The subscription model is coming to a theater near you
Hi there, welcome back to another exciting episode of Plain English, the podcast where we talk about what’s going on in the world, but we do it a little slower than normal speed, so everyone who’s learning English can follow along and understand everything. And we throw in some learning too. Learning can be fun, right? Speaking of learning, you can find all the learning resources for this episode at PlainEnglish.com/192.
Coming up today: The first company to offer unlimited movies in the theater for a monthly fee has crashed out of business. But the subscription model is here to stay, as the big movie theater chains offer lots of movies for a flat monthly fee. The English phrase we’ll discuss later today is “the sweet spot.” We’ll have a quote from Roger Ebert, too, famous movie critic. The video lesson is about how to use “rather than” and our flash cards for this episode are all about subscription businesses. Something I’m learning a lot about lately.
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Subscriptions on the big screen
It was something out of JR’s wildest dreams. He’s the producer of this program and he’s a movie lover. He was in Memphis, Tennessee, a city in the US, and he saw a billboard advertising MoviePass: For $10 a month, at the time, you could go to one movie a day, with no other limits, and you could go to just about any theater. He told me about it, and I remember thinking, there is absolutely no way this company stays in business. This month, my prediction came true. MoviePass is no more.
The company was troubled since the very beginning. Its mission was laudable: bring the subscription model to the moviegoing experience. And it made a certain amount of sense. Tickets are expensive—usually between $9 and $18 in the US—and theaters have lots and lots of empty seats. Some people are movie fanatics, so they’d be willing to pay a little more for unlimited tickets. They can fill those empty seats and buy expensive popcorn and soda.
The problem was that MoviePass tried to do this without the cooperation of the big theater chains. So MoviePass—and I don’t know how they thought this would work—would charge customers $10 per month. Then every time that customer wanted to actually go to the movies, MoviePass would have to pay full price of the ticket to the theater. So MoviePass would lose money on a customer if the customer redeemed only one movie a month—forget about unlimited!
At its peak, MoviePass had 3 million subscribers. It calls to mind a funny expression in business, that you’re losing money on each unit, but you’re making it up in volume. That’s pretty much what happened: they were offering something that was too good to be true, and they lost money on every customer. That’s a tough bargain when you have 3 million customers. They tried changing the membership plans several times, which led to confusion and outrage among customers. They stopped taking new customers over the summer, and finally shut down last week.
So is the subscription model dead for movies? Not really. Customers love the subscription model when it comes to streaming. In fact, in a recent survey, most people thought Netflix streaming was a good bargain, but that the price of a movie ticket was not a good bargain. Offering consumers another way to get movies would seem to make sense. The problem with MoviePass was that they had to pay full price for each ticket. And they didn’t even get the benefit of selling expensive popcorn!
Theater chains, though, are a different story. In fact now, three of the major theater chains in the US are trying out the subscription model for themselves. The biggest chain in the US is AMC theaters and they released a program called A-List about a year ago. With A-List, you get three movies a week, including their premium offerings like 3D and IMAX, and you can reserve seats ahead of time. That costs between $20 and $24 per month. AMC says it has 860,000 subscribers and that the average subscriber goes 2.6 times per month. That strikes me as right in the sweet spot: it’s a good value for the consumer, but it’s not so many times that AMC is giving away too much. Cinemark has a subscription program that has 700,000 members, who attend once per month on average. Regal, another big chain, just launched a membership program here, too. That one has different tiers, which are between $18 and $24 per month. The average moviegoer in the US goes to about five movies a year, so this is a good bargain for the people who want to go a little more than average. It’s probably good for smaller movies. Movie fans will always go see the big hits, but a subscription probably lets people feel more comfortable about seeing less-popular movies. Maybe they wouldn’t be willing to pay $15 to take a risk on a film they’ve never heard of before, but if it’s included in a subscription, why not go? So maybe this will boost the exposure of smaller movies.
Related: Episode 160: Urban Outfitters wants to bring the sharing economy to your wardrobe with clothing rentals
This is a more sustainable model than MoviePass. Theaters like the consistent revenue, and there are usually so many empty seats that it’s not a big deal if they accommodate more people in each theater. The big chains also like the stickiness factor. With subscriptions, customers are much more likely to stick with just one chain rather than shop around for the best times or prices. And of course, every time someone walks in the door, they can sell them high-priced concessions. Another advantage could be the data: by collecting enough data on people’s moviegoing habits, they may be able to direct offers more effectively at their best customers.
The subscription model is new in the US, but it’s been in existence abroad for some time. The British chain CineWorld has its CineWorld Unlimited. In Mexico, the largest theater chain—and JR’s favorite chain—Cinépolis has a three-tiered program. At Cinépolis, you have to pay for a full year in advance. And with the highest tier, you get Cinépolis VIP, which, according to JR, and verified by me, has the most comfortable seats of all the Mexican chains.
MoviePass, what a fiasco. If you are interested in hearing more about that story, there’s a podcast called Spectacular Failures and it featured MoviePass on one of the episodes. I’ll link to that on the transcript at PlainEnglish.com/192.
Spectacular Failures: MoviePass begins with plenty of drama
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