MoviePass (incorrectly) assumed it would be able to strike sweetheart deals with all theater chains, thus drastically reducing overall costs. It even sounds good in theory - why wouldn't the theater want to get paid for seats that would have otherwise gone empty and have more people inside buying concessions?
It could even have worked - maybe five or ten years ago. Now the theaters themselves quickly realized the value of such a subscription model, and made the logical decision to cut out MoviePass entirely and just offer it themselves.
It's similar to how Netflix would never exist had it started out today, because no studio would surrender their back-catalogs to them for pennies.
Nope it would not have worked. You see movie theater owners have to pay the movie owner a per viewer fee. So it is not merely about filling up empty seats. The entire "filling up empty seats" story relies on the misconception that if you have empty seats there is a zero marginal cost to extra viewers, but that is not the case, movie owners charge per ticket sold.
The deal movie pass offered theaters was "if you make a deal with us, we can help you raise revenues at a marginal loss." No sane business person wants that. The point of business is to make money not lose it.
Moviepass was always a crazy impossible scheme. The business model was: get famous, get high growth, then we'll figure something out. This is something we rational people do not like to think about, but there are people out there that take bold and reckless actions without thinking much or at all about the consequences, under a belief that it will all work out in the end. You can just look at the political news to confirm that.
Problem is, it's nigh impossible for a tech company to "strike deals with all the theater chains," be they sweetheart or not so sweet. The movie theater biz is one of the most inept around, stuck in the 1950's in terms of its business model.
I did a tech startup that tried to bring social/mobile/local tech to the movie theater experience, and the theaters balked. They fear technology. It took a decade of fearmongering for theaters to fork over millions to buy digital projectors. The last thing they want is tech that will empower moviegoers.
What you discover with the "exhibition industry" (what theaters like to call themselves) is that they are in the fast-food business. Popcorn, soda, candy, junk food: this is what the theater sells. The movie is there just to bring you into the building. But what they want you to buy is the concessions. Without the movie nobody in the world would wander into a theater and order a popcorn and a soda for $12 or whatever.
When I spoke with exhibitors, I found them to be like realtors: really paranoid, untrusting of their competition, and particularly untrusting of uppity little tech startups (can't really blame 'em, I mean, if a tech startup ever gets successful they tend to wipe out everything in their wake--witness Netflix, Amazon, Apple, Microsoft, Facebook, Craigslist, etc.)
Despite the fact that we had built an app that presented a compelling case for a $1 billion or higher bump in annual U.S. box office revenue--we basically came up with ways to get more people to go to more movies more often--the exhibitors would have none of it. They didn't trust it, they wanted nothing to do with it. ESPECIALLY if their competitors in the same city had the same tech. The idea of a mobile app that empowered moviegoers to get alerted to every moving coming, and track upcoming movies after you indicated you liked the trailer, and tracked your favorite stars/directors/etc, and tracked the reviews of your favorite critics, and tracked what your friends were planning to go see, none of that meant diddly to exhibitors.
It was the craziest thing I've ever seen.
The way theaters are trying to survive now is by focusing on what their core competence is: food. Notice how many theaters now sell hamburgers and pizza and sandwiches, and beer and wine, and so on. You go to a movie now, you may be set back for $30 in meal fees per person easily. For an exhibitor, that's nirvana.
> It's similar to how Netflix would never exist had it started out today, because no studio would surrender their back-catalogs to them for pennies.
I personally doubt the longevity of Netflix. On it's own it's not much more than a cable channel, like say AMC. Its success depends on producing very good content... it has not mastered this at all. Over time most studios will back out of their deals with it.
As I understand it Americans buy a lot of food and drink at movie theaters at exorbitant prices without a care in the world. That is were the income comes from.
> MoviePass parent Helios & Matheson Analytics Inc. omitted and misstated its financial prospects in press releases when it touted a "sustainable" business model, the shareholders claim in lawsuits filed in Manhattan federal court.
Is this for real? Any outsider could have seen that this model was unsustainable from the start, with the business buying tickets at full price and then selling them at an unlimited rate for $9.99. To claim ignorance here as an investor just seems negligent.
If the company actually made false statements, it would be illegal. They should have known better than to believe me is not a valid defence for securities fraud.
They looked at people's movie habits and wrongly applied that to an "all you can eat model". I'd guess the average person sees 6 movies a year.
