Will AMC Be the Netflix of Multiplexes?

By Markets Fool.com

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Bringing new meaning to the "binge viewing" term championed by Netflix , a leading movie theater chain is testing out a celluloid smorgasbord model. AMC Entertainment is teaming up with Movie Pass to offer a subscription service that lets movie buffs see a movie a day for a flat monthly rate.

The test begins next month at AMC multiplexes in the metro Denver and Boston markets. Movie Pass members use smartphone apps to reserve their bookings, flashing their card to enter.Folks will pay $35 a month for the plan, or $45 if they also want access to enhanced screenings on IMAX, 3-D, or AMC ETX. It sounds like a great deal even for film fans that want to limit their theater outings to weekly events.

There are no blackout dates. The only limitation is that you can't use the pass for a repeat viewing of the same movie. That's fine. Interstellar won't make any more sense the second time around.

AMC tested a similar offering a decade ago, but it failed to gain traction. The climate is clearly different now. Thanks to Netflix, video is no longer something that needs to be limited to spooned out morsels.

Execs from AMC and Movie Pass tell The Denver Post that the time is right. Entertainment subscription plans are all the rage in the streaming media realm. Think Netflix. Think Spotify. Think Kindle Unlimited. Why can't old media learn some new media tricks?

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More importantly it's what the movie industry needs right now. The target audience for this service will be moviegoers between the ages of 18 and 34. These are the people that aren't trekking out to the corner multiplex anymore, and it has led to stagnant box office attendance. A recent Nielsen report found that American teens and young adults -- those between the ages of 12 and 24 -- saw 15% fewer movies this year than they did in 2013. If that's anywhere close to reality, exhibitors don't have a choice but to battle aggressively for relevance with the moviegoers of tomorrow.

Disrupt or be disrupted
Subscription plans risk imploding the pay-per-view model. We saw this happen with DVD sales shrinking in the Netflix era and iTunes sales starting to slip as Spotify and Pandora gained traction. The perceived value of an individual work may shrink when there's a nice spread of content -- there's no point in ordering a la carte at a buffet -- but access to a growing vault of content is addictive.

If access to 30 movies in the course of a month -- even if 30 movies aren't actually released in a month -- is worth $35, can a single admission be worth north of $10 in major markets for primetime viewings? That's what AMC and Hollywood risk here, but sometimes you have to burn your own ships. Sometimes you need to disrupt yourself.

Netflix did it. Skeptics wondered if Netflix's original DVD rentals would be upended by digital delivery, and it went out and became the leader of streaming. Its number of disc-based subscribers has shrunk by two thirds since peaking a couple of years ago, but Netflix itself is more valuable today because it was a pioneer in a new world instead of battling for the remnants of the old.

AMC may be testing something simple here, but don't be surprised if it's the way that we consume movies in the future. AMC can make up the potential lost revenue per screening through concessions, and all parties will benefit from young audiences finding their way back to the multiplex.

This is what would be billed as a "coming attraction" before a movie. AMC is on to something.

The article Will AMC Be the Netflix of Multiplexes? originally appeared on Fool.com.

Rick Munarriz owns shares of Netflix. The Motley Fool recommends Imax and Netflix. The Motley Fool owns shares of Imax and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.