- The movie-theater subscription service MoviePass is getting into the distribution business, as it has teamed with The Orchard to acquire a Sundance Film Festival title.
- A day after the buy at Sundance, MoviePass announced its service would no longer be available at some AMC theaters.
- A media analyst believes MoviePass is “skating on thin ice.”
It’s been a roller-coaster ride this week for MoviePass.
On Wednesday, the movie-theater subscription service announced that it was teaming with a distribution company, The Orchard, to take the North American rights for “American Animals,” a heist movie that premiered at the Sundance Film Festival. Then on Thursday, MoviePass revealed that it was pulling its service from some AMC theaters.
Entering the acquisition game with MoviePass Ventures, the company hopes that by investing in movies it can share in their box-office success. Such investments could help counter losses from the company’s main business model, in which it pays the full price for tickets at most theaters where MoviePass subscribers use the app.
There’s skepticism, however, that this is the right move for MoviePass.
“It’s a diversion from their focus and a loss, as most film investments are,” Hal Vogel, a media analyst who founded Vogel Capital Management, told Business Insider. “In my opinion, they’re skating on thin ice.”
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Another move that will not be universally praised is MoviePass’ decision to pull its service from some theaters owned by AMC, the largest movie chain in the US. Subscribers will no longer be able to use the app at major theaters like Empire 25 in New York City, Universal CityWalk in Los Angeles, and AMC Loews Boston Common, according to Deadline.
In all, 10 AMC theaters have been pulled from the service, according to Ted Farnsworth, the CEO of Helios and Matheson Analytics, the parent company of MoviePass, in a statement to Business Insider.
In a statement about the move obtained by Business Insider, MoviePass CEO Mitch Lowe said: “As we continue to strive for mutually beneficial relationships with theaters, the list of theaters we work with is subject to change.”
MoviePass covers over $2 million in ticket sales weekly to AMC, according to Deadline.
Though AMC is the country’s biggest chain, MoviePass probably anticipated problems early on. Ever since the company decided to change its model in the summer to a $9.95-a-month subscription plan, a big price cut that in some cases would cause the company to lose money on subscribers who see just one movie a month, AMC has been lukewarm about being supportive.
The chain initially announced it was looking into whether it could block the service from its theaters, saying it would create unrealistic expectations about ticket prices, but it eventually decided to continue accepting MoviePass.
Lowe has said the company’s goals going forward include making deals with exhibitors to get discounted tickets in exchange for promotion and using its data to help market movies. But that never seemed likely to happen with AMC.
On a earnings call in November, AMC CEO Adam Aron said: “AMC has absolutely no intention, I repeat no intention, of sharing any – I repeat, any – of our admissions revenue or our concessions revenue with MoviePass.”
Farnsworth’s statement to Business Insider, however, suggests MoviePass sees itself as having some leverage in relationships with theaters.
“We already know in past testing that MoviePass subscribers are not theater-loyal,” Farnsworth said. “They’re happy to drive by a theater that may be closer to a theater that will accept MoviePass – because of the MoviePass value.”
At the same time, Vogel believes pulling out of some AMC theaters in major cities represents a “significant loss of traction.”
“AMC has taken no action to block the acceptance of MoviePass at our theatres,” a spokesperson told Business Insider on Friday. “We have no further comment about MoviePass’ unilateral actions. We are, however, disappointed that MoviePass continues to make false statements about AMC, including today when MoviePass greatly exaggerated its contributions to AMC’s profitability.”