The Moviegoer’s Movie Math: An Inside Look at Theater Subscriptions
The Moviegoer’s Movie Math: An Inside Look at Theater Subscriptions

Do theaters actually want movie subscribers to show up?

There are two battlefields where traditional movie makers are currently fighting - the home and the theater. As we know, they are not mutually exclusive, and the home is taking market share from the theater, with US ticket sales reaching their lowest point since 1992.

So disruption is upon them. Smart theaters are making investments in new chairs, designing new menus, adding local beers to the tap – and some are taking a page out of the competition’s playbook: subscription services.

The failures of MoviePass have been widely reported. Some smaller niche chains like the Alamo Drafthouse are exploring new models that will work with their theaters. But can movie subscriptions work for a bigger, traditional chain like an AMC?

We’ll do an intellectual exercise for them and break down the math between attending a movie the old fashioned way vs. through the subscription model. At what point do theaters like AMC make more money or less by rates of attendance?

First, let’s look at the AMC subscription model and use AMC's latest annual financials to make assumptions around film costs, % of people who visit the concession when attending the theater, average revenue from those concession transactions and the margin generated. We will be looking at the margins generated from ticket sales and concessions before any operating expenses or fixed costs:

AMC Subscription Model Premise - You pay $20 a month and can see up to 3 movies per week.

Main Assumptions based on AMC financials:

  • Average ticket price is $10 (rounded up for easier math)
  • Average film exhibition cost to studio is 50% of ticket price
  • 70% of people who attend movies go the concession stand
  • Average concession purchase per person $7
  • Margins on concession revenue is 85%

Let's break it down by looking at two different people:

  • The "obsessed" movie goer who takes full advantage of his AMC subscription pass and attends 12 times a month
  • The "frequent" movie goer who attends the theater 2 times a month

Obsessed Moviegoer Math

Ticket Revenue and Cost Breakdown

  • Revenue = $20 flat monthly rate as part of the subscription
  • Cost = 12 movies X $10 typical ticket cost X 50% fee to studio = $60

Concession Revenue and Cost Breakdown

  • Revenue = 12 movies X 70% concession visits X $7 avg. purchase = $58.80
  • Cost = 15% avg. cost


The total margin from the Obsessed Movie Goer equals $9.98. This doesn't seem like that much money? If that movie goer went 12 times without a subscription, concession sales would remain the same, but they would recoup more money from ticket sales. They would generate $120 from those ticket sales vs. just $20. Meaning under the standard model they make 1,000% more.

Frequent Moviegoer Math

Ticket Revenue and Cost Breakdown

  • Revenue = $20 flat monthly rate as part of the subscription
  • Cost = 2 movies X $10 typical ticket cost X 50% fee to studio = $10

Concession Revenue and Cost Breakdown

  • Revenue = 2 movies X 70% concession visits X $7 avg. purchase = $9.80
  • Cost = 15% avg. cost


The total margin from the Frequent Movie Goer equals $18.33. Under the traditional ticket purchase it also equals $18.33, meaning under this current set of assumptions 2 visits per month is the break-even.

So what does this mean? The movie theater actually doesn't want you to come much!

They want you to attend two or less movies a month and pay for a subscription.

Does this business model sound familiar? Yes: it resembles the big box gyms. The big box gyms want to lock you into a monthly subscription and hope you barely come. Then they can sign up more members because the gym won't be as crowded, and they do not have to update, repair or maintain the equipment at such high levels.

Movie theaters are also hoping that by paying a subscription fee you already feel like this is sunk cost and therefore will splurge even more on the concession stand visits and purchases.

So will this work? Maybe. A subscription model may ultimately work better in a food-and-alcohol theater environment where more visits could really mean more money spent on meals and high-margin alcohol.

Moreover, streaming content on home services like Netflix are improving as is home theater equipment. Eventually what you watch at home will be as good as what you can see in a theater. When we reach that tipping point, theaters will have to rely on experience and environment as the product (not the film itself). Traditional chains will need to make a serious investment to make that change, and that will take more than a band-aid remodel to be effective.

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