This is quite common. I worked at a telecom that sold 0.99 unlimited 1-day calling cards and we predicted would spend less than 1 hour on the phone. People spent an average of 2+ hours on calls which made the product lose money. And some people spent all day on the product.
In the end a service like MoviePass will be needed, noone wants one just tied to one theater chain most likely though it will be that way for a while if not indefinitely. It looks like this iteration of a movie service independent of movie theaters just won't be it.
As it has been said, theaters are empty much of the time and they make major margins from their concessions. You'd think more of them would have gone for it. Maybe somehow they tie it to concessions sales in that you can get 19.99 a month or something if you aren't buying concessions but 14.99 or 9.99 with limited movies if you are buying concessions and that is tracked through the card. At that point it is a loyalty/rewards program and you could go to the theaters with ROI in that the customers you bring in are x% concessions buyers for x amount. Seems like an easier sell hooked to concessions sales.
Theaters pay between 5-20k per film per week and make almost nothing from ticket sales, if not lose some depending on the distributor and if they are first run theaters. Theaters NEED concession sales more than ticket sales.
It seems a service that allows free movies that ties pricing to concessions would do better. Or, we'll just be stuck with theater bound movie services which is essentially a local theater only rewards program.
I don't think being tied to a single chain is too big of a deal. Everywhere I've lived there's really been one dominant chain, and usually an alternate chain. Almost always, I go to only one or two theaters, so it wouldn't be a big deal to be stuck to one place. It's different than say, I probably wouldn't want to pay for watch all the Warner Bros movies you want, because I would like to have a variety of studios
Honestly nevermind being tied to one theater chain, I wouldn’t mind being tied to one theater. I go to the same one almost all of the time anyways. And even if I didn’t, there are enough AMCs around that it’s not much of a value add for me to have something that works at different chains.
> noone wants one just tied to one theater chain most likely though it will be that way for a while if not indefinitely
I'd take a single location to be honest. I'd say > 90% of my movie going in the past 5 yrs has been the same location. For the edge cases I can pay cash.
> In the end a service like MoviePass will be needed, noone wants one just tied to one theater chain
I also wish all restaurants were on all the delivery services. I don't think it'll happen, nor do I have an expectation that consolidation is inevitable.
Not being American I have to ask why? Could you elaborate on that need? I see maybe a dozen movies a year, at mostly 3 cinemas all in the same chain. Why a need for multiple chains? Do only some chains show some movies or something?
I think MoviePass has been successful in showing that the industry needs a shakeup. I dont know what their monetization model was, I dont think they knew what it was.
But every industry can be shaken up if you're willing to give things away effectively for free with VC money. I don't know if that translates to proving an industry needs a shakeup.
They need a shakeup, but at the moment the biggest threat is people having big TV's and cheaper snacks at home. The only reason they still exist is because they have a monopoly on movies for a limited time where they don't have to compete with other distribution channels. And that movie studios like to screw up the sound tracks to make watching at home as unpleasant as possible.
I think most theaters will disappear in the long term and they'll become a luxury experience, more like visiting an imax once a year than going to see a movie once a month. Services like MoviePass wouldn't be necessary in that world.
I pondered that a bit when I first heard about them. It must be they looked at the number of movies the "fanatic" pays to see, and the number of movies the average person pays to see, per year.
I'm guessing they figured the fanatics would cause enough buzz about their service to convince the average person to subscribe and when enough did they'd turn a profit.
They may have created a formula where they estimated those lines would cross, but at best that would be a "known unknown" and I don't see how an "investor" could fail to realize that. You either have faith that goal can be achieved, or you don't, and faith in such matters is known to be risky.
I'm guessing the main thing they proved is that there's a small subset of movie fanatics that would see every movie released, some multiple times if they didn't have to pay. They figured out the size of this market and it probably was what killed them i'm guessing.
Like X% of movie pass subscribers saw 10+ movies a month. What was the size of X?
Damn. Been rooting for them. Theaters are practically vacant most of the time, so I'd think it would be a win-win. But the chains can't stomach sharing the power. Sounds like Movie Pass is all but done at this point.
A long time ago I heard of a demo of a telco project in a mall's cinema. They sent a location based SMS to everyone in the mall giving away half price tickets to an otherwise empty screening starting in 15mins. And apparently it filled up.
However that was years ago and I don't think anything came of it. Ive always imagined there was some business rationale for the cinema to keep the ticket pricing static and just take the hit on the empty screenings.
