In its 4 months of existence, MoviePass has signed up over 1 million members. The highlight of a MoviePass membership is that you can get one ticket to a movie every day of the month for a $9.99 subscription fee. There are more than a few business professionals who question the MoviePass business model, but given the super-fast climb to 1 million, moviegoers are taking advantage of the situation while the business is still around.
The latest report by the Motion Pictures of America (MPAA) show several pieces of data that are worth considering, both for the future of MoviePass and the survival of the traditional movie theater. Though the MoviePass subscription seems low, according to the MPAA the average price of a movie ticket in $2016 was $8.65. That was up 3% from the previous year, but still under the $9.99 subscription price. So MoviePass seems to have created a model based on the average price and bumped it up a bit. Making $1.34 per subscriber means it is within the realm of possibility that MoviePass has made over $1 million in 4 months. Possible, but not likely.
Another MPAA statistic worth mentioning is that the 25-39 age group has increased its movie-going habits over the past 5 years and leads the pack in attending movie theaters. This is an important demographic because historically movie attendance drops off considerably for the 40 and over group. The potential revenue for theaters lies in keeping that 25-39 demographic happy, and lower ticket prices are clearly a major factor. Other age demographics may be jumping on board with MoviePass, but they are less likely to use it on a daily basis.
As for the actual owners of MoviePass, consider this comment: “I don’t know how long they will stay afloat but I’m going to ride the wave until it crashes.” Some critics of the theaters are saying that going to a movie is a matter of price, and if we can’t see our movies for a lower price, then the traditional theater will simply give way to subscription-based services such as Netflix. But this comment is spot on. Internet companies rise and fail all the time, and if MoviePass ends up being one of them all it does to the consumer is to look for other ways to get cheap movie tickets. There really is nothing hard about that, and virtually no one’s life is tied to the success or failure of MoviePass.
That leaves the question of what does MoviePass expect its financial salvation to be. The answer according to MoviePass is to sell subscriber data to movie studios and other advertisers, and work with the theaters to cut deals on concession stand revenue. If the numbers are true, a 1 million subscriber database is a huge asset, and if the company holds to its strategy they should be reaping the rewards sooner than later. But note that as an industry, stock prices of movie theaters dropped after MoviePass announced its pricing scheme. MoviePass can sell discounted tickets, but if there aren’t many physical theaters to use the tickets at, it doesn’t seem as a way to consistently make money.
Reaching the 1 million mark may actually sort out this conflict between MoviePass, theaters, and moviegoers. If the strategy of selling its subscriber data to other companies is successful, then it is likely to quiet the concerns of theaters who are trying to stay afloat in a troubled movie industry. Consumers can continue to use (and share) their MoviePass and continue saving money. But as for theaters sharing concession revenue with MoviePass, it is something that is not very likely to happen.
The only way theater owners make any kind of concession to MoviePass is if the demographics begin to shift and older Americans (over 40) start returning to the theater. That is connected to whether Hollywood can produce movies that are worth going to the theater for, a reality many moviegoers think is not likely to happen any time soon. Netflix is proving itself to be a formidable opponent to Hollywood as it invests in new content and original series for its subscribers. It’s not that theaters can’t survive, but it is clear they cannot do it alone.
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