Nothing lasts forever. In the entertainment world, that’s particularly true. Remember Blockbuster? Many still long to visit their neighborhood franchise and peruse the shelves, an experience that’s been digitized and replaced by the Netflix scroll. This week, another movie business met the fate of our beloved video store. MoviePass, the subscription-based movie ticketing service once touted as disruptive, has filed for Chapter 7 bankruptcy, along with its parent company, Helios and Matheson Analytics.
But it was doing so well, right?
MoviePass Failed to Bring ‘Value’ to Movie Lovers
MoviePass launched in 2011 and gained popularity years later. It first used a voucher system: members printed vouchers from home and redeemed them for tickets at participating cinemas.
In August 2017, MoviePass made headlines by lowering its unlimited movie subscription to $9.99 per month.
Former Netflix executive Mitch Lowe became CEO of MoviePass in 2016. His strategy was simple and attractive: for a small monthly fee, members could see as many movies as they wanted.
This model, however, was problematic. MoviePass had to cover the cost of members’ tickets. They gave subscribers independent debit cards which drew from a MoviePass bank account. Ticket costs outweighed revenue.
The idea was popular, but doomed.
But also, back in October 2018, the entertainment service was under investigation for fraud and allegations that it “misled investors.”
“How often have we heard someone say, ‘Why would I pay $15 to go to the theater when I can watch something on Netflix for free?’” asks Andy Bohn, co-managing director of Greenwich Entertainment.
MoviePass’s third party status made it unsustainable, but “it was the fastest-growing subscription service in history for two reasons. People love movies, and they love value.”
Movie Theater Subscriptions Compete With Online Streaming
Ahead of the death of MoviePass, AMC and Regal introduced their own monthly subscriptions. AMC’s Stubs A-List is one of the oldest theater subscriptions, debuting in June 2018 for $19.95 to $23.95 per month. Regal Unlimited runs for a similar price.
“We’ve been really pleased with our initial results — the consumer reception has been incredibly positive as we’ve filled a need for avid movie fans that didn’t exist before our launch,” says Ken Thewes, CMO at Regal.
“They’re really running a loyalty program,” says movie data analyst Bruce Nash. “They want to get the same person to go back to the same theater over and over again and get you to have a relationship with them, much like with airlines.”
If monthly passes like AMC’s and Regal’s don’t catch steam, theaters will need more effective ways of competing with online streaming.
With New Streaming Competitors Emerging, Not Even Netflix is Safe
Netflix facilitated the greatest shift in entertainment consumption since the television set. Last year they passed 60 million U.S. subscribers, nearly tripling since 2012.
Worldwide subscriptions reached 167 million users. This growth has kept step with the changing demands of consumers, who now watch what they want, when and where they want it.
Yet, the dominance of Netflix is waning. New membership has flatlined for the first time. And Netflix has gone billions of dollars in debt keeping new content available. They’re also facing stiffer competition than ever.
Amazon Prime Video could pass 60 million U.S. subscribers in just a few years.
Hulu has seen exponential growth since 2015.
Newcomers Apple TV+, Disney+, and HBO are all making waves.
And many more services are launching this year, including NBC’s Peacock and mobile-specific Quibi.
In Small Screen Entertainment, Not All Small Screens Are Equal
Small screen entertainment now weighs heavily against the big screen experience. But not all small screens are created equal. Consumers are not returning to cable. Viewership has steadily declined since 2000. Newer services like AT&T TV Now and Sling TV are designed to replace a typical cable TV package.
Other services include Fubo TV, Sony Playstation Vue, T-Mobile TVision Home, and YouTube TV. While they’re attempting to keep prices lower than traditional cable, these still run between $50 and $145. The struggle for the small screen carries a large price tag.
The spirit of Blockbuster still exists in our desire for home viewing. People love movies as much as ever. But consumers demand convenience and affordability. Theater chains and cable services must stay in high gear if they hope to keep up. For now, one thing is certain.
You can enshrine your MoviePass membership alongside your Blockbuster card.