AMC Takes On MoviePass, But Is the Subscription Model Sustainable?

AMC has announced its a MoviePass competitor

moviepass - AMC Takes On MoviePass, But Is the Subscription Model Sustainable?

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AMC Theaters (AMC), which holds the title of America’s largest movie chain, wants you to forget all your friends bragging about their MoviePass and to join its A-List instead.

Members of the AMC Stubs A-Lit can see up to three films — even IMAX and 3D films — per week for just $19. The service competes with MoviePass, which offers users one movie per day for $9.95 a month.

AMC stock got a small boost from the news this month, but it was a band-aid on a year of bleeding. Shares have gained almost 10% over the last five days, but still have a 26% loss in the books over the last 12 months … and a 45% loss for the last three years.

MoviePass, meanwhile, had some sassy words on Twitter for its newfound rival:

But to focus on comparing MoviePass and AMC’s two offerings is to miss the forest for the trees. The movie business subscription model comes with countless question marks related to sustainability—and not because the deals seem too good to be true.

Offering viewers a cheaper way to go to the movies is great if they actually want to go to the movies. You and I both know there aren’t enough movies to see even close to one per day. (MoviePass knows this too; it uses that metric to seem cheaper while really offering something barely available much less desirable).

And three per week doesn’t seem much more appealing. MoviePass and AMC can’t control the output of Hollywood, which seems more worried about re-making Simba and Spider-Man than creating original, compelling content.

On top of that, original, compelling content is being made and distributed in new ways — by other subscription models that were new a few years ago but are arguably now the incumbents in the media world.

Netflix (NASDAQ:NFLX) has shown that it’s willing to spend the money to get great content and that it knows what great content looks like — and it’s just the tip of the iceberg when it comes to attacks on the old gatekeepers of the movie world.

MoviePass and AMC’s A-List offering might get a few more people through the doors in the short-term—and may tempt them to buy some overpriced popcorn and candy as a result.

But with AMC sporting a PEG ratio close to 20 and a forward P/E close to 40 despite long-term earnings growth of just 6%, it’s safe to say there’s not change in the long-term outlook as a result of these products.

The movie subscription business is a symptom of a broader industry shake-up. It’s great that AMC is trying to innovate and keep up, but I wouldn’t bet on the old-school player to win back the movie crown.

As of this writing, Robert Martin did hold a position in any of the aforementioned securities.

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