Last month, the service MoviePass reduced its pricing to $10/mo, under which you can watch all the movies you want (including new releases, but not 3D or IMAX) at the movie theater. They just mail you a debit card and foot the bill.
How could this possibly make money for them? If you watch 10 movies that month, that’s $100 they have to pay the theater. Supposedly they just sell your information for advertising (fine with me if someone wants to know what movies I watch)… but that’s not worth $90 a month, is it?
Or do they have some sort of back-end deal directly with the movie theaters? Doesn’t seem easily to believe, especially since AMC Theater hates them.
Right, but it’s not run by the movie theaters. As I said, AMC theaters opposes the program. It’s a third party that takes $10/mo from the movie watcher and then pays the theater for every movie the moviegoer sees.
You’d assume they had some sort of profit-sharing arrangement with the theater (we get them in the door, you give us 20% of popcorn prices)… but that doesn’t seem to be the case here, as far as I can tell? It seems like they’re actually paying money to the theater. Am I wrong about that?
My suspicion is that they cut the price because they didn’t attract many subscribers at their old price, and were running out of cash. I’d guess that they’re hoping that the low price will attract a sufficient number of people to try it, and make the business look attractive enough to be able to sell it to someone.
MoviePass makes money on subscribers who don’t buy enough tickets in a given month to exceed the cost. When the subscription price was $30 a month (higher in more expensive locations) you could count on a good proportion of subscribers each month being profitable enough to make up for the cinema maniacs who see 20 films a month.
The $10/month promo price is not meant to be profitable and it won’t be. It’s meant to quickly increase their subscriber numbers ahead of an anticipated venture capital round in the next couple months.
I don’t claim to understand much about this stuff - if I did I’d presumably be a lot richer - but it seems like many internet companies, including very large ones, can be quite successful from a market value standpoint without actually generating any profits (this article is a couple of years old, but gives you the idea of what I’m getting at.)
This article says the plan is to sign up lots of subscribers. Once MoviePass becomes a major force driving attendance at movie theaters, it can start to push theater chains to share some of the revenue from advertising, popcorn, and soda sales. The implied threat would be that if the chains don’t go along, MoviePass will drop those chains from coverage in their program and their foot traffic will drop off.
This is not a crazy business model. It’s a variation on what newspapers do; sign up subscribers for an amount that doesn’t even cover the cost of production, printing and distribution. Then make money selling ads to businesses who want to reach the subscribers. It works only because newspapers offer a critical mass of consumers that advertisers want to reach. MoviePass also has to attract a critical mass of movie watchers, and the easiest way to do that is to drop the price so low that everyone will sign up.
I have no idea if MoviePass will be successful but consumers who see more than a movie a month can take advantage of it right now for as long as the VC money lasts.
There are a couple of aspects to how Moviepass works that make it less than attractive for a lot of people. These include:
You can’t sign up and use it right away – you have to wait for them to send you that debit card.
You don’t just directly buy your ticket through the phone app (like you do on services like Fandango) – when you use the app, Moviepass is loading that debit card with the payment for that ticket, and you then have to essentially buy the ticket in real time at the theater, using the debit card.
You can only buy one ticket per movie. If, let’s say, you and your spouse want to go to the same movie, each of you needs the app (and the debit card), and each of you has to make individual transactions.
It sounds like theaters which offer reserved seating (which is increasingly common) won’t let you reserve specific seats through Moviepass.
You have to have a smartphone (smartphone penetration is high in the US, but, as noted by several people in the earlier thread, by no means universal).
My strong suspicion is that none of those were parts of Moviepass’s original business plan, but that they were hacks that they had to make in order to get it running.
With people streaming movies at home, or watching VOD on cable or satellite TV, theater ticket sales have dropped dramatically for some theater chains. If Moviepass can dramatically drive up ticket sales for theaters they now have a real incentive to cut Moviepass in on the popcorn profits. At the same time Moviepass dramatically increases it’s customer base and becomes a target for buy out. Making a profit is the least of Moviepass’ problems at this point.
I have a membership and I have no problem using the card at the local Cinemark theater where all the seats are reserved. You just choose your seating choice at the time of purchasing your ticket, just like with any other payment method.
If you’re accustomed to buying your tickets (and selecting your seats) at the box office, it’s not a big deal, true.
I nearly always buy my tickets ahead of time (through the theater’s web site), and make my seat selection then. Maybe I’m just paranoid, but I’d rather be able to do it then, rather than at the box office.
Many years ago I worked for the US Navy’s Morale, Welfare, and Recreation (MWR) program. I worked at a movie theater on a Naval base that served sailors, Marines, and others on the base. It was paid for by federal funds and didn’t really need to be profitable.
But when my boss at the time took over he decided to try to make it profitable. He lowered ticket prices to $1-2 each (which even in the late 90s was ridiculously low) and charged reasonable but still profitable prices for concessions. (The prices were still low enough some people bought a ticket just to get in the door and buy food and didn’t even watch the film.)
The place turned a profit for the first time in its existence. Even relatively cheap concessions can contain a huge markup. Unpopped popcorn by the bag, refillable CO2 canisters, and bags of syrup can serve many customers at very low cost. A movie theater that can draw customers will practically print money.
I’ve always wondered why more theaters don’t try this route. That’s how most of the small towns I’ve lived in do it, and they survive (though not exactly thrive). The big chains always do the exact opposite, premium prices for a “premium” experience, I guess. They seem to survive too, and I guess they got to become multinationals SOMEHOW.
They may not have a choice. The studios make their profits from renting the films to the theaters. They don’t get a cut of the concession money.
So if a theater chain tried to slash its ticket prices in order to get more people in the door and then make up for it with increased snack sales, the studios might fight back by refusing to rent them first-run films.
The studios seem to accept the fact that small town theaters won’t survive charging top prices, so they let it slide when they charge less.