Subscription Commerce

AMC, MoviePass Strive For Perfect Subscription Balance

The subscription model is everywhere. The PYMNTS Subscription Commerce Conversion Index, a collaboration with Recurly, notes that the model has grown by more than 100 percent in each of the last five years, and subscription companies have seen monthly visits grow 830 percent since 2014.

Subscriptions go far beyond the “box of the month” clubs that were popular in the model’s nascence. There are subscriptions for consumers and subscriptions for businesses, subscriptions to products and subscriptions to platforms, subscriptions to services and subscriptions to content and subscriptions to experiences.

One category that’s really heating up is movie subscriptions – platforms like MoviePass, Sinemia, Cinemark Movie Club, and now, AMC’s Stubs A-List. These platforms let consumers pay a monthly fee to attend a certain number of movies per month. The prices vary, and so do the perks, but the services also share a lot in common.

Here’s why AMC, MoviePass, and many other companies today see subscriptions as such a valuable tool, and the balance they must strike if they hope to succeed with the business model.

The Perks of Being a Subscription

Subscriptions can net a company greater profits over time than a one-time purchase or a la carte buying activity. When customers pay by the month or year to access a service, product or experience, it generates recurring payments – a steady flow of revenue for the company. Plus, that monthly payment keeps the subscription on the customer’s radar. If they’re paying for it, they’re more likely to use it, and that helps deepen their sense of loyalty to the brand.

Meanwhile, from infrequent customers who may normally purchase a la carte, subscriptions can inspire spending that was not previously there by making it into a habit.

In the case of MoviePass, Sinemia, Cinemark Movie Club, and AMC Stubs A-List, subscribers may not attend movies frequently – maybe just a few times a year. But when consumers subscribe to something, they want to get their money’s worth, which could inspire them to show up at the theater more frequently, potentially driving additional refreshment sales.

The Subscription Secret

The challenge, of course, is giving consumers enough to feel like they got a deal, while not giving them so much that the company slips into the red.

That has been a struggle for MoviePass, the subscription service that lets customers see as many as one movie per day in theaters for $9.99 a month. Customers are savvy; they can see that $9.99 a month is a great deal even if they only take advantage of the subscription one time a month.

In many markets, $9.99 is less than the cost of a single movie ticket. In others, customers can see a movie twice per month and more than make up the cost of the subscription.

Any subscription offering this sort of value must depend on the fact that some users will take advantage of the program less than two times per month. If every user goes to the movies every week or more, then it quickly becomes clear how the model could lose MoviePass money instead of making it – and indeed, it seems that this is exactly what happened.

MoviePass Vs. AMC Stubs A-List

As AMC Theaters announces its competitor subscription offering, AMC Stubs A-List, it will have to be careful not to fall into the same trap.

Investors seem confident, if company stocks are anything to go by. Following the announcement of AMC Stubs A-List, stocks of MoviePass parent Helios & Matheson plunged 13.2 percent. Investors have long said that MoviePass’s model was “too cheap to survive,” while AMC touts its new offering as “simple and sustainable,” reports Seeking Alpha.

It does seem that AMC has learned from MoviePass’s mistakes. For $19.95 a month – twice what MoviePass charges – AMC will let customers attend just three movies per week, rather than a movie every single day.

As a natural outgrowth of AMC’s existing Stubs loyalty program, the subscription does include other benefits like free upgrades on popcorn and soda. Plus, it grants members access to any available showtime at any AMC location in any format, including IMAX at AMC, Dolby Cinema at AMC, RealD 3D, Prime at AMC or BigD.

MoviePass, by comparison, only supports standard 2D showings, although it has announced plans to get into 3D and other special screening types with a forthcoming “Premium Showings” offering. It’s also working to introduce surge pricing for in-demand new titles at peak times and dates.

Will AMC strike the perfect balance that initially eluded MoviePass? Will MoviePass right the ship and remain the leader in the movie subscription category? All of that remains to be seen, but one thing is clear: Subscriptions aren’t going away, for movies – and for everything else.

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