March 2, 2018
Editor’s Note: Because of the wide pickup of this article’s section on MoviePass data collection, I have expanded the quote from Mitch Lowe: “We get an enormous amount of information. Since we mail you the card, we know your home address, of course, we know the makeup of that household, the kids, the age groups, the income. It’s all based on where you live. It’s not that we ask that. You can extrapolate that. Then because you are being tracked in your GPS by the phone, our patent basically turns on and off our payment system by hooking that card to the device ID on your phone, so we watch how you drive from home to the movies. We watch where you go afterwards, and so we know the movies you watch. We know all about you. We don’t sell that data. What we do is we use that data to market film.”
Subscription theatrical movie service MoviePass expects to reach 5 million paid subscribers and account for roughly 20% of movie ticket purchases by the end of the year, said CEO Mitch Lowe at a presentation March 2 during the Entertainment Finance Forum presented by Winston Baker in Hollywood.
The service currently has more than 2 million subscribers and accounts for 6% of ticket purchases, Lowe said.
The $9.95 a month service (less for a year subscription) allows subscribers to attend one screening per day at participating theaters. The service is growing the theatrical audience, Lowe said, and more frequent attendance is boosting films that typically make under $50 million at the box office, which have been increasingly pushed out by sequels and franchises released by the studios. It’s also bringing in audiences that had eschewed theaters.
“Our goal is to reenergize moviegoing to the movie theater,” he said, noting that “over 50% of our subscribers are millennials, the people who are abandoning theater the most.”
The service pays theaters the price of each ticket and is looking for discounts and revenue sharing from theaters in exchange for the audience boost. Lowe said he’s just looking for the same kind of discount a retailer such as Costco gets for purchasing a big block of tickets.
Not all theaters have been happy with that plan, notably goliath AMC. Lowe counters that the increased traffic is helping theater chains such as AMC sell more high-priced concessions and that the chain should let MoviePass share in that windfall.
“I think eventually they’ll come around,” Lowe said, though he said there was no “active dialog.”
Another plan to boost MoviePass’s bottom line is to glean income from all of the data the service collects from subscribers.
“We know all about you,” he said at the keynote, appropriately titled “Data is the New Oil: How Will MoviePass Monetize It?”
The data collection information elicited some nervous laughs from the industry crowd, many of whom raised their hands to show they were MoviePass subscribers.
“We get an enormous amount of information,” he said, noting the company knows subscribers’ addresses and can glean demographic information based on where they live. The company also can track subs via the app and a phone GPS.
“We watch how you drive from home to the movies,” he said. “We watch where you go afterwards.”
That sort of data fits into a long-term revenue plan.
“Our bigger vision is to build a night at the movies,” he said, whereby MoviePass would direct subscribers to places to have dinner before or after a screening, for instance, getting a cut from vendors.
As a former executive at entertainment industry disruptors Netflix and Redbox, Lowe said theaters are ripe for change.
“Online, at home, all the other forms of entertainment had all this innovation,” he said. “The theater hasn’t innovated — at least in the business model.”
The key is alleviating consumer anxiety around purchases, he said.
“In 1999 at Netflix when we came up with the disc by mail, all-you-can-eat program we eliminated late fees that Blockbuster had built their business on, and removing that anxiety got people to consume documentaries and foreign films that they never would have rented from Blockbuster,” he said. “And that’s what we’re doing [at MoviePass]. We’re kind of providing movie insurance.”
As a disruptor veteran, he’s also faced doubt about low pricing and seen success despite the initial criticism.
“[MoviePass’s $9.95 a month] may seem like it’s a deal too good to be true,” he said. “That’s what they said about us at Netflix. That’s what they said about us at Redbox.”
He added, “We’ve essentially just copied the Netflix model but in the theatrical window.”
Lowe’s experience at Netflix also leads him to be optimistic about subscriber expansion at MoviePass.
“We went public with Netflix in 2002, and at the end of the year, we all made bets on how big we could get, so just to show you how bad I am at this — I was near the top by the way— mine was 1.7 million subscribers, and I think the highest was 2 million at the time,” he recalled. “Of course, it’s 105 million now, so I do believe 20 million subscribers for MoviePass is definitely doable over a four year period.”