The recent drastic moves by MoviePass make one analyst believe it's 'skating on thin ice'
- Movie theater subscription service, MoviePass, is getting into the distribution business as it has teamed with The Orchard to acquire the Sundance Film Festival title, "American Animals."
- A day after the buy at Sundance the company announced its app will no longer be available at some AMC theaters.
- A media analyst believes MoviePass is "skating on thin ice."
It's been a roller-coaster ride this week for MoviePass.
On Wednesday, the movie theater subscription service announced that it was teaming with distribution company, The Orchard, to take the North American rights for the Sundance Film Festival title, "American Animals." Then on Thursday, MoviePass revealed that it was pulling its service from some AMC theaters, the largest movie chain in the US.
Going into the acquisition game with MoviePass Ventures, the company hopes that by investing in movies it can share in their box-office success, which will help counter the company having to pay full price for the tickets at most of the theaters where MoviePass subscribers use the app.
However, there's skepticism if this is the right move for MoviePass.
"It's a diversion from their focus and a loss, as most film investments are," Hal Vogel, media analyst and founder of Vogel Capital Management, told Business Insider. "In my opinion, they're skating on thin ice."
MoviePass CEO Mitch Lowe said about the move in a statement obtained by Business Insider that, "As of today, you'll find a small handful of theaters are no longer available on our platform ... As we continue to strive for mutually-beneficial relationships with theaters, the list of theaters we work with is subject to change."
MoviePass covers over $2 million in ticket sales weekly to AMC, according to Deadline.
Though AMC is the country's biggest chain, MoviePass probably could tell the relationship wasn't going to last. Ever since the company decided to change its model in the summer to a $9.95-a-month subscription plan (Helios and Matheson Analytics also took a majority stake in the company), AMC has been lukewarm about being supportive.
At first, the chain announced it was looking into if it could block the service from its theaters. But AMC eventually decided to continue accepting MoviePass. Then, on a earnings call in November, AMC CEO Adam Aron said that, "AMC has absolutely no intention, I repeat no intention, of sharing any - I repeat, any - of our admissions revenue or our concessions revenue with MoviePass."
Lowe has stated that one of the goals going forward is to make deals with exhibitors to get discounted tickets in exchange for promotion, and using its data to help market movies. It doesn't seem like that ever was going to happen with AMC.
Vogel believes MoviePass pulling out of some AMC theaters, located in major cities, is a "significant loss of traction."
Business Insider contacted AMC for comment but did not get a response.