(FROM THE WALL STREET JOURNAL 2/1/16)
By Ben Fritz
Three studios are leading a $50 million investment in a new
company looking to solve one of Hollywood's oldest problems: How to
get more people into movie theaters.
Walt Disney Co., 21st Century Fox's Twentieth Century Fox, and
Lions Gate Entertainment Corp. are backing Atom Tickets, a mobile
startup that can organize groups to go to movies and enable
discounts for less-popular screenings, a controversial practice in
the industry.
Atom, which previously raised $10 million, has been incubated by
Lions Gate.
The company has been operating in three test markets since April
and plans to launch nationwide this summer, potentially posing the
first serious challenge to Comcast Corp.'s Fandango, which has long
dominated the online ticket market, since it and the smaller
MovieTickets.com launched in 2000.
Many in the movie business are eager to increase the percentage
of tickets sold online, currently around 15%, and the total tickets
sold each year, which has been trending slowly downward for more
than a decade, recently reaching about 1.3 billion in the U.S. and
Canada.
The Atom app can poll several friends' movie preferences and
availability and suggest screenings that meet everyone's criteria.
People can then buy a block of tickets together but divide
payments. No more rounds of emails and texts, in other words, to
figure out who wants to see what movie when and who owes how much
money.
With theaters' consent, Atom can offer escalating discounts as
people buy more tickets together. Theaters can limit that option to
certain screenings of movies with poor box-office results, or can
choose not to participate at all.
Atom earns revenue through ticket surcharges, a cut of popcorn
and soda preorders, and advertising on its app.
"Variable pricing" has long been controversial, with some
arguing different prices for different films erodes the value of
moviegoing. Executives at the two cinema chains that participated
in Atom's tests, Regal Entertainment Group and Carmike Cinemas
Inc., said they were open to testing the idea, as did executives at
Disney and Fox.
Lions Gate Vice Chairman Michael Burns called it "astounding"
that variable pricing isn't a common practice, given the potential
to make more money for movies that bomb on their opening
weekends.
Theaters set ticket prices, though studios typically set the
minimum revenue they will accept per ticket sold, which can make
discounts difficult.
"We think it's a place theaters will evolve to and we're going
to keep testing it," said Atom co-founder Matthew Bakal, adding
that variable pricing won't be among the company's offerings when
it launches nationwide.
Atom's backers think an aggressive new player would help.
"Shaking up this space would be beneficial to everybody," said
Kevin Mayer, Disney's chief strategy officer.
But the market leader is making aggressive moves of its own.
On Friday, Fandango said it had acquired M-Go, a video-on-demand
service, in order to offer movie downloads along with tickets. In
addition, Fandango has held talks with Time Warner Inc.'s Warner
Bros. to acquire that studio's movie website Flixster in exchange
for equity, a person with knowledge of the discussions said. That
would give Fandango, which is overseen by the head of Comcast's
Universal Pictures, two major studios in its corner. Fandango
currently sells tickets online and through a mobile app, but
doesn't focus on organizing groups or discounts.
Atom was co-founded by Mr. Bakal, a film-financing executive,
and Ameesh Paleja, a veteran engineer at Amazon.com Inc. "There are
not a lot of tech people looking to help theaters," Mr. Paleja
noted.
"People have so many options at home, we need to make the social
experience of moviegoing easier," said Fox Chief Executive Jim
Gianopulos. (21st Century Fox and The Wall Street Journal-owner
News Corp were part of the same company until mid-2013.)
Eighty-five percent of Atom users in the test markets, which
included Knoxville, Tenn., and two smaller towns, were between 13
and 40 years old, the company said. The average number of movies
seen each year by people in that age group has been declining,
according to Motion Picture Association of America data.
To launch nationwide, Atom may need more partners than Regal and
Carmike, the No. 1 and No. 4 chains in the U.S. by theater count,
respectively, as well as Landmark Cinemas Inc., a distant No. 2 in
Canada. A spokesman for AMC Entertainment Holding Inc., the No. 2
chain in the U.S., declined to comment on whether his company would
work with Atom.
Carmike CEO S. David Passman said theaters that used Atom
generated higher ticket and concession sales than comparable ones
in other cities. David Ownby, Regal's chief financial officer, said
it was too early to gauge the impact Atom has had for his
company.
(END) Dow Jones Newswires
February 01, 2016 02:48 ET (07:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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