Now it seems, the high costs involved are catching up with MoviePass and it is quietly restricting access to certain AMC theaters. The company has reportedly already approached AMC with a deal, according to Deadline.
It seems AMC has finally struck a negative chord with MoviePass, though, as the service has begun pulling itself out of ten high-traffic AMC locations.
To counter MoviePass or other subscription companies like it, Cinemark announced a new service for movie theater fans, according to the Deseret News. AMC was also down about 3.04% on Friday. Ever since the company chose to change its model in the summer to a $9.95-a-month subscription plan (Helios and Matheson Analytics also took a majority stake in the company), AMC has been lukewarm about being supportive. This means the theater gets the full value of the ticket, while the subscriber isn't paying an arm and a leg to see some entertainment. Meanwhile, subscribers probably won't be happy being used as negotiation fodder, but it's too early to see if MoviePass' gamble will pay off. That's where the negotiations come in.
MoviePass pulled out of a total of 10 AMC theaters, less than 2 percent of the chain's theaters, according to a statement from Ted Farnsworth, CEO of Helios and Matheson.
MoviePass customers took a hit Thursday as they learned their pass would no longer work at certain AMC Theatres.
Farnsworth said in his statement that AMC has not been interested in collaborating with MoviePass, despite MoviePass generating 62 percent of AMC's operating income. This equates to $34.4 million of gross profits to AMC in the upcoming quarter. Here's what it boils down to: it appears that MoviePass is using its huge subscriber base (which has recently passed the 1.5 million mark) as leverage against AMC to turn a bigger profit. Including concessions, Farnsworth said MoviePass customers could represent as much as $203.4 million of annual revenue for AMC. "We hope to partner with them again". MoviePass is seeking $3 per ticket sold through its app, and 20% of concession sales to its customers, these people said. It has deals with almost 1,000 indie cinemas already for a $3 cut and/or 25 percent of concessions. MoviePass wants to participate financially in that bump.
As one of the largest cinema companies in the United States, AMC has always felt some level of superiority.
In what is only the latest blow in an ongoing battle with the movie theater chain, MoviePass made a decision to pull its service from 10 AMC-run theaters without prior notice to the company or its customers. "As we continue to strive for mutually-beneficial relationships with theaters, the list of theaters we work with is subject to change".
But with its unsustainable business model - the more subscribers it receives, the more money it loses - and its new ventures into movie acquisition, we were all wondering how MoviePass was making its money, right?