up for the service and pays the monthly fee. Cinemark, AMC, and other movie theater chains are businesses that remain businesses because they turn a profit. MoviePass, not so much.

It is easy to see the critic’s viewpoint. It is the mantra that has played out over and over again online — the idea that competition is defined primarily through price. The lower the price, the better for the consumer. So in the case of MoviePass versus Movie Club, if Movie Club is a fail and Cinemark is forced to accept MoviePass while losing money in the process, that’s business in the 21st century. If MoviePass goes under, another business model will be attempted to compete with Movie Club, so either way the consumer wins because they can still get discounted tickets.

A quick look at Cinemark’s quarterly profit and loss statement ending September 30th shows that more than one-third of its revenues come from concession purchases. Anyone who has gone to a movie in the last 20 years knows that concessions are one of the main reasons movie theaters can stay open. That leaves just under 60% of revenues generated by ticket sales (there is an “other” category, which is why it doesn’t total 100%). Of that 60% in revenue (not profit) one-third goes to actually renting the movies. The point to this accounting exercise is that Cinemark’s cost to rent the films will not change because the ticket prices are lower.

Maybe the critics don’t care about what it takes to run a business. The test will be to see what happens to MoviePass. If it doesn’t go under, the critics will be right.

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