Tickets were just the beginning: MoviePass wants to disrupt all parts of theater experience

4:31 p.m Tuesday, Nov. 7, 2017 Movies

The folks that run MoviePass, the movie subscription service that lets subscribers watch up to one movie a day in theaters for the low price of $9.95 a month, know you’re probably skeptical. Is it too good to be true? How will the company make a profit? And just what is its place in Hollywood’s ecosystem now that Netflix and Hulu are competing for your time with streaming content? 

The answer to all those questions, according to MoviePass co-founding CEO and current co-chairman Stacy Spikes, doesn’t only involve box office receipts. It involves the movies, and the soundtracks to those movies, and the books that those movies are based on. It involves concessions, food and alcohol sales, promotions and original content. And, despite recent misgivings about the service’s profitability, Spikes thinks the service’s main goal is to introduce some competition in the movie business.

Changing the way we watch movies

According to data from MoviePass, a little more than 664,000 moviegoers use the service nationwide. A little more than 8,200 of those users are right here in Austin. Spikes said in an interview with the American-Statesman that the service has added an average of 40,000 to 50,000 subscribers a week since it lowered its subscription price to $9.95 a month, down from up to $50 a month when the service first started in 2011.

By looking at the pricing points of services like Pandora, Spotify, Netflix, Hulu and YouTube Red, Spikes found that the price to be competitive with the coveted millennial demographic was just under $10.

“The future [of the movie business] is all about competing for people’s time,” Spikes said. “And especially among millennials, people would rather stay at home than go out and pay for movie theater tickets, something that is becoming increasingly expensive.”

But netting that 18-35-year-old demo isn’t enough for Spikes and where he thinks MoviePass’s business model can go. That’s where the soundtracks and books come in.

He uses “Baby Driver” as an example. That film’s soundtrack is integral to its very being; there would not be a point to the film if the viewer couldn’t hear T.Rex’s “Deborah” or The John Spencer Blues Explosion’s “Bellbottoms” sync up perfectly with the action. Thus, soundtrack sales, in addition to box office receipts, are also important to the movie studio’s bottom line.

“What if we found a way to sell you the soundtrack right at the theater, or an advance digital copy right after seeing it?” Spikes asked. “We’re having conversations about more partnerships with studios right now, but nothing has been put in place yet. That’s the type of model we’re looking to move toward, instead of a live-or-die by tickets model. 

“We’ve done tests where we’ve proven that 40 to 50 percent of the related product sales [soundtracks, book tie-ins, other merchandise] are from people who have already seen the movie.

“So those are the kinds of customers we’re looking to get, that will invest in that part of the ecosystem.”

As for right now, the closest thing to MoviePass’s subscription structure is a gym membership. Much like the way gym memberships spike after New Year’s and taper off around March, not every gym member will continue to take full advantage of the service. But then you have the gym rats who pay the same price for a membership, and are there multiple times a day. 

Not every subscriber is going to take full advantage of MoviePass’s “one movie a day, every day” limit. Most will probably see one to three movies a month with the service. But those “tentpole users,” who only go to the theater to see blockbusters like the Marvel films, will help to even out the “extreme users,” who go to see a movie a day, Spikes said.

“People overeat initially, but it all kind of breaks even.”

And no matter what, those users are probably still buying alcohol, popcorn, snacks and other concessions as they go to the theater, because now that they have saved on a ticket, they can afford to buy other commodities.

“We also want to help our studio partners out and start working on promotions where we say, ‘Hey, you’re a MoviePass customer, if you go to Studio Movie Grill and prove your membership, you’ll have a free upgrade on us,’” Spikes said. 

‘Let people sit in the dark and watch a movie and have fun’

Last year, the top 10 box office earners in the country were all tentpole films from major studios, or franchise sequels to former tentpoles. “Rogue One: A Star Wars Story” was the year’s top earner, making $532,177,324, according to Box Office Mojo. Much has been written about the current box-office-heavy film landscape completely eliminating the independent film and mid-tier film market. 

Spikes said he wants MoviePass to change that. And he has some data proving that it already has, to some extent.

Think about it— if you’re a MoviePass subscriber, you’re not technically losing any money when you buy a ticket to non-tentpole fare like “Wind River” or “Battle of the Sexes” or “mother!” Same goes for widely maligned flops like “American Assassin” and “Geostorm.” And while those films have been critically panned and some haven’t yet turned a profit, Spikes said a good amount of tickets sold for the above movies came from MoviePass subscribers.

“What we found with these subscriptions is that if you give people a set price for whatever they want, they’re more likely to venture out to see things they might not have seen otherwise, like indies or mid-tier movies,” Spikes said. “And so, really, we’re helping the industry by giving people a safe option to maybe go see some movies they normally wouldn’t see, and those are seats that are getting filled that otherwise weren’t. And, we’ve increased midweek movie attendance by 50 percent because of that, too, and we’ve actually raised moviegoing from the middle to the low end of low-budgeted movies among our subscribers.”

Indeed, the Top 10 list of films seen by Austin MoviePass subscribers this year includes polarizing films like “Blade Runner 2049” and “mother!” as well as the widely panned “Geostorm.” Give people the freedom to see what they want, and they will. 

It’s also worth noting all of the movies on Austin’s top 10 list were released after MoviePass lowered its price. 

As for the future of moviegoing, Spikes said he hopes for more disruption, whether that’s from MoviePass or from Regal Cinema’s recent plan to price tickets based on a supply-and-demand model.

“It is cool to see a company like Regal experimenting. I mean, we’re experimenting. It’s an exciting time.”

And as for competing with companies like Netflix, Hulu and HBO for viewers’ time, Spikes is confident that if theater chains can just try to adapt, it would benefit the entire moviegoing business overall.

“If you don’t adapt, you’re going to die. People like the communal experience of sitting in a dark theater and experiencing a film, and that’s what we’re trying to do, is to let people sit in the dark and watch a movie and have fun.”

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