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MoviePass Buys Moviefone Because Subscribers ‘Don’t Want to Get Their Recommendations From Rotten Tomatoes’

IndieWire spoke with MoviePass CEO Mitch Lowe following the deal's announcement today.

MoviePass

Discounted-ticket subscription service MoviePass acquired ticket-buying app and website Moviefone in a $23 million deal. “Our subscribers want to know more and more about movies,” said MoviePass CEO Mitch Lowe. “They don’t want to get their recommendations from Rotten Tomatoes, they want to get it from fellow subscribers.”

Founded in 1989, Moviefone began as an automated hotline for callers seeking showtimes. Within several years, the internet rendered 777-FILM largely obsolete; the phone service was terminated in 2014. Moviefone, which also provides reviews and entertainment news, now receives 6 million unique visitors per month.

According to Thursday’s Securities and Exchange Commission filing, the purchase consists of $1 million cash and less than $8 million in common stock shares, with additional warrants in place from Helios and Matheson Analytics, MoviePass’ parent corporation. It’s a fraction of the $388 million that AOL paid for Moviefone in 1999. AOL is now owned by Verizon, and Moviefone had been housed under the latter’s digital umbrella, Oath.

Through the new deal, Oath will take a minor ownership stake in MoviePass through the Helios and Matheson equity. Oath will also continue to curate Moviefone’s digital ad content.

Moviefone has been forgotten since its pop-culture heyday, when the hotline and its memorable baritone, Mr. Moviefone (co-founder Russ Leatherman) was referenced on shows like “Seinfeld” (1995), “The Simpsons” (2002), and “Family Guy” (2008).

“We saw this iconic brand just languishing, essentially not having any love and attention being given to it over the last few years as it’s kind of been an orphan within a much bigger organization,” said Lowe. “So we thought this would be a great way to build this up into kind of an ideal funnel for potential subscribers.”

The deal’s “most important” advantage for MoviePass, Lowe said, is “build[ing] our relationship with Verizon. This is just the beginning of what we believe will be a much bigger and a much more interesting relationship.”

In addition, plans for Moviefone include “bolster[ing] the editorial staff, bring[ing] in a lot more exciting content, [and] bring[ing] in a lot more advertisers.” That vision contrasts MoviePass’ current, bare-bones website, which exists just to sign up subscribers.

MoviePass has already announced its intention to enter the original content business, with the January unveiling of distribution arm MoviePass Ventures. At the Sundance Film Festival, MoviePass Ventures announced its first acquisition with, “American Animals,” bought in partnership with The Orchard for a reported $3 million. Based on a bungled art heist by four college students (and co-starring the real-life perpetrators) “American Animals” will be released theatrically June 1.

Lowe said he “definitely” plans to keep the Moviefone name, although the site might now be called something like Moviefone Brought to You By MoviePass. “We think [the name]’s got a really cool history,” said Lowe. “We think we can, in this retro world, build the brand back up to be one that is really well-known.”

The number of MoviePass subscribers has grown from less than 20,000 people to 2 million-plus since August 2017, when it was bought by Helios and Matheson Analytics, and the monthly price fell below $10 for the first time. With its deep discounts, MoviePass does not currently turn a profit, and many critics question whether its business model is sustainable. Helios and Matheson Analytics increased their MoviePass investment in February, and now owns 78 percent of the company.

MoviePass also just announced that they again work with 10 AMC theaters that had been off-limits to subscribers, including NYC’s Empire 25 and LA’s Century City 15. “We haven’t had the greatest relationship with AMC,” Lowe said. “When we changed our pricing model, they came out with a statement saying that they were going to get their lawyers to try to stop us from being in business … We’re buying millions of tickets at AMC.” Still, “I’m convinced that someday, we will be in partnership with them.”

Read More: The Great AMC/MoviePass War Has Begun

Lowe insists that cutting MoviePass’ access to those theaters wasn’t a petty power move, but a research opportunity. “What we were trying to see is, ‘What is the reaction of our customers? Do our customers go somewhere else, do they not go to the movies at all?'” In total, he said just six subscribers who reside near the impacted theaters cancelled their MoviePass subscriptions.

Lowe also touted MoviePass’ ability to help smaller films sell tickets with premium posting on its app, highlighting it on social media, or reminding subscribers to check it out via email. A recent example Lowe cited was Amazon Studios’ “Gringo;” 21 percent of those who have watched “Gringo” on the big screen paid with their MoviePasses. Typically, MoviePass users buy six to seven percent of American theater tickets each week.

“We’re trying to get people back to the theater,” said Lowe. “What scares me about the exhibition and theatrical business is they’re making it more and more of an event, and charging higher and higher prices, and getting you to go to fewer and fewer films each year,” leaving streaming sites to claim the independent titles.

“If you ask any filmmaker would they rather first see their film at Netflix or at a movie theater, it’s like [asking] a writer would you rather self-publish your book or would you rather have a real publisher publish it?,” he said. “And even if you got less by putting it in the theater, to a filmmaker whose put their passion and love for probably two, three years or more on a project, seeing their film for the first time on an iPhone is not their dream.”

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