Netflix brought subscription-based movie and television streaming to the millennial masses. Spotify and Rhapsody did the same thing with music - pay once, listen to as much or as little as you want.
Now a major movie theater chain is trying to step onto the subscription gravy train as it seeks to reverse attendance declines, especially among young moviegoers. Leawood-based AMC Theaters, the No. 2 chain in North America behind Regal Entertainment, has agreed to a pilot partnership with MoviePass, a three-year-old company focused on letting people attend a movie a day for one monthly fee.
“It frankly wouldn’t be smart to ignore the success of subscription in other areas of media,” said Christina Sternberg, senior vice president for corporate strategy at AMC, which operates 4,959 movie screens.
In January, AMC theaters in Boston and Denver will begin working in concert with MoviePass to offer monthly subscription packages for $45 and $35. More cities will be added.
Never miss a local story.
“The data will determine how fast we go,” Sternberg said. “Sometimes you first expand the test, sometimes you accelerate the deployment.”
MoviePass has tried to build a subscription service on its own since 2011, with limited success. The problem: Worried that embracing a subscription alternative will undermine traditional per-ticket pricing, the big chains - and some of their studio suppliers - have repeatedly swatted MoviePass to the side. AMC’s average ticket price increased 5.3 percent in the third quarter of this year, to $9.48.
But the musty exhibition industry is newly alarmed about a sharp drop in young ticket buyers. That audience has repeatedly turned up weekend after weekend, bingeing on high-margin soda, popcorn and candy in the process.
The Nielsen Co. said last week that the moviegoing of Americans age 12 to 24 dropped 15 percent in the first nine months of 2014, compared with attendance in the same period a year earlier. Total attendance has declined about 5 percent so far this year compared with last, according to box-office analysts, because of fewer broad-appeal films and about a dozen more modest movies, like “Sex Tape” and “A Million Ways to Die in the West,” that missed the mark.
About 75 percent of MoviePass subscribers are 18 to 34, according to Stacy Spikes, the service’s chief executive and co-founder.
“Millennials are consuming things differently, and that includes going to the movies,” Spikes said.
He declined to say how many people subscribed to MoviePass. He noted, however, that MoviePass members tended to spend significantly more on concessions.
AMC, acquired two years ago by the Dalian Wanda Group of China for $2.6 billion, has emerged as a leader in challenging the exhibitor status quo. The multiplex operator has been aggressively updating its auditorium seats, rolling out enhanced sound systems and experimenting with marketing and ticketing.
Last month, for instance, AMC offered members of its rewards program, AMC Stubs, the chance to see “Interstellar” as many times as they wanted, for $19.99 to $34.99, depending on the viewing format.
“The mandate at AMC is to break some eggs and make some omelets,” Spikes said.
For MoviePass, it has been a battle to link arms with any exhibition company, much less a giant like AMC. MoviePass was introduced in San Francisco during summer 2011, but the subscription service drew the ire of theater owners, in part because they felt it was trying to go around them.
“We thought we had communicated with the right people and we hadn’t,” said Spikes, whose entertainment career has included executive stints at Motown Records, Sony Music Entertainment and Miramax Films.
MoviePass regrouped and tried to move forward by teaming with a ticketing voucher company, Hollywood Movie Money. But that workaround was clunky. Among other hassles, MoviePass subscribers had to print out vouchers at home, then present them to theater ticket takers.
For the past two years or so, MoviePass has been using yet another multistep method. People who sign up now receive a membership card that functions like a debit card. When members want to see a movie, they use a MoviePass smartphone app to check in at the theater. The app instantly transfers money - the price of a ticket - to the membership card. Members in turn use the card to pay for entry. Monthly membership costs $30 to $35, depending on location. That price covers one movie a day in a standard format.
The pilot partnership with AMC will allow MoviePass members an option, for $45 a month, to see films in any format, including Imax and 3-D.
Under the MoviePass business model, theaters are paid full price for every admission. To make money, the service depends on traditional subscription-service economics: More people pay than go.
Spikes said that, based on his company’s experience so far with members, “Some overuse; a lot underuse.”