Why Cinemark's unsexy $8.99 movie-theatre subscription plan may actually be the one that survives

Cinemark
  • Cinemark’s $US8.99 monthly movie-ticket subscription plan, Movie Club, has gained 350,000 subscribers since it launched in December.
  • Cinemark CEO, Mark Zoradi, explained to Business Insider how his team came up with the plan, which could become the blueprint for a sustainable US theatre-subscription service.

Though most in the movie-theatre space are annoyed by the way MoviePass has disrupted the business, they cannot deny that audiences love the movie-ticket-subscription model.

With movie tickets now costing about $US9.38 on average, paying a monthly fee to go to the movies has turned out to be very attractive.

That was evident when MoviePass changed its model dramatically last August. After introducing its $US9.95-a-month plan to see one movie a day, the company became so popular that within a year of spending millions to reimburse theatres for the tickets, it had to cap the plan at three movies a month to try to stay in business. But MoviePass was hardly the only company to think about dabbling with a subscription model.

For years, the biggest US theatre chains have been thinking of a way to offer customers a deal that would attract them to multiplexes while also making financial sense (and appease the Hollywood studios).

For close to a decade, AMC Theatres, the largest exhibitor in the world, has been toying behind the scenes with a subscription model. You can probably thank MoviePass’ popularity for why it finally unveiled A-List in June, the latest option in its Stubs customer-loyalty plan. For $US20 a month, AMC will let you see up to three movies a week (including large-format showings).

A week after AMC, the popular Alamo Drafthouse chain announced it would begin a beta version of its subscription model, Alamo Season Pass, at its Yonkers, New York, location soon (no price has been announced yet).

The one subscription service that hasn’t received major attention, however, was the first by any of the big exhibitors: Cinemark’s Movie Club. Since December, the third-largest exhibitor in the country has offered its customers an $US8.99-a-month plan that gets you one standard-format ticket, a 20% discount on concessions, and no fees if you order tickets online. Plus, your one-movie credit will roll over to the next month if you don’t use it.

On paper, it doesn’t sound as sexy as the other deals out there, but when you take a look behind the curtain, Cinemark may have figured out a movie-ticket subscription model that can outlast its competition.

Attracting the casual moviegoer is key

On an earnings call Wednesday, Cinemark CEO Mark Zoradi revealed that Movie Club had 350,000 subscribers, doubling its number of active members since the first quarter and representing 6% of Cinemark’s box-office revenue for the year.

If that doesn’t sound as impressive as the more than 3 million people who have subscribed to MoviePass since last August, or the more than 175,000 subscribers AMC has nabbed in five weeks, here’s the dirty secret about movie-ticket subscription plans: Having a lot of members can actually lose you more money, depending on the circumstances.

In the case of MoviePass, it has to pay the exhibitors the full ticket price at most theatres. And when exhibitors offer their own plans, a large percentage of those tickets sold go to the studios and distributors of the movies.

Zoradi was aware of all this, and for close to eight months before Movie Club launched, his team researched a model that would be right not just for Cinemark customers but for Cinemark.

“Myself and members of the marketing team were just looking at the business and realised nobody had a viable subscription program in the US for theatres,” Zoradi told Business Insider on Wednesday.

So they went out and looked at various subscription models – how the movie-theatre subscription model is done in Europe (unlimited plans that inspired the creation of MoviePass), how Netflix is done, gym memberships, Amazon’s Audible – along with talking to consumers and the movie studios to find a deal that would work.

CinemarkScreenshotThe deal you get with Cinemark’s Movie Club.

Zoradi acknowledged that talking to the studios was an interesting chat, but he got their blessing when Cinemark divulged that a concessions discount would also be in the deal, proving this wasn’t just a way to sell cheaper tickets (which in turn meant cheaper returns back to the studios).

And what they found from moviegoers was that most wanted to go to the movies only about two times a month – but didn’t want to be restricted to just that. That’s when the rollover option was born.

“Consumers responded tremendously to it,” Zoradi said. “It gave them flexibility to say, ‘Well, there’s not a movie I want to see this month, but maybe there’s going to be two or three next month,’ and they get to roll it over. That was a real key element.”

Zoradi believes that – along with having the option for Movie Club members to add a companion ticket for $US8.99 more and upgrading for a large-format showing for an added charge of $US2.50 to $US3 – covers all of his customers’ wants. He seems extremely happy with the service.

“We haven’t had to make major adaptations to it since December because we researched it so well,” he said.

And the past year seems to have proved Cinemark did it right: Keeping away from attracting the die-hard movie buffs is the most viable path to doing monthly ticket subscription in the US.

MoviePass’ movie-a-day model proved to be too good to be true. Its CEO was clear on that when his company changed to three movies a month earlier this week, noting that MoviePass had begun to focus on the “occasional moviegoer.”

“A small amount of our subscribers, that 15% that would go to four or more, go to a lot of movies,” Lowe told Business Insider. “A lot! It’s almost half of our cost of goods, like 40% of our cost of goods are used by that 15%.”

Because Zoradi had Cinemark’s plan cater to the casual moviegoer from day one, his company may have become the North Star in the subscription-model craze.

“The broad audience in the United States, that’s the sweet spot,” he said.

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