AMC Theatres Is Hungry, Desperate and Brilliant

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AMC Theatres at Easton Town Center in Columbus Ohio
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Theater operators have been struggling to draw young audiences, so AMC Entertainment (AMC) is turning to a smorgasbord strategy. The parent company of AMC Theatres is teaming up with Movie Pass to offer film fans the ability to see a movie a day for a reasonable monthly rate.

Folks in Denver and Boston will be able to sign up next month for the plan that offers daily screenings for $35 a month. If patrons want access to premium showings on IMAX (IMAX), 3-D or the supersized AMC ETX platform, they can pay $45 a month. There are no blackout dates, and members can reserve their bookings ahead of time on their smartphones. The only limitation to the daily screenings is that members can't see the same movie again.

Does a typical multiplex even offer 30 movies over the course of the month? It probably doesn't matter. Given the high price of movie tickets for prime-time showings, this works out to a pretty good deal even if someone limits box office outings to weekly visits.

Hoping that movie buffs take to a movie buffet is a bold bet, but AMC may be on to something here.

While My Box Office Gently Weeps

Folks aren't going to the movies the way they used to. There were 1.34 billion multiplex tickets sold in this country last year, and we're on pace for a multi-decade record low this year, with ticket sales likely to barely top 1.2 billion with only a few days to go in 2014. We're a far cry from the industry's 2002 peak of 1.58 billion tickets, and the trend is even scarier when we key in on younger consumers.

Piecemeal ticket sales aren't working. The quality of home theaters has improved with arrival of high-def, Blu-ray, and now 4K television, making the big-screen experience less impressive given what one can re-create at home. In terms of convenience, the growing array of streaming and on-demand options makes any movie or show available from the comfort of one's own sofa for folks willing to wait. The multiplex model is broken, and offering a subscription model makes sense.

AMC tried to pull this off a decade ago and it failed to gain traction. However, executives from AMC and Movie Pass are telling The Denver Post that things should work this time around with subscription plans growing in popularity. Folks aren't flinching at paying up for access to a worthy catalog of content, from Netflix's (NFLX) menu of movies to Spotify's of music. The perceived value of the individual screening has decreased in value despite exhibitors going the other way and boosting admissions.

Ultimately, this AMC gamble is about winning over the youthful tastemakers who seem to have sworn off the corner multiplex. A recent Nielsen study found that Americans between the ages of 12 and 24 saw 15% fewer movies this year than they did in 2013. The industry needs to do something to make going to the movies cool and economically feasible. This all-you-can-eat feast for eyes could help. The one thing that is certain is that doing nothing isn't going to change the industry's gloomy trajectory. AMC is taking a big risk, but its rivals had better hope that it pays off.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of IMAX and Netflix. Try any of our Foolish newsletter services free for 30 days. Is your portfolio ready for a change? Check out our free report on one great stock to buy for 2015 and beyond.
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