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MoviePass CEO Mitch Lowe on disrupting the US cinema industry

He’s already helped transform Netflix into an online streaming superpower. Now, Moviepass CEO Mitch Lowe has his sights set on disrupting the US movie theatre industry.

Mitch Lowe has made a career out of disrupting established industries. As one of the founding executives at Netflix, he helped transform the business into the most popular online streaming service.

As of July 2017, Netflix had more than 103 million subscribers worldwide, including more than 51 million in the US.

In addition, Lowe was the president of Redbox, the DVD, Blu-ray and video game rental business that helped hasten the demise of Blockbuster. Lowe remembers it well.

“They said ‘wait a minute, we rent movies for $5. You can’t make money renting them for a dollar!’” he told BBC News. “The year I left we did $1.5 billion in revenue. Blockbuster doesn’t exist anymore.”

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Movies at the swipe of a card

Redbox itself is now reportedly in decline, but Lowe has a new project to work on. Like most disruptive business ideas, MoviePass is deceptively simple. Film fans can subscribe for just $9.95 a month.

As a result, they are given a debit card. Having chosen a film, MoviePass simply adds the normal price of the ticket to the card. This allows users to watch any movie, at any time of the day, in almost any US cinema. However, members cannot watch more than one film a day.

“We’ve got this granted patent that allows us to turn on and off that card, to only be used at the theatres where you say you want to go buy a ticket,” said Lowe. “It’s kind of a GPS-activated debit card.”

Is MoviePass a threat to cinema chains?

Understandably, MoviePass is a threat to established cinema operators – and one in particular has responded.

AMC, the largest cinema chain in the US, has threatened to take legal action against MoviePass, saying in a statement:

“That price level is unsustainable and only sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled.”

“The big incumbents, and AMC is one of them, are always trying to protect what they’ve got rather than innovating for what consumers want,” Lowe responded.

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So what’s the catch?

Chains like AMC could block MoviePass card holders from using their cinemas. However, as BBC North America technology reporter Dave Lee points out, that would mean having to block every Mastercard from using their self-service kiosks.

MoviePass makes a major loss on the price of cinema tickets. As a result, it is banking on cinemas eventually agreeing to it taking a share of the profits from products like popcorn and drinks.

“Let us prove that we can drive incremental profit and if we do, let’s sit down at the table and just give us a portion of the incremental profit,” Lowe told the BBC.

MoviePass expects to have 2.5 million subscribers by next year. It currently has 300,000 − 150,000 of which came in the two days following the subscription price drop from $50 to $9.95.

Read interviews with some of global industry’s top CEOs in the latest edition of Chief Executive Officer.

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