On Wednesday, I introduced to many of you the MoviePass program.  Today, I am going to talk about some upheavals about the program- as well as some current industry response.

Last week, in Las Vegas, the movie theater business had its annual conference, CinemaCon.  That’s the fancy name for the annual conference of the National Association of Theater Owners.  (Hmm. They claim they have members from 80 countries; maybe it’s time to become International?)

While these conventioneers were reveling in the last few months of positive news for their industry (thanks to the overwhelming success of the Black Panther and the Avengers), they recognize that their business is down.  Way down.  Down 6% from 2016, with only 1.24 billion theater admissions sold in 2017.  Overall, there has been almost a 10% drop in ticket sales over the past five years. (Revenue for the theaters only remained stable because they raised the admission price.)

And, that’s not because of MoviePass (which has since ceased operating).  The changes are strictly related to the fact that we use streaming media and digital subscriptions more often, instead of traipsing to a movie theater.  We can enjoy our movies without the need to leave our home.  And, we know exactly how much money we need to budget for our entertainment.

Since I wrote my piece (my queue is long, so posting may be up to three weeks after I write a piece- but these changes literally were made late last week- and I, as one of their annual and initial subscribers, wasn’t notified of the changes), MoviePass has changed and rechanged its business model.

For a short period of time (which still may turn out to be a permanent change), MoviePass stopped new subscribers’ ability to see one new movie each and every day.  To staunch the cash drain, until the model is accepted (and remunerated) by theater owners (at least as of last week), new subscribers will now be able to see only up to four movies a month.  Except there’s a new rumor (literally floating today) that unlimited (that’s one a day, not multiple movies a day) movie usage may be back to new subscribers- along with a new $ 7.95, three-movie-a-month plan.

MoviePass claims only 12% of its subscribers are frequent users. Which means some 88% don’t use the system often enough to cost MoviePass much money. (I go about 5 times a month.  I haven’t figured out if that makes me frequent or infrequent by their calculations.)

And, I’m not sure I agree with the concept of “much money”- since the average price for movie admission across the US runs $ 9 (with many theaters in places like DC demanding $ 15 to let us in the doors).  So, if a user goes to one movie a month, MoviePass cleans up.  But, even by the fourth movie, MoviePass is losing something on the order of  $ 22 to $ 28 (there are kickbacks to the program)  a month!  That may explain why the stock value of Helios and Matheson (the big investor, if you read my earlier blog)  has dropped to $2.15- down from $ 33 in October 2017.  Business Insider claims that MoviePass is burning some $ 20 million a month!

As a matter of course, MoviePass may be one way movie theater owners can recover from the onslaught of digital media and streaming services.  After all, there was a big switch in  CY 2017.  We spent more money on streaming entertainment than movie tickets- in hard, cold cash.  Moreover, movie admissions (the actual number of tickets sold, despite the price) were the lowest they’ve been since 1995!

Yet, these theater owners still have not warmed to MoviePass, which now has some 2 million subscribers.  (It is expected to reach 5 million subscribers by year’s end.) Many theater owners wonder why anyone would be willing to pay full (over-inflated?) admission prices, once they know about MoviePass.  That concept gets doubled if MoviePass crashes and burns.  (Me, too!)

There’s another catch that theater owners see in the offing.  If MoviePass becomes a behemoth (let’s say 50 million subscribers), it could demand a large revenue-sharing system- and hold the theater owners hostage if they don’t agree to the deal.

And, while it’s waiting for theater owners to jump in with both feet, MoviePass is thinking beyond the movies, too, to increase its revenue capabilities.  Given the location services and the data mining they effect, MoviePass is studying if our movie viewing habits match certain food preferences; that would mean MoviePass could generate ad revenue from local restaurants, matching our desires to their menus.

That new revenue stream could let MoviePass last for at least another year.  Good news for me- how about you?