It didn't work. Instead, they just pissed of their customers and showed AMC that they had no ability to drive customers to AMC.
MoviePass should have built upon its success at driving viewers to indie films to target smaller theater chains and movie studios. Instead, it went the VC way and try to artificially scale itself up by buying customers, and is now on the brink of collapse.
According to their own earnings releases, AMC's USA per-screen attendance dropped from over 38,000 admissions per screen in 2016, to 29,808 in 2017.
You need to learn to read investor reports...The "loss" was entirely driven by tax law changes that changed how they accounted for certain items on their books.
"Included in the net loss for the quarter was approximately $310.0 million of tax expense in our U.S. markets related to the impact of the change in the U.S. enacted federal income tax rate from 35% to 21% and the impact of a full valuation allowance on our deferred income tax assets."
They may in fact kill MoviePass by refusing to budge, but they would be shooting themselves in the foot doing so. Who else is generating demand for movie tickets at this scale?
Not MoviePass. Last I checked, the movie studios spent a few hundred million dollars on promoting movies in the US alone.
There's no point in bringing in more MoviePass subscribers if they're losing money per ticket due to splitting the revenue 3 ways (i.e., adding MoviePass into the cut) if those viewers don't also buy enough concessions to make up for the lost revenue. So far, it appears they don't.
That being said, AMC has a subscription pass coming out (or is already out in some markets) which is like the original MoviePass: a sustainable price that brings in viewers and incentivizes them to purchase concessions (and additional tickets).
The $310m of tax-related expenses in Q4 must be countered against the gain in the other 3 quarters. Annual "income tax provision" was only $154M for the year. Earnings before income tax were still -333 million. The Q4 "loss" is essentially the reduced ability to take future write-offs ("deferred income tax assets"), since the corporate tax rate was just slashed. Meaning, executive management failed to maximize the value of deferred taxes, when rates were higher.
You seem to believe no MoviePass subscribers are buying snacks. Surely there are abusers of the system, and subscribers' average spend may be lower than the general public's, but more butts in seats does result in more concession sales. Do you have evidence otherwise?
Let me know when AMC's subscription is out, and it has 2.5 million subscribers. Will it be as awesome as Cinemark's Movie Club? $8.99 for 1 whole movie ticket?
Gross margins on ticket sales were 50% in 2017, so it would appear they do have wiggle room. Concessions are almost pure profit at 84% margin. Sacrificing some lower-margin ticket revenue (shared with studios) to generate growth in higher-margin snack sales (not shared) would seem to be a win for the theaters.
And let's face it: heavy users of MoviePass are also the least likely to be heavy purchasers of concessions.
However, I think we disagree on whether a person using MoviePass would be more likely to buy concessions. In my experience at my local megaplex (where tickets are $18 for matinee!) MoviePassers usually sneak in their food, even though they just saved $12 (or more) on their ticket and the beer and food is actually reasonably priced for the quantity compared to what you'd get at a nearby restaurant. While the small boost to ticket sales is a net benefit to the theater in the short term, it's clearly a net loss in the long term if they lose concessions revenue because now they're not just sharing the ticket sales with the studios, they're splitting it with a third party. (On average, theaters usually don't make a profit on the ticket sales for the first few weeks a movie is showing--they rely on concessions to make up the shortfall and push them into the black. Theaters only make back their money based solely on ticket sales on long-tail movies that spend a few weeks in the theaters.
That might mean that the theaters would be willing to sell tickets for $6 later in a movie's run to fill up a theater, but early on they could easily be losing money at that price.
Have you been in a theater on a weekday afternoon? Most are ghost towns, even with reduced matinee prices. This suggests that matinee prices, although discounted, are still too high. MoviePass can grow a theater's attendance and revenue without requiring it to lower its window price to the general public. Why wouldn't they be "interested in" that?
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I also know another millennial who bought a bunch of eth at the IPO, and has held through everything.