AMC Theatres Launches VOD Service to Take Slice of Digital Movie Transactions of Its 20M Loyalty Members

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Publication date: 18 Oct 2019 Author: Charlotte Jones Associate Director/Principal Analyst, Cinema, OMDIA

AMC Theatres launches VOD service to take slice of digital movie transactions of its 20m loyalty members

Brought to you by Informa Tech AMC Theatres launches VOD service to take 1 slice of digital movie transactions of its 20m loyalty members

AMC Theatres, the largest exhibitor in the US, has entered the streaming business with a movies on- demand model offering close to 2,000 newer releases and library titles exclusively for its AMC Stubs loyalty members. The service provides options to rent or purchase movies on a case by case basis, after theatrical release for its approximately 20 million AMC Stubs members, and honouring the standard industry windows framework from theatrical to EST. The key incentives for AMC customers are earning loyalty points with every digital movie purchase for in- theatre incentives as well as purchasing cinema tickets directly through the app. There are two tiers of annual membership (free or $15) as well as AMC Stubs A-List, its monthly subscription service for cinema tickets ($19.95-$23.95), with each rising tier awarding more points. There are also welcome incentives for customers who first download a Paramount or Lionsgate title to choose three more films from that same Studio’s catalogue. AMC is also planning to leverage cross-marketing opportunities between its VOD service and AMC Networks as well as sharing the IFC Films and RJLE Films catalogue. Our analysis The move is the first by a US exhibitor into streaming, although other major exhibitors such as Cineplex Entertainment in Canada, and Mexico’s (and International player) Cinepolis already operate their own movie on demand services. Another example is the UK’s independent Curzon, Curzon Home Cinema, which releases its own titles through its distribution arm day and date with Curzon Cinemas. Previously, Hoyts Australia launched a VOD service, although that was shelved back in 2013. Streaming allows exhibitors to tap into downstream revenues from the same films and more critically the same customers through loyalty incentives, all the while creating new ancillary revenues. It also ties into a concept called Boomerang, which means customers missing films and cinemas bringing them back a few months after theatrical release for those customers that missed out. This is therefore also a way to satisfy those customers without programming on cinema screens. The launch will see AMC Theatres on Demand compete in the same space as Amazon Prime Video, RedBox and Vudu, and in a different segment to subscription services such as Netflix and the prospective launch of Disney+ and AppleTV +. AMC Theatres On Demand will, however, need to convince consumers to shift their movie purchasing habits away from now long standing and familiar sites such as Amazon. For its part, AMC is looking to personalise movie consumption from theatre into the home by leveraging its customer database and offering select in-theatre retail incentives including discounted tickets on Tuesdays, which is already available through AMC Stubs. AMC is in a strong position as survey data consistently shows avid moviegoers are also among the most active consumers of content across all platforms including physical retail, EST and SVOD. For example, according to IHS Markit's Consumer Research service, of people that have used 3 or more TVOD services in the last year, 72.0% say they regularly watch the latest movies in the cinema compared to only 7.0% that have not used any. Plus, there are also intangible conversions such as associations with a high-end moviegoing experience though AMC’s ongoing investment across a range of initiatives including recliner

© 2020 Omdia. All rights reserved. Unauthorized reproduction prohibited. AMC Theatres launches VOD service to take 2 slice of digital movie transactions of its 20m loyalty members seating and premium formats such as 4D and Screen X in its theatres. AMC’s closest competitor in this space is probably FandangoNOW, which also offers cinema ticket purchases and digital movies on a transactional basis through its service. The company also incentivises its customers through discounted prices for digital copies and has also exploited synergies with VR making available 3D movies on Oculus VR headsets. Other players such as Cineplex, the largest circuit in Canada, have also offered ‘SuperTickets’, the bundling of one transaction for movie tickets with free or discounted digital copies and this remains a possibility for AMC too. While AMC Theatres on Demand will launch with a transactional model, there has been a recent push by theatre chains to launch their own subscription services for movie tickets in cinemas such as AMC Stubs A- List, now the most popular theatre subscription service in the US (following the recent demise of Moviepass) with over 900,000 customers. Although there are no current plans from AMC to move into SVOD, potential future synergies between the two models cannot be ruled out. The push into streaming from a major US circuit, and indeed largest global exhibitor coming from AMC/Wanda, could drive a wider push by theatre chains to capitalise on their customer relationships through streaming services in the home. While AMC has been a fierce supporter of theatrical windows and standard release terms, there remains potential for a shift in allegiance should ancillary revenues from streaming gain significant traction. However, both exhibitors and studios alike have a vested interested in retaining the value of the theatrical experience of which windows is a key element. This scenario, therefore, remains unlikely based on AMC’s strategy to date and its vested interest through Wanda/AMC in over 16,358 movie screens worldwide at H1 2019, according to IHS Markit data. Although it could be in a first mover advantage, if or when wider industry terms are renegotiated. While AMC’s streaming service has been planned for some time, the launch comes as box office revenues in North America are currently down 5.6% in 2019 to date, although to put this into context it follows on from 2018, the second highest tally on record. The launch also comes amid increasing competition in the streaming market and concerns over potential saturation of subscription services and in turn consumers limitations’ in terms of total household spending on digital movies in any form. AMC’s customer relationships and its strategic position in the value chain are perhaps its strongest attributes and extending that loyalty into in-home movie purchases is perhaps a natural extension of its core business. Digital movie transactions and their loyalty rewards could, therefore, conversely, help drive incremental cinema attendance at AMC Theatres. What certainly rings true is that AMC is after a larger slice of its customers’ total movie spend. For AMC Theatres, the customer is King.

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