MoviePass Rejects Legal Threats from AMC Theaters

Mere hours after MoviePass unveiled its $10 movie theater subscription deal — while the site was still down from a flood of eager people trying to sign up — AMC announced that it’s trying to block the plan at its locations. But MoviePass CEO Mitch Lowe doesn’t think they have a chance.

In a statement, AMC said that it’s consulting lawyers and “actively working now to determine whether it may be feasible to opt out and not participate in this shaky and unsustainable program.”

Movie theaters get fully reimbursed for each ticket a MoviePass participant redeems under the monthly plan. MoviePass claims that theaters will benefit from boosted ticket and concessions sales because the subscription incentivizes people to see more films (the company says that its plans increase theater attendance by 111 percent).

But that doesn’t necessarily mean that this is a good deal for theaters. Oftentimes cinemas have invested in their own subscription or loyalty programs — in AMC’s case, the Stubs rewards — and lowered participation in these programs may result in more losses than would be subsidized by increased traffic from MoviePass.

Additionally, AMC calls MoviePass’ deal “unsustainable” and claims that it “sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled.”

In the scenario AMC imagines, people will go to the cinema even less than they used to when the MoviePass deal ends because they’ll no longer feel that it’s worth it at normal prices. AMC says that if it’s forced to significantly lower its prices to re-attract customers, its ticket revenue “over time will not provide sufficient revenue to operate quality theatres nor will it produce enough income to provide film makers with sufficient incentive to make great new movies.”

Despite these threats from AMC, Mitch Lowe doesn’t feel too anxious.

“I’m not worried,” he told Variety. “What I’m worried about is it confusing customers and making them believe they can’t use this service at AMC theaters.”

It seems unlikely that AMC will be able to block the subscription plan. The program doesn’t require consent from movie theaters, because its cards work like — and technically are versions of — Mastercard credit cards: Users check in to a show with the app before buying a ticket, MoviePass adds the money for a ticket to their cards, and then users spend that money by swiping their cards. MoviePass has a deal with Mastercard.

“If you agree to take Visa or Mastercard, you’ve agreed not to discriminate between one card and another. If you’re a company like AMC and you say I’ll take this Mastercard but not that Mastercard, you’re violating the rules of the credit card company and you’ve lost your ability to take any Mastercard after that,” Lowe told CNET. “I think the only way they can stop taking our credit card is by violating the rules of Mastercard, which would mean they’d have to give up Mastercard altogether. If they did that, I’d just switch to a different credit card company.”

“I’d love someone to explain how what we’re doing is not legal. We’re sending our customers to buy full-price tickets from them, and they’re not paying us a single penny,” Lowe said. “AMC is going to grow as a result of this.”