Payments Goes To The Movies

There were two very different stories about the American movie business floating around in the media this week. One was big and impossible to miss, while the other likely stood out more for payments and commerce enthusiasts.

The big story is the kick-off of summer movie season with the release of the Avengers: Endgame. Nobody knows exactly how much money the much-hyped latest installment of the Marvel movie saga/Disney cash printing press will generate, other than the general consensus that it will be a whole lot. Whether it will beat the single-day record of $119 million (set in 2017 by The Force Awakens) or whether it will hit the forecasted $300 million domestic and/or $900 million global mark in its opening weekend remains to be seen. Many have spent a good deal of time thinking about it – and rehashing every possible success/failure scenario.

The smaller story is the tragic tale of yet another movie theater subscription up-and-comer with high hopes of getting consumers to the theater more often, dashed against the rocks of the American market. This time, MoviePass is out of the hot seat, and its rival Sinemia has jumped on it, at least in the U.S.

Sinemia announced this week that it will be pulling the plug on its U.S. operations. “Today, with a heavy heart, we’re announcing that Sinemia is closing its doors and ending operations in the U.S. effective immediately,” the company wrote in a statement posted to its front page.

Like MoviePass before it, Sinemia struggled with monetizing a platform offering movies in theaters on subscription. Ultimately, both firms had a difficult time meeting consumer desires to see movies in theatres on demand, as they were essentially subsidizing movie tickets for their customers.

“We want to become a payment method for movie-goers,” Rifat Oguz, CEO and founder of Sinemia, told Karen Webster in a conversation about six months ago. “Movie-goers are one of the biggest customer segments that drive our economy.” He added that movie theaters are often located in malls or around other shopping and eating locations – all home to social activities that involve disposable income.

That goal, it seems, hasn’t quite come through. Instead, the company found itself embroiled in lawsuits, as users protested hidden charges and opaque policies for canceling accounts. It remains unknown at this point whether the service will continue to operate abroad in places like the U.K., Canada, Australia and Turkey, where much of its staff is currently based, or how it will handle the issue of money still in users’ accounts here in the States.

The two stories paint different pictures of the American moviegoing public – on one hand, they are so fired up to see a single summer movie that the entire media cycle has been overtaken by it, and on the other hand, they are incapable of sustaining the type of relationship with the theater that a successful subscription service requires.

As it turns out, in the age of Netflix, Prime, Video, Hulu and YouTube, going to the movies is becoming a very different kind of experience.

Let’s Go to the Movies (Rarely)

Americans don’t go to the movies all that often – but when they do, they tend to go all at once to the same movie … and that movie is usually put out by Disney.

Okay, the last part is an exaggeration, as other film studios occasionally put out massive blockbusters as well – but between Star Wars and Marvel Universe movies that make $200+ million in their opening weekend, the average box office consumer just doesn’t have much more room on their dance card for a night at the movies.

And that’s not an exaggeration. The average American goes to the movies five times a year, according to a Harris Interactive survey, with the majority of respondents noting they were going less than they were a few years ago.

The proof is in the numbers. Movie attendance in 2017 slid to its lowest point since 1992, down to 1.24 billion tickets.

So, why do Americans basically see only one movie a quarter at the theatre? There are many explanations, depending on who one asks – starting with the films on offer at the theatres.

Variety reported that consumers think movies aren’t worth seeing – at least not worth spending $10 or $20 for a ticket. It seems consumers have their limits – and there is only so much they are willing to forgive in the name of movie theater popcorn.

There also used to be more incentive to get out to the movies, since the DVD versions might not be available for a year. In 2019 – when most films are available for rental in less than six months, and can often be streamed for free within the year – there is a lot less pressure to rush to the cinema.

Some also say movie theaters have done a poor job of making digital natives feel welcome. The ability to purchase movie tickets online has been available for a long time, and they can be easily stored in a digital wallet on a smartphone.

One might assume that buying digital tickets would be popular – but it is not. Or, at least, not as popular as one might expect, as the vast majority of movie tickets are still purchased at the box office. It turns out customers don’t like adding another dollar or two to the cost of their already expensive ticket. If they plan to go to the movie, they’ll get a ticket the old-fashioned way and save the $2.

Innovating a Night at the Theater

Theater operators, faced with a feast/famine of customers throughout the year, seem to be taking steps to bring people back to the seats.

Unique among the movie subscription players, AMC Theatres has started offering its own version of a subscription service, A-List,  which allows members to see three films per week in any format for a monthly fee of either $19.95, $21.95 or $23.95, depending on the state. The company announced the service was nearing a million members as of February 2019.

“Members are seeing many more movies than they did before A-List was created, are seeing movies more than once and are bringing their friends and family members along, who are paying for their tickets at full price,” AMC CEO and President Adam Aron said in a statement.

Other theaters are looking past the movies themselves, working to draw the consumer with higher-end concessions. The Alamo Drafthouse Cinema started out in Texas 20 years ago as a passion project of Founder Tim League, who longed to combine the dinner and movie experience in a more meaningful way, despite the fact that he admittedly knew little about either – other than that he loved both.

Today, the Alamo Drafthouse is in 22 cities and is renowned for its next-level concession experience.

“We are at our best when we combine food, film and drink,” League said. “During the first two weeks of showing Moonlight, for example, we served the exact same Cuban meal you see on-screen in the final act of the film, complete with red wine in a Styrofoam cup. If you experienced that meal at the exact same time that the stars in the film were eating and drinking, it was a magical experience. If there is a clear food tie-in, like the Cuban sandwich in John Favreau’s Chef, we are all over it,” League told Uproxx.

Alamo is also known for using its screen time differently than most chains: It shows first-run blockbusters, but also has theme nights arranged around series, genres and local fan communities. “We try to offer up great experiences for all tastes: classics, cult classics, action films, exploitation, silent films, sing-alongs, comedy events, you name it,” League noted.

And while it seems unlikely that chains en masse will go to the lengths the Alamo does to build a custom experience, it seems safe to note that it is time for theater owners to think about bringing in consumers with off-screen offerings.

Because consumers have proven that they can – and will – stay home and wait for movies to reach Netflix, unless they get a good reason to leave the house. And since every movie can’t be Infinity War, theater owners better put on their producer hats and start cooking up more entertaining experiences, no matter what is on the screen.

If not, between Netflix, Uber Eats, Grubhub, Drizzly, Amazon Prime Video and Hulu, the consumer will opt for a truly friction-free movie experience – on the couch, in their pajamas.