[ryantuck]

One thing I am struggling to understand is why MoviePass is paying theaters full price for tickets, essentially needing to take on the same economics as an insurance company.

If I'm a theater, I'm incentivized to put butts in seats and make my markup on concessions. If MoviePass is helping to put lots of butts in otherwise empty seats, I imagine I'd be willing to provide tickets to MoviePass at a discounted rate. I'm not sure how much that helps MoviePass's bottom line, but my initial guess is that it would be nontrivial.

What don't I understand about the incentives and economics here?

[slivym]

It's way more complex than that. Firstly:

* MoviePass isn't putting butts in empty seats - look at all their problems, their problem is that they're selling out on blockbusters and weekends. So a lot of the revenue theatres are getting is just displaced. There's really no reason to think that a MoviePass customer is seeing more low demand movies. Think about it this way: A Theatre could drop the prices on their older flicks to get more butts in seats today, but they don't. What's the logical difference between that and doing it for MoviePass?

* Secondly, Theatres don't make their money the way you expect - up to 100% of a blockbuster's ticket sales go to the studio and the theatre is contractually limited in the prices they can charge. So even if the theatres wanted to make a deal, they can't!

* Thirdly, which business on earth wants to let a middle man in? If MoviePass reaches critical mass it can turn around and say 'We're dropping you from our list of supported theatres unless you cut us in 20%' - and you'll have to agree because they aren't your customers anymore, they're MoviePass customers.

[cwyers]

Because the theaters don't need MoviePass to offer discounts? They can offer discounts directly to the consumers. MoviePass is an intermediary to the transaction that offers no value and tries to consume value.

[dwild]

> They can offer discounts directly to the consumers.

I offer discount at my company, will you takes it? Why no one is taking it? Marketing is the reason. It's great to have a discount but at the end of the day, you still need to promote that discount. Promoting to a market that's not yours, a market that you don't know and you don't even want to deal with (cheap ass consumer), doesn't make sense. MoviePass is the king of cheap ass market, they know how to reach them, they know how to make money out of them and you literally have NOTHING to invest to get that market. That's the value of MoviePass. You just take their client...

[bpicolo]

I'm sure they've done the math and realized that the incentive doesn't line up. They explicitly stressed in earnings calls that they have no plan whatsoever to share concessions or ticket revenue with third parties like MoviePass. I imagine they expect to crush moviepass with A-List

[emsy]

I don’t know about the US, but I talked with a someone who runs a cinema in Germany and he said that for example Disney dictates the prices, leaving him with small margins. This is also the reason why they have to sell a certain amount of drinks and popcorn (at a high price point) to stay afloat.

[solarkraft]

If they continue like this cinemas will just die out.

My local cinema however is offering a "Sneak Preview" on Mondays. For 5€ you get to see some (unknown on ticket purchase) new movie that people have actually put some effort into (non "block busters", a.k.a. transformers part 500). There I have seen Shape of Water, Hotel Artemis and Searching. I will see another one this evening.

With adaptions like these maybe they'll survive a bit longer. I certainly enjoy the offering.

[TillE]

And Cinestar shows you a solid 25 minutes of ads before each film, in addition to the aggressive snack marketing including an intermission during long films.

Seriously the only time I watch movies is as a two-week binge during the Berlinale; the experience in Germany is completely unbearable otherwise.

[judge2020]

Based on a few[0] articles[1], theaters only receive a small portion of box office sales for the first few weeks. Studios would likely still ask for a regular ticket's cut if the theatre sold a ticket for less to moviepass.

0: https://www.nytimes.com/1987/01/28/movies/where-movie-ticket... 1: https://money.cnn.com/2002/03/08/smbusiness/q_movies/

[tfandango]

I bet letting people go to whatever movie they prefer means they are mostly going to top run movies instead of older ones which have more availability. There's probably some overlap there if you go to 5-6 movies per month, but I bet those cases are rare.

[dragonwriter]

> One thing I am struggling to understand is why MoviePass is paying theaters full price for tickets

Because they a hostile outside party seeking leverage over theaters to extract some of the profits that the theaters currently earn.

> If I'm a theater, I'm incentivized to put butts in seats and make my markup on concessions.

If that was the case, theaters would just have lower prices on direct sales of the seats at issue.