Fandango Taking on Moviefone In Battle of Online Ticket Sellers

By CHRISTOPHER KEOUGH
Staff Reporter

Online movie ticketing start-up Fandango is mounting a credible challenge to two leading competitors AOL Time Warner Inc.'s Moviefone and Movietickets.com by locking major exhibitors into alliances that include exclusive ticketing deals.

While it's not yet clear who is winning the online ticketing race Fandango refuses to release its revenues or ticketing statistics the Santa Monica-based company has some industry-watchers convinced it can win a war for supremacy with the other two players, who announced an alliance last spring.

"Overall, we feel Fandango has the best product," said Robert Bucksbaum, president of box office research firm Reel Source Inc. in Los Angeles, in a recent research note. While Moviefone benefits from name recognition, thanks to its popular phone ticketing service, Fandango is the simplest to use and wins praise from exhibitors, Bucksbaum said.

Fandango also has signed four of the top five exhibition chains in exclusive deals, representing 6,810 screens set up for online ticketing. AOL Moviefone and Movietickets.com have access to 6,650 wired screens combined.

Fandango also has attracted more than of $15 million in investments from several exhibitors, including Carmike Cinemas Inc., Cinemark USA Inc., Edwards Theatres Inc., Century Theatres Inc., Loews Cineplex Entertainment Corp. and Regal Cinemas Inc.

(United Artists Theatres, AMC Theatres and National Amusements Inc. are among those allied with Moviefone and Movietickets.com.)

Along with the $15 million put in by the theater chains, Accretive Technology Partners and General Atlantic Partners LLC invested another $7.5 million each for an initial investment round for Fandango totaling $30 million. A second round of $5 million was raised among the same investors and exhibitors late in 2001, said J. Michael Cline, a founding partner at Accretive Technology.

Taking control

"Moviefone was not serving us well as exhibitors," said Raymond W. Syufy, chief executive of Century Theatres. "Moviefone was more interested in promoting the AOL brand and getting eyeballs to the AOL site."

AOL Moviefone spokesman Jim Whitney conceded that online ticketing isn't the main goal of the Web site. "Moviefone has always been focused on providing consumers the most comprehensive and convenient movie information from listings and show times to theater locations and advance ticket sales."

According to Jupiter Media Metrix Inc. research, 4.4 million unique visitors came to the AOL Moviefone site in January, compared with 1.1 million who visited Fandango. And despite Fandango's lead in exhibitor contracts, Moviefone sold more than 1 million tickets for "Harry Potter and the Sorcerer's Stone" most among online ticketing outlets.

One contributor to a recent increase in online ticket sales has been a spate of blockbuster movies, such as "Harry Potter" and "Lord of the Rings," that made online ticketing desirable for many parents taking large groups of kids.

"I do think it increased the palate for advance movie ticketing," said Art Levitt, president and chief executive of Fandango. "People wanted to know they were going to get in and they were going to get in opening weekend.

Bucksbaum said online ticket sales are on the rise, particularly in cases where moviegoers fear sellouts. According his count, 1.5 million tickets to "Harry Potter" were sold online, as was 12 percent of advance tickets sold for the recent re-opening of "E.T."

Fandango sold 230,000 tickets for a sneak preview of Disney's "The Rookie," or 2 percent of all sales. "That's phenomenal," Bucksbaum said.

Brainchild

Levitt, who formerly was Walt Disney Co. Chief Executive Michael Eisner's personal assistant (before heading Hard Rock Caf & #233; International, DisneyQuest and ESPNZone), won't reveal revenues, citing the company's private ownership. But he said that revenue is increasing and Fandango will be self-sufficient sometime this year.

Fandango is the brainchild of Cline, who decided at the height of the dot-com craze that online ticketing, which already was being offered by AOL Moviefone, would work best if done by and for the movie exhibitors themselves.

Cline expects online ticketing to account for 25 percent of all movie tickets sold within five years, or 100 million tickets per year. Fandango went live in February 2001, growing to 7,500 screens that summer, Levitt said.

The company makes money by charging, on average, a $1 per ticket sold. Other income comes from sponsorship and advertising on the site.

Syufy said Fandango now accounts for between 5 and 7 percent of Friday audiences at participating Century locations. But in Internet-savvy regions like Northern California, as much as 20 percent of Friday audiences are Fandango customers.

While Syufy concedes that Fandango "is not making me any money that I know of," he figures that making it easier to go to a movie will translate into larger crowds. "It's breaking down the anxiety of the movie-going experience," Syufy said.

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