Alamo Drafthouse is the latest movie theater chain to offer a monthly pass. The Austin, Texas-based company joins Regal, AMC, and Landmark in giving customers the option to pay a subscription fee in exchange for a set number of movie tickets per month at 41 locations.
The trend has swept the industry amid the rise and fall of MoviePass, a multi-theater subscription service that seemed to offer impossibly low rates for nearly unlimited access. The company shut down its mobile ticketing service in late 2019 and declared bankruptcy in January.
"This is a project that started when MoviePass dropped their price to $9.99," Alamo Drafthouse CEO Tim League told Cheddar. "That was a moment in time when the industry kind of — I don't know what the technical term is — started freaking out."
So along with the rest of the industry, Alamo Drafthouse started looking into subscriptions. Over an 18-month period, the mid-sized chain developed its own Season Pass, which costs between $14.99 and $29.99 depending on local ticket prices and allows members one movie per day.
That's compared with starting prices of $19.95 for AMC Stubs A-List and $18 for Regal Unlimited, the two biggest competing chains.
The research and development basically entailed finding a price point and mix of benefits that would serve customers while also not bankrupting the company, League said.
"For us, it was an opportunity to say this is a great idea. Let's get into the lab and build our own technology, so we don't have a company between us and our guests," he added.
The economics, however, differ significantly from the defunct MoviePass. Whereas that company generated income only through member fees, theater companies directly reap the benefits of increased visits through higher concession sales.
"The big distinction is that this is a company-owned product," League said. "I think this really works as a loyalty program that the individual business controls, not a third party."
Going into 2020, which some are saying will be a slow year for movies, the pass offers a fresh incentive for moviegoers to visit their local theater rather than hunker down with Netflix.
"Basically, it's a way to get your most avid movie-goers to come to the movies more often," Eric Handler, an analyst for MKM Partners who tracks the movie industry, told Cheddar. "What the theater chains have found is that those who engage with subscriptions are actually spending more on an overall basis, including concessions, than they were previously."
He added that subscriptions also give theaters a source of recurring revenue amid fluctuating monthly ticket sales.
"For consumers, it's a great deal because, for the most part, it's quasi-unlimited," Handler said. "You're getting the ability to go to more movies than you'll probably ever want to go to."