The Wild Plan Netflix’s Co-Founder Has To Get More People To Theaters

It’s no secret that movie theaters are struggling between moviegoers turned off by high prices and finding alternatives through streaming and even privacy.

By Ryan Velez

It’s no secret that movie theaters are struggling between moviegoers turned off by high prices and finding alternatives through streaming and even privacy. Yahoo reports that one of the co-founders of Netflix has an idea to change things, that may sound a bit too good to be true.

Mitch Lowe was an early executive at Netflix, and now runs a startup called MoviePass, which is planning to drop its monthly subscription fee. How does this work? The single fee lets customers get into one showing every day at any theater in the U.S. that accepts debit cards. MoviePass will pay theaters the full price of each ticket used by subscribers, excluding 3D or Imax screens. This could lead to a big loss of money for MoviePass, which is why the company boosted its coffers by selling a majority stake to Helios and Matheson Analytics Inc., a small, publicly traded data firm in New York.

Ted Farnsworth, CEO of Helios and Matheson, explained that part of the goal of this move is to grow a larger base of customers and collect data on viewing behaviors. This behavior could then be used to target advertisements or other materials to potential subscribers. Farnsworth compared it to techniques already used by Facebook and Google.

While that may make some people uneasy, movie theaters are likely to welcome any means to get more people in. The top four cinema operators, led by AMC Entertainment Holdings Inc. lost $1.3 billion in market value early this month after a disappointing summer. Ticket numbers sold decreased slightly, but revenue was at a slight increase over last year due to growing prices.

MoviePass originally opened up in 2011, with a model similar to a gym membership. The original aim was to get profit from customers who paid the fee but didn’t use the service enough to justify the cost. Lowe became CEO last year, and noted that while the data-based business model is still “years in the future,” that it is poised to deal with the biggest issue surrounding movie theaters. This isn’t competition from Netflix or even piracy, but the flat-out high price of tickets. “People really do want to go more often,” Lowe said. “They just don’t like the transaction.”

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