Can MoviePass help revive America’s malls?

Discussion
Source: MoviePass; Photo: Wikipedia/m01229
Apr 06, 2018

If movie theaters turn into major traffic drivers for malls, MoviePass promises to be a major contributor.

Described as “Netflix for movie theaters,” the controversial subscription service started in 2011 offering unlimited movie tickets for $50 per month. Subscriptions took off last summer when MoviePass slashed its monthly rate to $9.99 per month (with annual membership). Subscribers can see movies at any theater listed on the service’s app, a maximum of once per day.

Since moving to $9.99, the subscriber count has catapulted from about 20,000 to over two million. The goal is to hit five million by the end of 2019. Recently, MoviePass upped the ante by offering a limited-time deal for new subscribers of $6.95 per month for its annual membership.

Despite concerns from theater chains about the long-term impact of discount pricing, MoviePass is now accepted at more than 91 percent of U.S. theaters.

The company reimburses movie theaters for the full price of movie tickets. With the average ticket price nationwide at $9.00 and much higher in cities, MoviePass is presumed to be operating at a steep loss while it builds its subscriber base.

But MoviePass believes the service will work like gym memberships. Subscribers use the service heavily when they sign up and then see fewer movies as the novelty wears off. To discourage short-term memberships, members who cancel their subscription are blocked from re-subscribing for nine months.

MoviePass also hopes to arrange more revenue-sharing deals — such as a cut on concessions — as well as discount tickets for driving traffic to theaters. The company is also reaching marketing deals with studios and distributors to promote movies based on its wealth of data on viewers’ tastes and movie-going habits. Finally, studios benefit because they can charge more for streaming rights and foreign distributing rights due to higher in-theater attendance.

While potentially reducing the allure of streaming offerings from Netflix, Amazon and Hulu, MoviePass has its work cut out for it. According to a recent survey from Statista, 54 percent of Americans prefer to watch movies at home while only 13 percent prefer going to the theater.

DISCUSSION QUESTIONS: Do you think MoviePass will become a significant driver of customer traffic to malls? How successful will the service be in reversing the viewing habits of streaming service consumers? Should malls and theaters cut revenue-sharing deals with MoviePass or resist the temptation?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"MoviePass reminds me of the old joke about a retailer who loses money on each sale and claims he will make it up in volume."
"For some part of the population movies may be the only affordable entertainment outside the home. "
"Theater chains are investing heavily in amenities to put people in swank recliners. This seems like an example of swimming upstream in Trend River."

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21 Comments on "Can MoviePass help revive America’s malls?"


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Chris Petersen, PhD.
Guest
It will be very hard to beat the comfort and convenience of streaming movies in your own home. And there is the additional factor of original content. Netflix excels at original content and access to great series beyond movies. The question is, will consumers pay for another monthly subscription and will they have the time to consume all of the content? MoviePass has the advantage of first run movies, and there is nothing quite like a movie experience in the theater with fresh popcorn. Theaters make most of their money on concessions, so the financials for them are not a stretch. Other partner deals could sweeten the opportunity, especially for the mall itself. At the end of the day, it’s all about the behavior of the customer and what they value. Tom starts his article with a big IF — “if movie theaters turn into traffic drivers.” MoviePass becomes relevant if customers still want to go see movies in theaters. The verdict is still out on that one given the recent declines in attendance at… Read more »
Bob Amster
BrainTrust

“Significant” is an intangible. MoviePass will have a positive impact on movie attendance and on mall traffic. The company has to stay in business long enough to prove it. And they will have to prove their impact if they expect theaters and malls to cut revenue-sharing deals. This one falls under wait and see.

Bob Phibbs
BrainTrust

The question anyone offering big discounts has to ask is, “Will enough people join to make it profitable?” I don’t see how that is possible if they reimburse the full value of a ticket. The people who already want to see the films will go more, yes, but that doesn’t grow your audience — just traffic. I’m seeing Groupon redux here.

Cathy Hotka
BrainTrust

Not only can MoviePass drive mall traffic, it’s driving the right kind of mall traffic — younger people. They flocked to the theaters for loud, flashy hits like Black Panther, which are much more effective away than at home. Some savvy retailer is going to figure out that a “show your movie ticket and get a discount” offer will work as well.

