Movie chains pass on MoviePass

MoviePass, which billed itself as a monthly subscription service for movie fans, will have to rethink its strategy after theater owners announced that they wouldn’t honor its tickets. That’s effectively rendered its plans for a beta launch in San Francisco dead on arrival, and put into doubt the future of the service and the possibility of a subscription-based business model for movie fans in general.

We wrote about MoviePass earlier this week, as it announced grand plans for an all-you-can-eat movie-going package priced at $50 a month. It was planning to introduce a San Francisco-based beta test of the service starting this weekend, with plans to gradually expand to other parts of the country over the summer and launch nationally later this year.

Apparently, MoviePass had planned its beta as a proof-of-concept to show that there was demand for the service before it got exhibitors on board. But those plans have been shelved after exhibitors like AMC Theaters (AEN), Landmark Theaters and Camera Cinema announced that they wouldn’t honor tickets acquired through the service.

As a result, a MoviePass spokesperson told us by email that the service is on temporary hiatus, and issued the following statement:

“MoviePass is 100% focused on encouraging people to see movies in theaters. With the drop in movie attendance over the last few years, we thought that exhibitors would be our biggest allies. We absolutely want to work with the exhibitors directly. But we thought we needed a proof of concept before they would take a brand new company seriously. San Francisco is a private beta -– we wanted to test the product –- as well as develop a good case study. MoviePass is not in the discount business. Nor are we setting ticket prices. In fact, we are paying full price for the tickets. Our MoviePass subscribers will benefit if they attend frequently…and so will the theaters when they purchase popcorn, soda and candy. We love movies and believe that MoviePass will be good for the movie business.”

The most surprising thing about this turn of events may be the exhibitors’ reaction to the service. Movie theaters make most of their money through popcorn and soda sales at the concessions, so any service that gets more viewers in the seats should be a welcome addition to their businesses. Not just that, but MoviePass was willing to take on most of the risk of the venture, at least initially — it was planning to book and pay full price for tickets through online ticket services until it could prove its worth and start negotiating with theater owners directly.

Finally, at $50 a month, MoviePass seemed to be targeting a niche audience of rabid film fans, not the casual moviegoer. In fact, our concern about the model as it was first proposed was not that it wouldn’t click with exhibitors, but that there wouldn’t be enough consumers willing to commit that much money each month to feed their film addiction. Apparently the theaters were afraid of just the opposite — that the service would be too successful, thus cannibalizing their own ticket sales and ability to set ticket prices.