Why Cinemark’s unsexy $8.99 movie-theater subscription plan might actually be the one that survives

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Cinemark

  • Cinemark’s $8.99 monthly movie-ticket subscription plan, Movie Club, has gained 350,000 subscribers since it launched in December.
  • Cinemark CEO, Mark Zoradi, explained to Business Insider how his team came up with the plan, which could become the blueprint for a sustainable way to do theater subscription in the US.

Though most in the movie-theater space are annoyed by the way MoviePass has disrupted the business, they cannot deny that audiences love the movie-ticket subscription model.

In an era when the average movie ticket is priced at around $9.38, paying a monthly fee to go to the movies has turned out to be very attractive.

That was evident when MoviePass changed its model dramatically last August. Unveiling its $9.95 per month plan to see one movie per day, it became so popular that within a year of spending millions to pay for the tickets, it had to cap the plan at three movies per month to try and stay in business. But MoviePass was hardly the only company in the theater space to think about dabbling with a subscription model.

For years, the biggest theater chains in the country have been thinking of a way to offer customers a deal that would attract them to multiplexes while also making financial sense (and appease the Hollywood studios).

For close to a decade AMC Theaters, the largest exhibitor in the world, has been toying behind the scenes with a subscription model. It’s likely you can thank MoviePass’ popularity for why it finally unveiled A-List in June, the latest option in its Stubs customer loyalty plan. For $20 a month, AMC will let you see up to three movies every week (including large format showings).

A week later, the popular Alamo Drafthouse chain announced it would begin a beta version of its subscription model, Alamo Season Pass, at its Yonkers, New York location soon (no price has been announced yet).

However, the one subscription service that hasn’t received major attention was the first by any of the big exhibitors: Cinemark’s Movie Club. Since last December, the third-largest exhibitor in the country has offered its customers a $8.99 per month plan that gets you one standard format ticket, a 20% discount on concessions, and no fees if you order tickets online. Plus, your one movie credit will roll over to the next month if you don’t use it.

On paper, it doesn’t sound as sexy as the other deals out there, but when you take a look behind the curtain, Cinemark might have figured out a movie-ticket subscription model that can outlast its competition.

Attracting the casual moviegoer is key

On an earnings call Wednesday, Cinemark CEO Mark Zoradi revealed that Movie Club had 350,000 subscribers, doubling its active members since the first quarter and representing 6% of Cinemark’s box-office revenue for the year.

If that doesn’t sound as impressive as the 3-plus million that have subscribed to MoviePass since last August, or the over 175,000 subscribers AMC has nabbed in five weeks, here’s the dirty secret about movie ticket subscription plans: having a lot of members can actually lose you more money, depending on the circumstances.

In the case of MoviePass, it has to pay the exhibitors full ticket price at most theaters. And when exhibitors offer their own plans, a large percentage of those tickets sold go to the studios and distributors of the movies.

Zoradi was aware of all this, and for close to eight months before Movie Club launched, his team researched a model that would be right not just for Cinemark customers, but for Cinemark.

“Myself and members of the marketing team were just looking at the business and realized nobody had a viable subscription program in the US for theaters,” Zoradi told Business Insider on Wednesday.

So they went out and looked at various subscription models – how the movie theater subscription model is done in Europe (unlimited plans that inspired the creation of MoviePass), how Netflix is done, gym memberships, Amazon’s Audible – along with talking to consumers and the movie studios to find a deal that would work.

The deal you get with Cinemark's Movie Club.

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The deal you get with Cinemark’s Movie Club.
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Zoradi admitted that talking to the studios was an interesting chat, but he got their blessing when Cinemark divulged that a concessions discount would also be in the deal, proving this wasn’t just a way to sell cheaper tickets (which in turn meant cheaper returns back to the studios).

And what they found from moviegoers was that a majority only wanted to go to the movies around two times a month, but they didn’t want to be restricted to just that. That’s when the rollover option was born.

“Consumers responded tremendously to it,” Zoradi said. “It gave them flexibility to say, ‘Well, there’s not a movie I want to see this month, but maybe there’s going to be two or three next month,’ and they get to roll it over. That was a real key element.”

Zoradi believes that – along with having the option for Movie Club members to add a companion ticket for $8.99 more, and upgrading for a large format showing for an added charge of between $2.50 to $3 – covers all of his customers’ wants. He’s extremely happy with the service.

“We haven’t had to make major adaptations to it since December because we researched it so well,” he said.

And the last year has proved Cinemark did it right: keeping away from attracting the die-hard movie buffs is the most viable path to doing monthly ticket subscription in the US.

MoviePass’ movie-per-day model proved to be too good to be true. Its CEO was clear on that when his company changed to three movies per month earlier this week, noting that MoviePass was now focused on the “occasional moviegoer.”

“A small amount of our subscribers, that 15% that would go to four or more [per month], go to a lot of movies. A lot!” Lowe told Business Insider. “It’s almost half of our cost of goods, like 40% of our cost of goods are used by that 15%.”

Because Zoradi had Cinemark’s plan cater to the casual moviegoer from day one, his company may have become the North Star in the subscription model craze.

“The broad audience in the United States, that’s the sweet spot,” he said.