People don’t just go see a movie when they go out to the movies. They eat dinner in a restaurant. They snack on popcorn. They have cocktails before the coming attraction starts or after the end credits roll. They treat it as a date. They bring the kids and treat them to a special outing.
Movies are about more than movies — and that’s what’s driving Rifat Oguz, CEO and founder of Sinemia, as he not only tries to exploit an opening left by a rival ticket subscription service, but as he plans out his company’s future. That competitor is MoviePass. Once a hot property, its promise overshadowed that of Sinemia’s, though its struggles have regularly made news in recent months.
In a new PYMNTS interview with Karen Webster, Oguz talked about his company’s recent growth, its expansion to the United States and its plans to provide a payment method for the entire ecosystem associated with movie-going.
Subscriptions can drive incremental revenue. The average person in the U.S. goes to the movie four times a year, but if that person has already bought tickets for future trips to the movies, those additional viewings mean more popcorn, candy and pop, along with any associated spending at nearby restaurants, bars and shops. After all, it’s not like most theaters are located in the middle of empty fields — they’re in malls or alongside other retail buildings and entertainment providers.
Sinemia launched four years ago in Europe and offers various subscription options for tickets, with packages that range (depending on seasonal sales) from $3.99 per month for one ticket each month to $14.99 per month, which gets a consumer three tickets per month, including 3-D, 4-D and IMAX movies. The packages come without blackout dates, surge pricing or any limits on when users can see blockbusters, a recent change announced by MoviePass, which also raised its prices as it struggled with capital.
Oguz, while happy to discuss all the ways in which his company functions as an anti-MoviePass, wanted to make clear one main point at the start of the PYMNTS interview: “This is not a movie ticketing business,” he told Webster. “This is a financial technology business.”
Ticketing App
A consumer who wants to use Sinemia downloads the company’s mobile app and buys a subscription package. The consumer then selects online the particular movie and showtime they want and gains entry to the theater by showing the ticket on their phone without any use of a physical card.
The theaters, from which Sinemia gets its tickets, are paid full price by the platform; the customer discount comes from advertising deals with studios and restaurants. The balance, though, remains lopsided as the app tries to attract more advertisers: 85 percent of the company’s revenue comes from subscriptions, with just 15 percent coming from advertising, according to the latest figures provided by the company.
Growth, Oguz noted, is 50 percent month over month, showing the sustainability of the Sinemia business model. Part of the success comes from testing, he said. “We A/B test every price,” he told Webster. He added that about half of the company’s business comes from families or couples — many of whom care less about seeing one particular movie than finding the right showtime fit for the free time they have in common. Those customers might search movie listings with two or three potential films that everyone can agree on, but with the final decision determined by a workable time window.
He also said the company, so far, has had little problem in its dealings with movie theaters, including the big chains. “We pay them full price” for tickets, he said. “Maybe because of that, and their hatred of MoviePass, is why they love us.”
Sinemia is happy to take advantage of such stumbles by its competitor.
In fact, the enmity between the two companies includes legal matters, not just competition for movie-goers. MoviePass is suing Sinemia for copyright infringement, claiming the competitor app ripped off many of MoviePass’ features. Specifically at issue: MoviePass says Sinemia violated a patent pertaining to automatic authentication and one pertaining to a ticketing system.
Churn Concerns?
That issue aside, people buying movie ticket subscription plans won’t necessarily see all the movies to which they are entitled. The average movie-goer in the United States, in fact, sees four movies a year. That naturally leads one to wonder about churn: Wouldn’t a decent number of Sinemia customers decide to cancel their subscriptions after realizing they’re not getting their full money’s worth?
Not really, Oguz told Webster. “Retention is super high,” he said.
The credit for that may be given to the excitement created by movies, at least in his view — that is, the top-level, more-than-century-old Hollywood expertise at marketing and hype. Trailers, for instance, tease coming attractions in such a way that subscription holders tell themselves they intend to see those future movies, which, in turn, keeps them from canceling their Sinemia memberships. Who wants to be that one person who hasn’t seen the latest blockbuster?
Sinemia has big plans — plans that revolve not only around a looming expansion to Asia, but the ecosystem of movie-going. It already offers restaurant combo deals, counting on the fact that movies often come after a dinner.
“We want to become a payment method for movie-goers,” he said, adding that movie theaters are often located in malls or around other shopping and eating locations — all of them social activities that involve disposable income. “Movie-goers are one of the biggest customer segments that drive our economy.”
The recent trials of MoviePass show that the subscription ticket model is not without significant challenges. However, even at four films a year, on average, the U.S. movie-goer still spends a lot of money. Sinemia wants to be a major part of that ecosystem.
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