Cinemark's Movie Club Steps Up The Competition With MoviePass

Helios and Matheson Analytics Inc HMNY stock is tanking more than 20 percent on Tuesday after Cinemark Holdings, Inc. CNK announced a brand new subscription movie service that will rival MoviePass. Cinemark said moviegoers can now pay just $8.99 per month for a subscription to Movie Club and get a monthly pass for one movie ticket per month.

What Is Movie Club?

Movie Club is the first direct competitor to MoviePass' subscription model that has the service on track for 1 million subscribers by the end of the year. At first glance, MoviePass seems like the far superior deal at the moment. MoviePass subscribers can pay $89.95 (or $6.95 per month) for a full one-year subscription to the service and get access to up to one movie per day at over 90 percent of theaters nationwide.

However, with the average nationwide movie ticket price currently just shy of $9, MoviePass is not turning a profit at its current price and has instead been focusing on building its subscriber base. In the longer-term, the company plans to collect valuable data on its users that it could potentially sell to advertisers or Hollywood studios.

Netflix Impact

Netflix Inc. NFLX and other streaming video competition has weighed on movie theater ticket sales in the past decade. Box office revenue is down 4 percent in 2017, according to ComScore. Total ticket sales have declined from 1.4 billion 10 years ago to only 1.32 billion in 2016.

In addition to encouraging Americans who go to the theaters only a handful of times per year to up their trips to once per month, Cinemark CEO Mark Zoradi said the company is hoping Movie Club will help boost concession sales as well.

Price Action

Helios’ big decline is a clear sign the market is taking Movie Club seriously. Here’s how other movie theater stocks reacted to the news on Tuesday:

• Cinemark stock declined 0.8 percent.
• AMD Entertainment Holdings Inc AMC stock was up 2.4 percent.
• Regal Entertainment Group RGC stock was up 9.2 percent on news of a buyout by Cineworld.

Related Links:

Why MoviePass Could Hit 1 Million Users This Year And What It Means For Helios & Matheson

The Pros And Cons Of MoviePass