What Does MoviePass Mean for Portland Theaters? The Movie Subscription Service Seems Like a Great Deal—For Now

Dominic DeVenuta

By the time you read this, MoviePass will have over one million subscribers—and, quite possibly, will change the way people go to the movies. Yet you, a well-informed moviegoer currently reading the film section of a reputable alt-weekly, might have no idea what MoviePass is.

That’s because last July, the service only had around 20,000 subscribers, most of them hardcore cinephiles who paid about $50 a month in exchange for one free movie ticket a day. But in August, data company Helios and Matheson Analytics acquired a majority stake; under the guidance of former Netflix and Redbox executive Mitch Lowe, MoviePass slashed their subscription price to $9.95 a month. Membership surged. Like, really surged—around 2,000 percent in the first month.

Despite that explosive growth, the service isn’t widely understood. There’s a great deal of uncertainty about both MoviePass’ business model and what a Netflix-style approach to ticket pricing could mean for movie theaters—particularly in Portland, where Cinema 21, the Laurelhurst Theater, Living Room Theaters, and the non-profit Hollywood Theatre are part of a robust collection of beloved and independent movie theaters.

Speaking to the Mercury, operators of Portland’s indie theaters expressed concern over what MoviePass could mean for them—and confusion regarding the service’s opaque business model, which involves selling tickets at a loss and selling data regarding users’ moviegoing habits.

“It’s impossible for them not to [lose money]. They lose money the first time someone uses it,” says Cinema 21’s owner, Tom Ranieri. Doug Whyte, the executive director of the Hollywood Theatre, notes, “Anything that sounds too good to be true probably is.”

“It’s impossible for them not to [lose money]. They lose money the first time someone uses it,” says Cinema 21’s owner, Tom Ranieri. Doug Whyte, the executive director of the Hollywood Theatre, notes, “Anything that sounds too good to be true probably is.”

Most MoviePass users assume the service operates in partnership with theaters, but that isn’t the case. MoviePass’ website proclaims the service to be “America’s largest theater network,” but each of the theater owners I spoke with said they were surprised to find their theaters listed on the site.

Steve Herring, the CEO of Living Room Theaters, said that not only was he not contacted by MoviePass, but according to a Google Group of other independent theater owners, his experience was “almost unanimous. They just showed up on the MoviePass list of participating theaters, and it took quite a bit of effort to be removed from that list.”

MoviePass can get away with that because of how it works: Once consumers sign up for the service, they’re sent a MoviePass-branded MasterCard; after checking into a theater using an app, MoviePass loads the exact price of their ticket onto the card.

“At this point, it’s no different than any other person using a credit card,” says Prescott Allen, co-owner of the Laurelhurst Theater. In an interview with Variety, MoviePass CEO Mitch Lowe explained why theaters can be included in the MoviePass network even if they don’t want to be. “They would essentially have to not take MasterCard in order to block us,” Lowe said. “I don’t think you can cancel that agreement without severe penalties.”

But while paying $10 a month for a movie ticket per day is a very consumer-friendly arrangement, the theater operators I spoke with argue that it doesn’t reflect the reality of running a brick-and-mortar business.

“The cost of going to see a movie is based on some fairly simple accounting principles,” says Cinema 21’s Ranieri. “There has to be a portion that goes to labor, to rent, to utilities, to insurance, supplies, maintenance, city fees, all that.”

“What’s to stop them [from saying], ‘We control 50 percent of your customers. You’re going to give us a kickback on those.’”

Similarly, theater owners doubt MoviePass can continue to operate without either raising its price—which Lowe has claimed he won’t do—or demanding that theaters sell tickets to MoviePass at a discount, which could force some theaters to close. Living Room Theaters’ Herring laid it out plainly: “What’s to stop them [from saying], ‘We control 50 percent of your customers. You’re going to give us a kickback on those.’”

MoviePass seems designed to disrupt the economics of corporate multiplex chains—but almost as an afterthought, it’s affecting independent theaters, too. In that same Variety interview, MoviePass’ Lowe said theaters’ ticket prices have “gotten out of hand” and, rather than critiquing MoviePass, theater owners “should come up with creative models that get people to consume more.”

But that’s a suggestion that doesn’t apply to Portland, a city with no shortage of popular and varied ways to go to the movies. For now, MoviePass seems like a great deal, and one that lets more people see more movies. If it starts putting theaters out of business, however, filmgoers will wind up with fewer choices, not more.