Art Suriano
Guest
MoviePass is a great idea, but I don’t know if long term it can be successful. The company is already losing money so that’s a concern and there’s no way to know if and when they can turn that around. As long as the customer gets a discount and MoviePass is making up the difference the loss will continue. True if customers keep the subscription and use it less that will help but even if the subscriber sees just one movie a month, there will be a loss. Unfortunately, what MoviePass has no control over is the quality of today’s films, which is the more significant problem. How many times have you walked out of a theater with the question, “What the heck was that?” Special effects too often replace what should have been a good script. Instead of seeing “This is a true story,” we often see “Inspired by a true story” so writers have the creative license to write plenty of fiction. To solve the problem, Hollywood needs to get back to making… Read more »
Max Goldberg
Guest

MoviePass reminds me of the old joke about a retailer who loses money on each sale and claims he will make it up in volume. Theaters are happy to take the company’s money, and so far are refusing to share any other revenue sources. Over time it will be interesting to see how much MoviePass can move the needle on dwindling theater attendance. Certainly any positive change in mall traffic has the potential to increase sales for all merchants. Theater owners have their heads firmly planted in the sand. They spurn studio offers to share higher revenues in exchange for day and date release on streaming services. They spurn sharing revenue with companies like MoviePass that have the potential to bring in more customers. And many offer a movie-going experience that is far from optimal. All the while, their customer base shrinks.

Bob Amster
BrainTrust

That joke IS an oldie but a goodie!

Steve Montgomery
BrainTrust

MoviePass should have a positive impact on traffic for both the malls and their theaters. The questions are, how much and what is it worth? The answers to those questions will determine if MoviePass’ business model is sustainable.

Its potential profitability depends on securing a portion of the theater concession sales and possibly from the malls themselves. For the theaters the question is, can they segment the sales for MoviePass users and non-users? If so, I would expect the concept of concession revenue sharing would become more acceptable. For the malls the ability to demonstrate any positive economic impact is far more problematic and doubtful.

MoviePass will not reverse tide of movie streaming. The movie industry and, therefore, theaters fortunes are becoming based on a few big blockbusters such as Black Panther which are best seen on a large screen. Most of the rest can be viewed on a large screen at home without the hassles of driving to a theater and spending as much on snacks as on the tickets.

Sky Rota
Guest
3 years 5 months ago

No, MoviePass isn’t going to get people into malls. “Reverse viewing habits of streaming services?” If this is anyone’s hope, they are sadly mistaken. Streaming is how we watch TV today and forever! Now services are trying to “reverse” streaming habits, that’s crazy! Who comes up with these ideas. I don’t see any temptation with joining MoviePass, in the big picture, people already have way too many monthly charges aside from regular bills coming out of their pay. It would be fine if it was just Netflix, but it’s Netflix, ICloud Storage, Hulu, Pandora, Sirius XM, Twitch and tons of others. How much can people be expected to give out of their paychecks monthly! Enough is enough. My local movie theater has a $5 movie night. That works for families.

Doug Garnett
BrainTrust

MoviePass will end up a failure. They have an unsustainable business model that they seem to justify with “if we can only get enough people to sign up there’s gotta be a way to make money some day.” Their only hope is to get bought — so malls shouldn’t be basing any future plans on MoviePass themselves.

But what about movies and malls in general? To a degree they are a good match. The more people are comfortable going to the mall the more they’ll eventually buy.

And I recommend caution for two reasons. Shoppers are shopping — not looking for entertainment. And the only solid profitability comes when those shoppers are buying goods. Also, it’s too easy for stores or malls to embrace “entertainment” theories and end up being c-grade amusement parks with d-grade merchandise. To BE entertainment is far harder than today’s Faith Popcorn’s of retail will admit.

Harley Feldman
BrainTrust

If only 13 percent of Americans want to go to the theater to watch movies, it is hard to see how MoviePass can bring major traffic to the mall. Even at a low monthly fee, the moviegoers will mainly opt to go to movies they are interested in seeing. This constrains the people coming to the mall to see a movie to be correlated with the popularity of the movie. While certainly MoviePass can collect data on the habits of their members, the data will have limited use and only if the members actually use the service. Even the article points out that MoviePass is having limited success in keeping their clients coming after the initial rush due to novelty. The malls and theaters might try limited revenue-sharing ideas to see if they work, but signing up for a long-term deal would be a mistake.

Evan Snively
BrainTrust
Evan Snively
Loyalty Strategist, Chapman & Co. Leadership Institute
3 years 5 months ago

This is not the answer for malls. As someone who has seen probably 10 movies in mall theaters over the past few years, I can say that I have not made an extra retail purchase during those visits a single time. The number one reason? I see movies in the evening (when most people do) and all three of the malls which I have attended close their shopping stores at or before 9 p.m. This means all the stores are closed by the time potential customers get out of any show that starts after 7 p.m.

Also, hoping that the customer does not utilize your product probably isn’t the most sustainable approach when there is no major barrier to exit. I could see monthly subscriptions spiking during the holidays for all the big releases and dipping largely after. We shall see.

Ralph Jacobson
Guest

It is very hard to reverse consumer trends such as the increase in streaming vs. going to theaters. Yet I do believe this campaign is compelling, hopefully enough to rekindle the nostalgia of going to the movies. And hopefully the company can sustain itself long enough to become profitable. It’s a great offer and a great way to create a destination within existing malls.

