Suggestions for the Next MoviePass

Edit by Dalan Overstreet

Who doesn’t love a good trip to the movies? The theater going experience may hold varying significance to everyone, but it certainly means something to us all. Maybe it was the place you had your first date or went with your family every Saturday as a kid. Maybe it’s where you saw the twist that became a permanent part of Pop Culture. I still vaguely remember my first time at the movies, hiding under the seat when the T-Rex arrived in Jurassic Park, because I was going on three years old. Even if I hated the movie I foolishly paid to see, like The Lone Ranger (don’t judge, it was either that or wait in the airport), I enjoyed the experience of watching it in a theater. I go as often as time allows.

MoviePass, a subscription-based ticket service, made that much more affordable. Although a dream for Cinephiles, the service has seen better days. In the last month, the app has crashed multiple times, theaters have pulled their showings and the stock price has plummeted. This really shouldn’t come as a surprise. Looking at the company’s business model, I’m still trying to figure out where they thought money actually came from.

The unlimited movie plan has been $9.95/month, with the limited plan (3 movies) being $7.95/month. The average price for a movie ticket in the last quarter of 2017 was $9.16. This means the company is losing money if unlimited subscribers purchase more than one ticket per month…and if limited users purchase any tickets at all. The company must have been hemorrhaging cash.

Some liken MoviePass to a pyramid scheme, which doesn’t seem to fit. However, it has proven to be an unwise investment. Consumers are getting way more value than their dollars are worth, which doesn’t sound like a problem, but is a massive one. The price of an asset, say a movie ticket, has to match the value of said asset. When the price and value of an asset don’t align, you’re due for a bubble.

The only way this model could work is if a majority of subscribers never use the service. The industry most similar to that is Insurance. Still, even this isn’t an apt comparison. People buy insurance hoping they never have to use it. MoviePass is an entertainment product. Of course they’ll use it as much as possible.

I guess something finally clicked, because the company has announced changes to its pricing and products. The price of an unlimited subscription will be raised to $14.95/month. The company has also greatly limited the access customers will have to first-runs.

MoviePass is now in the unenviable position of making financially sound changes to its product just to have those changes cost them dearly. These moves could prove devastating for retention. Although necessary at this point, they are essentially asking existing subscribers to pay 50% more for less benefits, also making it less appealing to potential new users.

It seems as if it is too late for MoviePass. That doesn’t mean companies, developers and investors should abandon the idea of a ticket-based subscription service. As someone who consistently visits the theater I love the thought of a packaged ticket deal, but I still expect it to accurately reflect ticket value. There are more effective ways to make this work.

Raise the Price
The mistake MP made isn’t the new pricing, even though it still seems low, but the initial one. If the next MoviePass wants a chance to earn a profit, they’ll need to increase revenue. It is literally the most simple rule of business. They’ll either need to create other revenue streams (more on that later) or charge more than MP did for subscriptions.

Decrease Tickets per Subscription
Similar to the previous point, the problem won’t be the changes, but was the initial offering. As great as “unlimited tickets” and “A Ticket per Day” sounds, it isn’t viable and you’re begging for losses. A package that includes 3-5 tickets would still be attractive to users.

Secondary Revenue Streams
The company should fully compensate themselves with monthly subscriptions, but other revenue streams could help keep those monthly subscriptions prices down. There are options, such as merchandise. The obvious answer would be ads. Sell ad space on the app. Related app developers and studios looking to promote their films would be ideal sponsors.

Products and Incentives
MoviePass didn’t have to just offer movies. There are different incentives the company could have provided. Offer coupons for snacks and merchandise. Give reward points for using the app to buy tickets. Create exclusive content. Have contests. Include a limited number of digital rentals. Grant early access to presale tickets. In the same way revenue should be diversified, perks should be varied.

Think about the following package: 3 tickets, 3 digital movie rentals (24 hours), priority seating/first dibs on presale, refreshment discounts and exclusive content. Price: $25/month. It obviously isn’t as enticing as “Movies whenever the hell you want for $10”, but it is a far more sensible option with fair benefits to users.

When thinking of the most capable of creating a better MoviePass, I immediately think of theaters themselves. We are already seeing it, with AMC already having created a subscription program. It shouldn’t be long before Regal (my personal favorite) and Cinemark join, hopefully leading to more variety in service packages. Ticket subscription servicing isn’t going anywhere. Hopefully, MoviePass will serve as a cautionary tale.

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