How a Movie Subscription Works (And Won’t Work)

With a movie subscription, you can spend money to save money.

However, it all depends on the incentives.

Movie Subscriptions

For $20-$28 a month, you can join the AMC A-List if you are older than 13. In return, A-Listers get up to four movies a week. Buying food and drinks, they stand in VIP lines. One $25 member estimates he saved $10,000 by seeing 10-12 movies a month.

Regal and Cinemark also have subscription deals. With Regal Unlimited, for $18.99 each month, you can see as many movies as you want, but there is a surcharge for premium format screenings. (Not knowing the meaning of premium format screenings, I discovered it includes a ButtKicker seat option.)

But MoviePass is different. Instead of owning a theater chain, they have to buy tickets. Claiming the variety is a competitive advantage, they say their tickets can be at any theater that accepts a debit card. Also though they have theater partners that their app connects to.

After a 2020 bankruptcy, this time, MoviePass seems to have selected a niche and figured out pricing.

The MoviePass Story

Before the firm’s demise, for $9.99 a month, MoviePass subscribers could go to a movie a day.

MoviePass subscribers had it so cheap that a low Rotten Tomato rating barely mattered. They went to see A Bad Mom’s Christmas and Daddy’s Home 2. They went to the movies more frequently, sometimes during the middle of the week, and sometimes alone.

With low prices MoviePass’s CEO hoped to attract a bigger group of casual users. Then, with more people, he expected the theaters would give MoviePass discounted ticket prices. They did not. He also hoped to get a slice of the concession stand revenue pie. He did not. In addition, he planned to sell the customer data he collected and expected that film makers would pay him for “custom” advertising. Neither happened.

Within four days of offering $9.99, they had 150,000 new subscribers. During Aug 2017, their numbers climbed to 1.5 million subscribers. Soon after, they were at 2 million

There was just one problem. With every new subscriber, MoviePass lost more money. Even when they tried to tweak the plans, it did not work out. As a result, they had to shut down.

Now they are back.

With their pro plan–one of several ranging from standard to premium and then pro– you can see 30 movies for $40 or $60 a month, depending on where you live. And they like to tell us that unlike the chains, their members can go to different kinds of theaters.

Our Bottom Line: Thinking at the Margin

Looking at the MoviePass saga, an economist would say they were thinking at the margin.

To see how a margin determines your incentives, assume for a moment that you need access to a parking space near where you work. You can purchase a monthly pass that lets you park as many times as you want for 30 days. Or, you can pay for a spot every time you go to work. The deal you select determines your incentives. With the monthly, it is likely you will go to work more frequently. However, with the daily, you drive less frequently because you pay for each visit.

Similarly, movie subscriptions changed the decisions we make at the margin. By moving that margin from each film to each month of films, they created new incentives.

My sources and more: Thanks to WSJ for reminding me it was time to return to movie subscriptions. Next, moving beyond AMC’s A-List and Alamo Drafthouse, we were grobbed by the return of MoviePass, here, here, and here.

Please note that several of today’s sentences were in a past econlife post.