Can MoviePass' Subscription Service Work?
CNBC Media and Entertainment Reporter
MoviePass wants to apply the subscription model that worked so well for Netflix to movie theater tickets. The startup was supposed to start a beta test of its new theater ticket subscription system in San Francisco today (Friday), just in time for the long holiday weekend. But it cancelled the trial last night in the midst of conflict with theaters. And now it looks like MoviePass' business could blow up before it begins.
The idea of movie pass is simple: pay $50 a month to go to as many screenings at you want at participating theaters. You can browse show times and reserve tickets on MoviePass' app, then check into theaters with your smartphone. If you go to an Imax or 3-D screening, it costs an extra $3.
The company is backed by AOL Ventures, TrueVentures and Lambert Media. As of earlier this week, it planned to roll out beyond San Francisco to a few cities next month, reaching 40 percent of the nation's screens by next fall.
Now that expansion plan seems very preliminary: last night, AMC and Landmark Theaters issued statements saying they won't participate in MoviePass, saying they knew nothing about the program. Those two theater chains represented 18 of the 23 theaters on board for MoviePass' San Francisco test, forcing MoviePass to put its launch on hold.
MoviePass says it couldn't get a meeting with either AMC or Landmark—a statement that seems incredibly suspect, considering their big-name backers. They say the issue is that they bought the tickets through online ticket providers, including Movietickets.com, and did not negotiate with theaters directly.
But MoviePass CEO Stacy Spikes insists that the company still has legs, saying that it's in the best interest of both movie chains like AMC and Regal as well as studios to participate. He said that the company will pay theaters the full cost of tickets.
Their business hinges on the idea that subscribers will probably go to fewer than the four-and-a-half movies per month which would make the ticket part of the business break even. It also is based on the idea that studios will want to avail themselves of MoviePass for targeted marketing.
Spikes said he expects the company to make much of its profits from selling DVDs and the like, as well as marketing and advertising to its subscribers. Spikes said he's meeting with theater chains—we'll see if the company can roll out before the busy movie season ends.
In the meantime, Wall Street analysts are highly skeptical, saying the business is far less like Netflix than like an unlimited ski pass. Barclay's Anthony DiClemente tells me that initially the price seems very high, and only a very niche audience would be interested.
Pacific Crest analyst Andy Hargreaves says the big difference with Netflix is that Netflix totally changed the consumer experience in terms of convenience. With MoviePass, the experience is exactly the same as it was if you bought tickets individually. Without much added experience, is it worth it to be locked in to a monthly fee?
Questions? Comments? MediaMoney@cnbc.com