Startup Dealflicks Offers Discounts for Movie Tickets, Concessions

With the cost of U.S. movie tickets rising, one startup is looking to revolutionize the market by allowing theatergoers to buy tickets for 30 percent to 60 percent off. And theater owners are beginning to buy in.

Dealflicks, a San Francisco-based company, is looking to do for the movie theater market what and have done for the travel sector. Dealflicks CEO Sean Wycliffe recently told CNBC's "Squawk on the Street" that 88 percent of movie theater seats are left vacant—a void Dealflick hopes to fill.

Dealflicks now offers discounted prices for movies and concessions at roughly 100 locations nationwide. The startup has yet to strike a deal with larger movie-theater operators such as AMC and Regal theaters, part of the Regal Entertainment Group. Participating movie theaters set the discounted prices, which are available in real-time through their website and smartphone apps.

"Currently, we are letting the movie theaters set the pricing so tickets and concessions can be up to 60 percent off. They get to choose the show times and the movies. Typically, we get evenings, weekends even opening weekends as well," Wycliffe said.

Movie theaters are big business. Consumers shell out more than $40 billion on tickets and concessions annually. The average price of a movie ticket in 2012 was $7.96, hitting an all-time high of $8.12 last August, according to the National Association of Theater Owners. Ticket prices can exceed $10 in major cities including New York City.

Wycliffe got the idea for the company in 2011, when he went to see "The King's Speech" and was surprised that the movie theater was practically empty. The co-founders raised an initial $65,000 from friends and family to launch the company but membership in 500 Startups, an accelerator program for upstarts, helped the company "get into the spotlight in Silicon Valley," according to Wycliffe. Dealflicks officially launched in beta in July 2012.

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Source: Dealflicks | Facebook

Growth in Apps, New Theater Locations

Dealflicks launched its first iPhone app on March 5, with more than 4,000 downloads and counting. "Things have been accelerating," said Wycliffe, who plans to roll out an Android app later this year.

Dealflicks is currently partnering with independent movie theaters and small chains in several metro areas, including Chicago, San Francisco, Los Angeles, Dallas, Atlanta and the New York City tri-state area. Wycliffe estimates that the company is currently adding one to two new theater locations daily.

Wycliffe said the company is looking to partner with some of the big movie chains in 2013 and said that in conversations at South By Southwest, several large movie studios, including Warner Brothers and Disney "are very interested in our data."

"We are having a lot of fun and hope to fill a lot of empty movie theater seats," said Wycliffe. "Five years from now, we see ourselves generating a couple billion in revenue."

Soon after the CNBC TV interview, users on Twitter reported that the Dealflicks website and application were down. "There was so much traffic our server crashed momentarily," Wycliffe said in an email, "I guess not the worst problem to have!"

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CORRECTION: An earlier version of this article incorrectly stated Dealflicks offers discounted prices for movies and concessions at roughly 1,000 locations nationwide. It should have said 100 locations nationwide.

— By CNBC's Amy Pack