Who is going to willingly let a middleman get between them and their customers? That would be crazy. AMC have already introduced a similar plan, so customers still get a win out of it.
The chains are building their own subscription services that will be more limited, but likely with fewer glitches. AMC now has some sort of 3 movies / week for $20 per month.
In the meantime, I’m trying to get a few last screenings in on my 1 yr MoviePass subscription!
$19.99 per month. $2/matinee | $3/non-matinee. $1 in 'movie cash' for every $5 spent on concessions. spend 15 -- get $3...meaning the $3 is basically waived for a non-matinee.
Edit to clarify: This would then be more friendly towards theaters, encourage more $$ in concessions, and make them possibly give more deals/lower costs to moviepass... I think it would be more sustainable.
They sent a confirmation mail saying that "I am in" as soon as I cancelled their subscription! Pretty lame they can't identify difference between an entry event and an exit event
Careful! If you got that email, you didn't fully cancel, and resubscribed. The app has a prompt on open telling you about the plan changes, even if you canceled. If you check "I agree," it un-cancels your subscription.
[+] [-] paxys|7 years ago|reply
It could even have worked - maybe five or ten years ago. Now the theaters themselves quickly realized the value of such a subscription model, and made the logical decision to cut out MoviePass entirely and just offer it themselves.
It's similar to how Netflix would never exist had it started out today, because no studio would surrender their back-catalogs to them for pennies.
[+] [-] hristov|7 years ago|reply
The deal movie pass offered theaters was "if you make a deal with us, we can help you raise revenues at a marginal loss." No sane business person wants that. The point of business is to make money not lose it.
Moviepass was always a crazy impossible scheme. The business model was: get famous, get high growth, then we'll figure something out. This is something we rational people do not like to think about, but there are people out there that take bold and reckless actions without thinking much or at all about the consequences, under a belief that it will all work out in the end. You can just look at the political news to confirm that.
[+] [-] brianstorms|7 years ago|reply
I did a tech startup that tried to bring social/mobile/local tech to the movie theater experience, and the theaters balked. They fear technology. It took a decade of fearmongering for theaters to fork over millions to buy digital projectors. The last thing they want is tech that will empower moviegoers.
What you discover with the "exhibition industry" (what theaters like to call themselves) is that they are in the fast-food business. Popcorn, soda, candy, junk food: this is what the theater sells. The movie is there just to bring you into the building. But what they want you to buy is the concessions. Without the movie nobody in the world would wander into a theater and order a popcorn and a soda for $12 or whatever.
When I spoke with exhibitors, I found them to be like realtors: really paranoid, untrusting of their competition, and particularly untrusting of uppity little tech startups (can't really blame 'em, I mean, if a tech startup ever gets successful they tend to wipe out everything in their wake--witness Netflix, Amazon, Apple, Microsoft, Facebook, Craigslist, etc.)
Despite the fact that we had built an app that presented a compelling case for a $1 billion or higher bump in annual U.S. box office revenue--we basically came up with ways to get more people to go to more movies more often--the exhibitors would have none of it. They didn't trust it, they wanted nothing to do with it. ESPECIALLY if their competitors in the same city had the same tech. The idea of a mobile app that empowered moviegoers to get alerted to every moving coming, and track upcoming movies after you indicated you liked the trailer, and tracked your favorite stars/directors/etc, and tracked the reviews of your favorite critics, and tracked what your friends were planning to go see, none of that meant diddly to exhibitors.
It was the craziest thing I've ever seen.
The way theaters are trying to survive now is by focusing on what their core competence is: food. Notice how many theaters now sell hamburgers and pizza and sandwiches, and beer and wine, and so on. You go to a movie now, you may be set back for $30 in meal fees per person easily. For an exhibitor, that's nirvana.
Nah, MoviePass was doomed from day one.
[+] [-] rmc|7 years ago|reply
Netflix: "The Goal Is to Become HBO Faster Than HBO Can Become Us"
https://gizmodo.com/5980103/netflix-the-goal-is-to-become-hb...
[+] [-] devoply|7 years ago|reply
I personally doubt the longevity of Netflix. On it's own it's not much more than a cable channel, like say AMC. Its success depends on producing very good content... it has not mastered this at all. Over time most studios will back out of their deals with it.
