Even as MoviePass settles into an updated model meant to increase profitability, now allowing MoviePass holders to see one film each day for a monthly fee of $9.95, AMC Entertainment Holdings, Inc is preparing to launch a similar service for their loyal theater patrons, called AMC Stubs A-List.
At a price point of $19.95, visitors can see up to three movies a week in any AMC theater in the U.S. Although AMC has stated that MoviePass isn’t a threat to its business model, it does appear to be taking the company on directly.
How Much Does a Movie Really Cost?
Back in August, when MoviePass lowered its price to just $9.95 for the film-a-day plan, a representative from AMC was quoted in the Wall Street Journal, saying “That price level is unsustainable and only sets up consumers for ultimate disappointment down the road.” This may have been because of the way that movie theaters have to divide the cost of each ticket.
Theaters have to give a cut of the ticket sales to the studios that created them, with the bigger studios commanding up to 60 percent of each theater ticket sold. For AMC, the average ticket price in the first quarter of 2018 was $9.78. So, for AMC, $5.88 of that theoretical average ticket would go back to the studio, leaving just $3.90 for the chain.
Even with this requirement, AMC is much more confident that its AMC Stubs A-List is a money-maker. Adam Aron, the theater chain’s chief executive, told analysts that the program “is being done at a sustainable price point where we can be very confident that we will be profitable.” Granted, 12 movies a month for $19.95 is more expensive than 30 per month for $9.95, but it’s nowhere near the average ticket price of $9.78.
AMC Stubs A-List: Built to Last?
Some percent of pass holders will be power users, taking in as many movies as possible as often as possible.
At what point does AMC start to feel the strain and have to raise prices, reduce movie offerings or both? The company says it has carefully considered this issue, but until the data has a chance to be explored in the real world, it will be hard to know if the Stubs A-List movie pass will survive over the long run.