Shep Hyken
BrainTrust

A movie theater at a mall drives traffic. No doubt. People come early or stay. Theater owners will see the value they bring to the mall and be able to improve their negotiation power during the lease renewal. It’s simple, they increase traffic when the mall needs traffic — more than ever.

I can’t tell you if the business model for MoviePass is going to work long term, but I’m sure they’ve run their numbers. Theaters and malls should want it to work. Staying home and watching Netflix or Prime movies and ordering a pizza, preparing a Blue Apron meal or having the local grocery store deliver what’s needed to cook a home-cooked meal is a direct threat to the concept. MoviePass will have to make the value proposition so enticing it gets people out of their homes and to the malls.

Cate Trotter
Guest

There’s no denying that for the consumer this is a real bargain, but I’m not sure how this will carry over to retailers. There may be a lot of people who decide to combine going to a film with getting something to eat (although if you go several times a month that’s not sustainable spending), but I’m not sure how many deliberately combine it with shopping. And while generally having more traffic in malls is a good thing for retailers they can’t even reach the whole cinema audience if some are seeing movies outside of retailers’ open hours.

Joan Treistman
BrainTrust

For some part of the population movies may be the only affordable entertainment outside the home. I’m thinking of people with young children. If MoviePass starts to partner with companies that make the out-of-home entertainment possible on a cost-effective basis, I think there’s an opportunity. And why does MoviePass have to be restricted to movies? HD opera is popular in movie theaters. Is it a stretch to think of other sources? I don’t watch sports on TV, but I wonder if there is an opportunity to bring some play-offs into a movie theater.

I don’t see MoviePass driving traffic to malls. But I do believe there can be an opportunity to drive business to movie theaters.

Carlos Arambula
BrainTrust

I do think MoviePass can drive traffic to malls when the theaters offers multiple highly popular products consistently — which is never the case.

There are too many variables in the movie industry that make a movie successful, or a highly popular product. MoviePass is one step removed from decisions that affect the movie industry, and completely removed from the decisions of the very aggressive and innovative streaming services that have eroded the movie theaters.

It’s a concept that might have arrived decades late.

Dan Raftery
Guest

While MoviePass sounds like a cool way to use technology, the theater audience is getting increasingly smaller as in-home options proliferate and improve. Theater chains are investing heavily in amenities to put people in swank recliners. This seems like an example of swimming upstream in Trend River.

Craig Sundstrom
Guest

I think the answer depends on how you define “traffic.” If it simply involves visiting the mall, then probably it will; but if it means visiting ALL, or at least a large portion of it, then I don’t think so. The problem is the time that most people see movies. It’s in the evening when the other shops will already be closed.

Mike Osorio
Guest
I will offer a contrarian view. I think this has the potential to be a very successful model. It doesn’t need to “reverse” the trend toward at-home streaming. It merely needs to grow the pie, by adding a behavior to the growing number of movie viewers, wherever they are viewing. Just like digital books didn’t kill book reading (just the opposite), this could actually drive more movie viewing. We should not assume failure merely because the enterprise is losing money currently (think Amazon, Uber, etc. etc.). This is a new economy in which business models often secure investor interest despite a negative P&L due to the platform’s ability to secure different revenue sources and other means of valuation. Yes, it may fail. But it might just win. It will be fun and educational to watch. Ultimately, for as long as it exists, MoviePass will add traffic to malls. Whether it moves the needle or not is yet to be seen. I for one will be adding more in-theater viewing to my at-home movie streaming, based… Read more »
Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
3 years 5 months ago

Movie theaters have the potential to drive traffic into malls. However, there are a few variables at play. Not the least of which is that most movie theaters are not great destinations in and of themselves, especially older theaters that haven’t upgraded. Newer ones fare better but either way, there is another challenge — movies are losing audiences to home streaming. Apart from major action/adventure movies that deliver a true spectacle coupled with great storytelling (yes, Marvel movies seem to have this cornered these days), there’s not much compelling consumers to go to the movies rather than wait to stream it at home.

So the question becomes, with the limited number of people going to the movies, are these consumers inclined to go shopping before or after the movie? I suspect this is only true for moviegoers on the weekends as most going to a movie on weeknights are going late enough that the stores at the mall will be closed afterward and they are not likely arriving early enough to shop before the movie!

wpDiscuz
Braintrust
"MoviePass reminds me of the old joke about a retailer who loses money on each sale and claims he will make it up in volume."
"For some part of the population movies may be the only affordable entertainment outside the home. "
"Theater chains are investing heavily in amenities to put people in swank recliners. This seems like an example of swimming upstream in Trend River."

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