[+] [-] phobosdeimos|7 years ago|reply
[+] [-] deboflo|7 years ago|reply
[+] [-] kosei|7 years ago|reply
Is this for real? Any outsider could have seen that this model was unsustainable from the start, with the business buying tickets at full price and then selling them at an unlimited rate for $9.99. To claim ignorance here as an investor just seems negligent.
[+] [-] smnrchrds|7 years ago|reply
[+] [-] adrr|7 years ago|reply
This is quite common. I worked at a telecom that sold 0.99 unlimited 1-day calling cards and we predicted would spend less than 1 hour on the phone. People spent an average of 2+ hours on calls which made the product lose money. And some people spent all day on the product.
[+] [-] differentView|7 years ago|reply
[+] [-] drawkbox|7 years ago|reply
As it has been said, theaters are empty much of the time and they make major margins from their concessions. You'd think more of them would have gone for it. Maybe somehow they tie it to concessions sales in that you can get 19.99 a month or something if you aren't buying concessions but 14.99 or 9.99 with limited movies if you are buying concessions and that is tracked through the card. At that point it is a loyalty/rewards program and you could go to the theaters with ROI in that the customers you bring in are x% concessions buyers for x amount. Seems like an easier sell hooked to concessions sales.
Theaters pay between 5-20k per film per week and make almost nothing from ticket sales, if not lose some depending on the distributor and if they are first run theaters. Theaters NEED concession sales more than ticket sales.
It seems a service that allows free movies that ties pricing to concessions would do better. Or, we'll just be stuck with theater bound movie services which is essentially a local theater only rewards program.
[+] [-] toast0|7 years ago|reply
[+] [-] jrs95|7 years ago|reply
[+] [-] maerF0x0|7 years ago|reply
I'd take a single location to be honest. I'd say > 90% of my movie going in the past 5 yrs has been the same location. For the edge cases I can pay cash.
[+] [-] bdcravens|7 years ago|reply
I also wish all restaurants were on all the delivery services. I don't think it'll happen, nor do I have an expectation that consolidation is inevitable.
[+] [-] talltimtom|7 years ago|reply
Not being American I have to ask why? Could you elaborate on that need? I see maybe a dozen movies a year, at mostly 3 cinemas all in the same chain. Why a need for multiple chains? Do only some chains show some movies or something?
[+] [-] SN76477|7 years ago|reply
[+] [-] michaelchisari|7 years ago|reply
[+] [-] flukus|7 years ago|reply
I think most theaters will disappear in the long term and they'll become a luxury experience, more like visiting an imax once a year than going to see a movie once a month. Services like MoviePass wouldn't be necessary in that world.
[+] [-] oblib|7 years ago|reply
I'm guessing they figured the fanatics would cause enough buzz about their service to convince the average person to subscribe and when enough did they'd turn a profit.
They may have created a formula where they estimated those lines would cross, but at best that would be a "known unknown" and I don't see how an "investor" could fail to realize that. You either have faith that goal can be achieved, or you don't, and faith in such matters is known to be risky.
[+] [-] schaefer|7 years ago|reply
So even at their low prices it wasn't even worth it to me to try a MoviePass subscription.
[+] [-] fullshark|7 years ago|reply
Like X% of movie pass subscribers saw 10+ movies a month. What was the size of X?
[+] [-] duxup|7 years ago|reply
[+] [-] acjohnson55|7 years ago|reply
[+] [-] ian0|7 years ago|reply
However that was years ago and I don't think anything came of it. Ive always imagined there was some business rationale for the cinema to keep the ticket pricing static and just take the hit on the empty screenings.
[+] [-] untog|7 years ago|reply
Who is going to willingly let a middleman get between them and their customers? That would be crazy. AMC have already introduced a similar plan, so customers still get a win out of it.
[+] [-] hanklazard|7 years ago|reply
In the meantime, I’m trying to get a few last screenings in on my 1 yr MoviePass subscription!
[+] [-] gremlinsinc|7 years ago|reply
$19.99 per month. $2/matinee | $3/non-matinee. $1 in 'movie cash' for every $5 spent on concessions. spend 15 -- get $3...meaning the $3 is basically waived for a non-matinee.
Edit to clarify: This would then be more friendly towards theaters, encourage more $$ in concessions, and make them possibly give more deals/lower costs to moviepass... I think it would be more sustainable.
[+] [-] maksimum|7 years ago|reply
[+] [-] vamshi4001|7 years ago|reply
[+] [-] laken|7 years ago|reply
[+] [-] gt_|7 years ago|reply
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