Consumers who buy 10 tickets with their American Express card through MovieFone will get an 11th free. American Express will spend about $3 million for TV spots and print ads; MovieFone will be doing in-theater trailers and well as advertising on its Web site and through America Online, which recently agreed to purchase MovieFone.
The deal is significant because MovieFone needed to get the approval of virtually all the studios since the proceeds from tickets sales would be going to them as well as the exhibitors.
All the major studios have signed on, including DreamWorks Pictures, Fox Filmed Entertainment, MGM Distribution Co., Miramax Films, New Line Cinema, Sony Pictures Entertainment, Paramount Pictures, Walt Disney Pictures and Warner Bros. Studios.
"The deal is amazing," said Andrew Jarecki, a founder and CEO of MovieFone.
Previously, individual theater chains have tried to institute similar ticket plans, but these efforts failed because people show loyalty to a specific movie rather than a specific theater, according to studio executives.
Currently, MovieFone pulls in around $50 million in ticket sales annually, but it doesn't make money directly; those revenues go to the studios and theaters.
PHONE AD ANNOUNCEMENTS
MovieFone makes its money by selling ad announcements on the phone call to studios, at around 15 cents to 17 cents per phone call. It also sells time on the calls to other advertisers and banner ads on its MovieLink Web site (www.movielink.com).
MovieFone charges users a $1-per-ticket service charge. By buying 10 tickets and getting the 11th free, moviegoers will be recovering those service-charge fees, Mr. Jarecki said.
American Express' ads are handled by Ogilvy & Mather Worldwide, New York. MovieFone's in-theater trailers are from Mad Dogs & Englishmen, New York.