Last week I wrote about the many and various realities impacting what movies are made or acquired by studios and distributors in light of what’s happening not only within the movie industry but in the general media and retail worlds. There are four more stories that have emerged since or which at the time I didn’t give full freight to the first time around.
First there’s MoviePass. The “see a movie a day for one low monthly fee” service has been under fire from theater owners since its inception. They feel the “no incremental cost” model cheapens the moviegoing experience but customers just like seeing essentially free movies. MoviePass loses money the more movies a customer sees but is hoping selling data on those customers to studios eager to target that audience will be the key to actually making money. AMC in particular among theater chains has signaled it’s worried not only about the customer experience (at least that’s what it says) but that MoviePass subscribers won’t continue coming to theaters if the company goes out of business and “full price” is the only option.
Second, a new study has shown that $20 a month is about all people are willing to spend on streaming subscription services total. So if they’re paying ~$10 for Netflix or Amazon Prime already, they’re only going to be amenable to one other service at a similar price point. It seems customers are making it clear that “cord-cutting” was in large part a financial decision and they’re not going to be adding one service after another until the bill is as much as or more than they were paying previously.
Finally, data from PricewaterhouseCoopers shows the reality of the entertainment landscape. Theatrical revenue has essentially plateaued, growing only slightly in the last five years and not expected to get much better in the next five. It’s certainly not growing at the same rate physical home video is shrinking nor at the same rate electronic home video is skyrocketing.
I understand why theater chains don’t like MoviePass. It makes sense for them to want to protect the value of their product and not risk it becoming commoditized by a third party to the point where people are unwilling to give up savings they’ve become accustomed to.
The reality of the current marketplace isn’t going to allow AMC or any other chain to stick to old business models much longer, though. At the same time ticket sales are falling, studio demands regarding share of sales are growing. Eventually there will be a large scale correction that, I think, will take one of two forms:
- Theaters embrace subscription models. The big problem for theaters is that they didn’t think of the MoviePass system first. If someone does decide to go down this road I would expect it to look a bit different – $20/month for 10 movies max with various restrictions or something – but it may be the only play they have left. Adding digital projection, luxury seating and more hasn’t created a groundswell of demand because they haven’t addressed the key problem, which is that going out to the movies is an expensive hassle. Staying home and watching Netflix is cheaper and easier.
- Theaters begin failing left and right. That last point is key since theaters are subject in many ways to the same market forces now ravaging the retail industry. Those in my generation will tell you, there’s a fair amount of movies we saw just because we were out at the mall with friends and didn’t have anything better to do. If people aren’t in the position to make that spur-of-the-moment choice it will impact theaters, something that’s already happening. The failure of the first big chain will likely ripple through the industry to the extent at least one major studio announces it’s offering the premium rentals that have long been threatened, making major releases available on-demand almost immediately.
Loyalty program rewards and points for free popcorn aren’t going to lure in an audience that hasn’t made “going to the movies” a habit already. If I’m running a major theatrical chain, I’m looking for ways to adopt a subscription-like pricing model to my business. That’s clearly what people want given examples like Netflix, Spotify and others. It’s going to change everything about the way the industry operates, but the alternative is a quick fade into irrelevance even as movies themselves survive and thrive.
Chris Thilk is a freelance writer and content strategist who lives in the Chicago suburbs.
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