Blog Post

Will MoviePass’ subscription plan connect with moviegoers?

Hollywood is facing a tough time, as a rise in ticket prices and lackluster movie choices — not to mention an explosion in other entertainment choices — is causing some film fans to stay at home. Now a new startup is looking to make moviegoing a more attractive proposition, with a flat subscription fee and mobile apps aimed at helping viewers find the right movie.

MoviePass, which is backed by AOL Ventures (s aol), True Ventures (see disclosure) and Lambert Media, will soon begin offering a $50 all-you-can-eat monthly subscription video plan that will let users watch any movie they want at any participating movie theater. It will also offer other plans as time goes on, including a $30 offering that lets users watch up to four movies a month.

While the subscription package is a big part of the service, MoviePass hopes to create interest in moviegoing through movie apps. The beta version of the service is only available through mobile web apps now, but the company soon expects to launch native apps for iOS (s AAPL) and Android (s GOOG) devices. Those apps will offer up trailers, reviews and recommendations for movies based on a user’s viewing history. It will also let users preorder DVDs and merchandise for movies they just watched.

MoviePass will officially launch its beta program with a group of theaters in San Francisco. The plan is to capture potential viewers ahead of the July 4 holiday, which traditionally is one of Hollywood’s biggest box office weekends. It has plans to roll out its beta program throughout the summer, with a national launch in the fall. Once launched broadly, it expects to be available in about 40 percent of theaters nationwide.

MoviePass launches while Hollywood appears to be in flux: While revenues have been only slightly down, due to higher-priced 3-D and Imax films, attendance has been off significantly since the beginning of the year. To a certain extent, that’s related to the successes of Avatar and Alice in Wonderland — two 3-D films that connected with audiences in a big way — in late 2009 and early 2010. With no comparable titles, the studios have had problems filling seats at local movie theaters. And it seems there’s been a bit of a 3-D backlash, as U.S. viewers increasingly are choosing lower-priced 2-D versions of films as opposed to those sold at a premium.

It remains to be seen if the service will connect with moviegoers. On the one hand, for some cinephiles, a $50 upfront price tag could actually help them save cash on frequent moviegoing. And it could get some more-casual viewers into the seats and spending money on concessions — where the real money is made for distributors. But $50 upfront could also be a barrier to entry for some users who don’t want to commit.

(Disclosure: MoviePass is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, the founder of Giga Omni Media, is also a venture partner at True.)

5 Responses to “Will MoviePass’ subscription plan connect with moviegoers?”

  1. Ryan Lawler

    To a certain extent, I’m with you guys: I think $50 might be too high of a barrier to entry for many consumers. I don’t think MoviePass necessarily wanted the price to be that high, but when negotiating with theater owners and studios, it seems like you take what you can get. Frankly, with the increase of ticket prices and the launch of pricey initiatives like premium VOD, I think many overestimate the value of the content and consumer willingness to pay those prices.

    • And, Ryan L., please don’t get me wrong: If there was a plan that was family friendly (as Ryan the commenter alludes to) and if the base cost made this something you could actually consider just signing up for, it *might* be a trend reverser. As conceived, this has no chance of traction. I’m sure you’re right: It had to be this pricey to preserve margins for the middleman and the theaters at this point. That said, as a result it’s stillborn. No one will be talking about this, let alone signing up, except possibly to roll their eyes.

      For what it’s worth, thanks to discounted tickets from Costco, my wife and I regularly attend movies at the theater. That’s a habit we probably would’ve been broken of somewhat more severely otherwise. When we go, we typically purchase a popcorn/soda combo for the $10 or so. I’m sure net-net the transaction looks a lot better to the theater owners since we (a) spend more and (b) quite frankly go more. Nevermind the fact that we are in Costco twice a month and the discount vouchers are standing there like an ad for the movies, which doesn’t hurt keeping the idea top of mind.

  2. I share Mark’s sentiments, but am excited to learn more. If the $50 buys me unlimited family visits you might see if going to a movie theater on a more regular basis, but definitely not if I can only do this as an individual. Even as a cinephile my theater trips are often not scheduled on as a regular basis as my VOD viewing.

  3. Disclosure: This plan has exactly zero chance of being successful.

    Outside of movie critics, who is spending more than this monthly to attend movies? A few thousand people nationally? With only 40% of theaters participating in this, I’ll assume the addressable market for $50/month customers is perhaps 10,000 people. I believe this to be an extraordinarily generous assumption.

    Currently, most major movie chains sell discounted tickets through Costco and other warehouse clubs. These lower the price of a movie to the level in the $30/4 movies plan, rendering that plan and it’s fixed fee completely uninteresting, save for the app component. Given the fact that the fixed fee will feel like a bad deal every month you don’t attend 4 movies, I see it attracting virtually no customers.

    I have no idea how this concept raised funding. If it was unlimited movies for $30/month or $20/4 movies, it might attract *some* people (even at those prices, honestly, not that many).

    The flat-rate pricing is skewed in that it’s only remotely interesting in markets like New York/LA/SF and even there, you’d need to see an awful lot of movies for this to feel attractive. Because you are committing to paying the money, you need to be seeing those movies throughout the year for this to feel like an interesting proposition. I find it hard to believe there was any market research done to back up this concept as having any traction.

  4. F.I.N.A.L.L.Y !!!
    Since I moved to US (6 years ago) I keep asking for a subscription pass in theaters like there are in Europe. With all those rooms 3/4 empty, they wont lose much revenue letting people watch more movies with a subscription.
    In France, it is 20 euros/month (i.e. $28/month)… so the $50/month seems a bit expensive ?!?
    More people go to theater, and more they want to go. Especially when you don’t have to think how much you have to fork for a movie you don’t even know if it is worth watching. And when on person in a group has the subscription, he/she tends to ask his/her friends to come… and so little by little more subscribe.

    Obviously the price has to go down and rather quickly if they want this to succeed.