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How AMC is taking advantage of MoviePass's popularity

It’s a tale of two cities in the movie ticket sales business. Shares of MoviePass’s parent company Helios and Matheson Analytics (HMNY) plunged nearly 50% Wednesday morning, while AMC Entertainment (AMC) reported a stellar quarter with revenue reaching $1.44 billion, up 20% from the same period last year. AMC CEO Adam Aron expects 2018 to be the best year in the company’s history.

AMC is benefiting from the robust box office in 2018, and its frenemy— MoviePass. (Credit/Southern Living)
AMC is benefiting from the robust box office in 2018, and its frenemy— MoviePass. (Credit/Southern Living)

AMC, the largest movie theater chain in the U.S., should in part thank MoviePass for its standout results. During the company’s earnings call, management touted its frequent moviegoer program. In late June, AMC launched Stubs A-List, which allows patrons to watch up to three movies a week in any format for $19.95 a month. In comparison, MoviePass sells an all-you-can-see monthly service at $9.95, but its offering excludes 3D and IMAX, and it charges extra for popular movies and showtimes. It also just said it would be raising prices and introducing other restrictions. (Update: On August 6, MoviePass changes the plan to three movies per month.)

Even though AMC’s Stubs A-List costs more than MoviePass (even after the hike), AMC said sign-ups so far are well beyond expectations. In six weeks, A-List enrolled more than 175,000 members. Currently MoviePass boasts 3 million subscribers.

“We got A-List into the marketplace at a time when we can take advantage of this demand that seems to be out there,” said Aron on Wednesday’s earnings call. The remarks are an about-face from comments the company made about the subscription model and MoviePass just a year ago.

Does the subscription model make money?

AMC and MoviePass stock in five days.
AMC and MoviePass stock in five days.

Even at $19.95 a month, analysts still wonder whether the movie-subscription model makes economic sense. AMC has been running similar programs in the UK and Germany for three years. There the subscription service accounts for 10% of all movie ticket sales, according to the company.

Aron said A-List, which will be a permanent feature in the U.S., should be good news for Hollywood studios, which have been trying to lure millennials to movie theaters. Subscribers are particularly enthusiastic about watching movies in IMAX through the program, according to AMC.

The A-List subscription service may also protect AMC from losing movie-goers who are MoviePass subscribers. MoviePass accounts for 5% of national box office sales, according to estimates, but there are doubts about how long the popular ticketing app can sustain itself. Last week, MoviePass experienced a temporary service outage because it ran out of cash.

“Had we done nothing, we might be exposed to some risks,” Aron said in response to a question about MoviePass’s potential demise. “But we took our compelling program to the market, and we’re right out there competing every day, and doing way better than our original expectations.”

Still, AMC doesn’t see A-List as a main source of revenue for the movie theater company. “We do think it’s gonna be a small program — maybe someday we’ll get 10% of the tickets as in UK and Germany,” Aron said. “We do think most of the economics of AMC are gonna be sold one ticket at a time in the future just as the case as it is now.”

Krystal Hu covers technology and economy for Yahoo Finance. Follow her on Twitter.

Read more:

MoviePass CEO on how the company will finally break even

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