There was a strong nostalgic response to the rebirth of MoviePass. A whopping 775,000 people signed up for the priority waitlist a week ago, and now we have more details as the multiplex subscription service gears up to launch in Chicago, Kansas City, and Dallas. A wider rollout will follow, but there's no immediate timeline as to when that will play out.
MoviePass said it would select the initial test cities based on waitlist response, but it certainly seems as if the plan is to continue trolling movie theater chains. AMC Entertainment (AMC 3.96%) (APE) -- the country's largest multiplex operator -- is headquartered in the Kansas City metropolitan area. Smaller rival Cinemark (CNK 0.97%) is based a few miles north of Dallas.
MoviePass wants to get noticed by exhibitors. It obviously had no problem getting noticed by cinema patrons. However, as more details come out we see that the reality of sustainability -- something that the platform in its initial iteration failed to do -- it's becoming clear that MoviePass 2.0 won't be as disruptive or popular as it was the first time around. This could be good news for all parties involved.
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Screen pass
The success of the new MoviePass waitlist is impressive, until you realize that it didn't provide any details on pricing. Folks signing up also had no obligation to sign up for the plan. Some were likely delusional to think that MoviePass would be back with the same unsustainable plan, on which folks paid $9.95 a month for access to daily screenings at any multiplex chain that accepts debit cards for payment.
Late last week, Business Insider offered the first glimpse into what the new plans would offer. The entry level tier costs $10 a month, and it allows subscribers to see a single movie for traditional 2-D screen showings each month. If they opt for off-peak showtimes -- likely lower-priced matinee or weekday screenings -- they could see as many as three films a month. The $20 tier covers two monthly flicks or four off-peak viewings. The high-end $30 plan covered three movies (or five off-peak projections). Pricing may also vary by market.
MoviePass 2.0 still isn't sustainable of course. It will pay more for the single movie in the $10 tier than it takes in as revenue. A model based on a negative gross margin isn't built to last. MoviePass just wants to try to land as many members as it can before it runs out of creditors to borrow from, and that also explains the pricing. When you see that you can see as many as three films on the $10 plan but less than double that for the $30 plan you're going to gravitate to the entry-level tier. This is intentional. MoviePass is hoping to lose a little money on each of its $10 members than a lot more with its $30 subscribers, so it's nudging filmgoers to the cheaper option.
The new MoviePass will probably fail, but the pricing approach makes it a slow bleed compared to the original model's gushing jugular. MoviePass 2.0 is also less toxic to multiplex operators, even if they're not going to be entirely happy with the return of the platform. By offering tickets for a lot less than what the exhibitors are charging -- even if they're collecting those admissions from MoviePass -- it devalues to product.
The good news for theater chains is that the new plans continue to stay away from premium formats. The new approach where MoviePass members can see more films if they show up to weekday matinees, also helps multiplexes fill up seats when they are often the most available.
It also helps that the major exhibitors have even better plans than MoviePass. AMC Stubs A-List offers AMC regulars the ability to see three movies each week, at all times, and including the premium formats. You can see a dozen movies a month for $20 to $22 a month. Compare that to the $20 MoviePass plan and it isn't even close -- unless you don't happen to live near an AMC location. If you don't, it's not as if AMC is losing out on you as a customer.
It remains to be seen how MoviePass will ever become viable. It won't get anywhere close to its 2018 peak of more than 3 million members. The new format may actually be beneficial to the theater chains, but not to the point where they're willing to share ticket or concessions revenue with MoviePass. The movie theater stocks are smarter now.
