Close encounters between AMC and MoviePass

Abstract

Two threads regarding the recent feud between AMC Theaters and MoviePass have been quite popular in the news cycle: (i) the impending bankruptcy of MoviePass and (ii) the Twitter war between the two players. In this paper, we seek to evaluate if such developments are mere aberrations or if there is any economic rationale behind them. We develop a parsimonious microeconomic model for this purpose that sheds light on the competition/cooperation responses of a theater chain towards the entry of a non-essential intermediary. Our results have important implications for management and policy.