Deal or no? AMC and MoviePass butt heads

Friction reigns between AMC Theatres and MoviePass since the subscription-based service announced their new low-priced subscription program on Tuesday. AMC’s concern appears to be justified – a movie a day for under $10 a month seems too good to be true. So how will it work?

The company buys tickets at full value and essentially subsidizes moviegoers. It was also announced Tuesday that MoviePass sold a majority stake to Helios and Matheson Analytics Inc. for an undisclosed sale price. According to Variety, the capital from the sale will help with the new pricing model.

In a statement, AMC rightly expressed skepticism: “From what we can tell, by definition and absent some other form of compensation, MoviePass will be losing money on every subscriber seeing two movies or more in a month” – let alone 28.

Mitch Lowe, CEO of MoviePass, is thinking long-term. He believes the program will prove itself to theaters over time, increasing attendance by 111% and encouraging concession sales.

Coming from former head of Redbox and co-founder of Netflix, such a subscription proposal warrants attention. His remarks on AMC’s disapproval are either promising or foreboding, depending on one’s perspective: “This is so much like Blockbuster was when we rolled out Netflix or Redbox,” and, “It’s the big guy being afraid of the little guy offering better value to consumers.”