MoviePass Put on Hold Amid Negative Reactions From Theater Owners

The media are writing obituaries for MoviePass, the venture launched to provide unlimited movie-going for a flat rate, after it Thursday put off its Bay Area test planned to begin this week amid strong negative reaction from theater owners.

An AMC Theaters spokesman in Kansas City said the nation’s second largest theater circuit would not honor MoviePass’s smart phone pass system, which is tied in with the online ticket seller MovieTickets.com, and other exhibitors are expected to line up with it. The San Francisco Chronicle reported other Bay area exhibitors also were refusing to participate.

However, MoviePass insisted late Thursday that the company is not going out of business. A spokeswoman said the New York-based venture has funding and still plans to move forward, but first will reach out again to theater owners including AMC. She would not say how much funding it has.

The idea of all-you-can-watch movies for the price of a good restaurant dinner has been instantly popular. The MoviePass spokeswoman said in the three days since the ads and media blitz broke, the company has registered 19,000 inquiries seeking more information, which she called a very positive sign.

Apparently, MoviePass, which is run by Stacy Spikes and  Hamet Watt, both entrepreneurs, did some outreach to exhibitors. Ironically, considering the reaction from AMC bosses, MoviePass held an event at the AMC 14 Theater in San Francisco Tuesday evening for media and guests to discuss the test launch.

Spikes is a former Miramax marketing exec (in the Harvey and Bob Weinstein era) and founder of the African American-themed Urbanworld Film Festival, which has taken place for over a decade in New York with support from BET.

Watt was founder of NextMedium, which matches up advertisers and shows, music videos and networks for product placements through an online marketplace called Embed, and an executive at True Ventures, a Southern California investment fund.

Backers include Michael Lambert, a former studio and network executive who has been investing in media and other ventures since the 90’s. He owned Act III Cinemas with Norman Lear, which was sold for a nearly $300 million profit; and TV3 in Russia, which he bought when it was nearly bankrupt and sold in 2006 for $550 million.

Another investor is Ryan Steelberg, who with his brother Chad founded dMarc Broadcasting of Newport Beach, to connect advertisers directly to radio stations through an automated advertising platform. They sold that company in 2006 to Google for more than $1 billion.

So the founders have resources. The real question is whether they have a viable business plan. It won’t be an easy sell.

Movie theater owners are already under siege from studios that want premium video windows a month after a movie opens; from competition from home theaters with digital projection as good as any theater, video games, the Internet and a growing list of media devices and platforms.

The idea that MoviePass will do to exhibition what Netflix has done to home video is frightening to some in Hollywood. Even though MoviePass proposes to pay full price for tickets, and make back the difference selling data and targeted marketing, the idea of steep discounting is discomforting for exhibitors.

So MoviePass will next knock on theater operators’ doors in Kansas City (home of AMC), Nashville, Los Angeles and elsewhere, looking to gain support. But there is no assurance that exhibitors will want to participate.

Email: Alex.Benblock@thr.com

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