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MoviePass Launches All-You-Can-Watch Movie Theater Service

Moviepass App Screen Grab - P 2012

The startup is rolling out its service nationwide with an offer of unlimited movie-going for less than $40 a month -- without any cooperation from exhibitors.

MoviePass, which offers all-you-can-watch movie-going for less than $40 a month, starts a limited national rollout Tuesday -- more than a year after a near-disastrous miscue, which was followed by a year of beta testing.

In July 2011, MoviePass started a test in the San Francisco Bay Area. “Some article mentioned that we were working in conjunction with AMC Theatres, which was not true,” says Stacy Spikes, CEO and co-founder of MoviePass.

That caused a backlash from the theater circuits, which had not been consulted in advance about the new offer, which would feed off their business. Things grew testy, and MoviePass pulled back.

The company shut down that test but took its list of interested potential customers with it. Within a short time in the Bay Area, it had attracted about 19,000 people who wanted to know more or sign up for the service. The team felt it had something but put the idea under review.

“We retooled the product,” says Spikes. “We reached out and had conversations with the chains, with the studios. We launched the test in September of last year and completed our closed private beta. We are coming out with this product based on that feedback.”

In response to a query about MoviePass from The Hollywood Reporter, a spokesman for AMC Theatres said, “AMC has no affiliation with MoviePass, and we’ve had no discussions with the company about participation." A spokesperson for Regal Theatres did not respond to a request for comment.

Launched in 2010, MoviePass doesn’t think it needs the theater operators' permission, even though Spikes keeps saying that they want to have a good relationship with exhibitors. Spikes, a former vp marketing at Miramax, leads the company that has raised $4.7 million from investors, including AOL Ventures, Lambert Media, True Ventures and Moxie Pictures.

Spikes insists they are doing theaters a huge favor by encouraging more frequent movie-going. “In our beta trial, we saw an increase in theater-going by 64 percent and increases in concessions by 123 percent,” says Spikes. “We found that because they weren’t coming on out-of pocket cash each visit, they tended to almost always purchase concessions. So we feel it’s a win-win for everyone.”

He says the company has seen its offer increase attendance, too. “In focus groups, people would say, 'Of course I was going to see The Dark Knight, but there was this other film, and maybe I would not have gone to see that, which I did see,' " Spikes recalls. "And that was the fundamental difference. They were willing to take a risk because they were no longer thinking, 'How much do I need to come out of pocket for this movie?' And that is where we think you see MoviePass make a fundamental difference.”

The price for MoviePass ranges from $24.99 to $39.99 per month per person, depending on the geographic area, because ticket prices vary around the country. The national MoviePass average is $29.99. The customer gets a special credit card in the mail, but the key is in wireless.

“It has to work with an app in your smartphone,” Spikes explains. “You can walk into any theater that accepts major credit cards and check in. You can go to the kiosk or the counter, and you can buy a ticket. It knows whether you’re in that theater or not. If you aren’t within 100 yards of that venue, it won’t work."

It is the app that goes on the market for the first time Tuesday. Subscriptions are by invitation. Spikes says that includes current members and 75,000 on the company's waiting list. Each person can then invite 10 more movie lovers to subscribe as well.

For Christmas, the company will do a big push to encourage people to make MoviePass a gift for friends and neighbors, pre-loaded for a month, 90 days or a year for all-you-can-watch theater attendance, with a limit of one movie each day.

At the theater, the card will work on the same credit card machine and processor as Visa, MasterCard and Discover, so MoviePass expects theaters to treat it as just another card. The theater is paid full price for the tickets purchased. They just aren’t consulted in advance.

So how will MoviePass make money? “Everybody doesn’t go the movie every single day,” says Spikes. “We found in our beta trials that there are people who over-use the service and people who under-use the service. Overall, there is a balancing act. There isn’t an infinite number of movies or unlimited time to go to the movies. We found in our research that we have an economic model that works, and that’s why we’re moving forward with the next phase.”