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AMC Theaters On Demand won’t grab much of $5B movie store market

AMC Theaters On Demand is late to the movie store market. It’s an interesting option for AMC moviegoers but won’t capture much of the $4.6B online movie market.

Management at AMC theaters has decided to enter the online movie store business. Starting Tuesday, consumers can rent or buy movies from a selection of 2,000 films from Disney, Warner Bros., Universal, Sony, and Paramount. The service, called AMC Theaters On Demand, charges from $3 to $5.99 to rent a movie, and $9.99 to $19.99 to buy one.

AMC Theaters flirted with online sales in 2017

AMC Theaters has flirted with the idea of launching an online on-demand store before. In 2017, at the height of the debate about early home release windows for in-theater movies, AMC offered to run the online store that would provide the rentals. At the time, Adam Aron, AMC President, and CEO said the company was well placed to handle the job:

Adam Aron AMC Theaters

Adam Aron, AMC Theaters

“Twenty million guests flowing through our theatres in the United States each month, 15 million-plus sessions on our US website each month, 10 million households plus in our US AMC Stubs loyalty database. We think that AMC, therefore, can participate in a bigger slice of movie-related revenues in this country.”

Though the 2017 effort went nowhere, clearly, Mr. Aron still feels there is a big opportunity with digital sales. Commenting on the On Demand announcement, he said:

“Our theater business is mature. There is a high-growth opportunity in this digital expansion.”

How AMC Theaters On Demand works

To use the AMC Theaters On Demand store, consumers need an AMC Stubs account. It is free to join, and members earn Stub points for their rentals and purchases in the store which can be used toward in-theater rewards.

Device support is limited at this time. A mobile web app supports PC and mobile device users, and there are apps for Roku devices and LG Smart TVs. The company says the AMC mobile app can also be used, but a check of the Google Play store showed no sign the app had been updated to include the ability to stream movies. There is no support for most other popular connected TV apps, including Apple TV, Amazon Fire TV, Chromecast, Android TV, and Samsung Smart TVs.

As well, AMC Theaters On Demand is not integrated with the online film locker service from Disney called Movies Anywhere. Movies Anywhere vanquished rival UltraViolet last year, and all the major online movie stores now support it.

AMC Theaters On Demand is an ecosystem play

The US transactional VOD market has grown steadily over the last several years. In 2018, digital rentals and purchases generated $4.6 billion, an increase of 10% over the previous year. Online transactions now generate about 40% as much revenue as the US box office.

Despite Mr. Aron’s hopes for AMC Theaters On Demand, it is unlikely to capture much of the $4.6 billion annual revenue. Amazon and Apple dominate the online movie rental and purchase market. Other notables include the Google Play Store and VUDU.  Most of these stores rely on their ecosystems to help drive their business. For example, Amazon leverages Prime Video and Fire TV title searches to direct people to the movie rental or purchase from Amazon.

AMC plans on leveraging its ecosystem too. It has 20 million members of its Stub program and will market heavily to them. Elizabeth Franks, AMC’s Chief Content Officer, says that Stubs members purchased six million tickets to The Lion King over the summer. When the movie becomes available digitally today, she says that “those people will all get a personalized message from AMC saying that they can now enjoy it at home through AMC Theaters On Demand.”

Despite the best efforts of AMC to promote the new store, the opportunity for it seems limited. Outside of AMC’s ecosystem, there really is little reason for people to use the On Demand movie store. Lack of device support, me-too pricing, and no Movies Anywhere integration make Amazon, Apple, and others a better option.

Why it matters

AMC Theaters Movies Anywhere is a new entrant in the online movie store market.

Its weak device support, me-too pricing, and lack of Movies Anywhere integration limit its opportunity to the 20 million AMC Stubs members.

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