Got a habit of going to the theater to catch movies? Well, you’re an increasingly rare breed — despite the success of a couple movies (led by Wonder Woman), this year’s been a real bad one for the box office. That’s caused Hollywood to scramble around for solutions, and a former Netflix employee seems to think he’s found one — a monthly subscription that looks too good to be true.
Mitch Lowe served as vice president of business development at Netflix, getting his start with the company in 1998. He’s bounced around a few different places since then, including RedBox, before landing at MoviePass last year. Now the CEO, Lowe is trying to reinvigorate MoviePass’ attempts to save theaters from the scourge of empty seats by offering a $10 per month pass that would allow moviegoers to see as many as one movie per day (IMAX and 3D excluded).
Some quick math will tell you something doesn’t add up. MoviePass buys tickets from theaters as part of the deal, and considering $10 is less than the cost of a single ticket in some theaters, let alone 30, it would seem that this isn’t a very good idea for a business (in fairness, they’ll get a better rate as they buy more tickets). That’s why MoviePass was a lot more expensive at first — it was around $30 per month when it was founded in 2011, with the cost ticking up to $50 per month for heavier users. At that time, MoviePass was hoping to succeed on the back of a gym membership-like racket, profiting off people who paid the monthly fee but didn’t go to enough movies to make it worthwhile. That’s not the best long-term plan — at some point, when customers know they aren’t getting their money’s worth, they’re going to leave and you’re going to be left with the people seeing about 14 films per month. And unlike the gym, not too many people are going to feel shame about not going or canceling that subscription.
So, it’s no wonder MoviePass is trying something different under Lowe’s leadership. The new business model is no more palatable, though — it’s the good old targeted ad model! MoviePass is being open about it, too. The plan is to sell $10 per month subscriptions, gather data about which movies you go see, then sell that information to marketers so they can serve you targeted ads.
Is that going to work? Seems like a stretch! Targeted advertising, while a lucrative industry, is a very crowded one, and considering that MoviePass is going to take a loss if a subscriber sees one movie, let alone over a dozen, they’re going to have to make up a lot of money just to break even. Their only saving grace might be that there’s nowhere near a dozen movies worth watching that come out in a single month. They’re getting venture capital, too, but not even that tap stays open forever. According to a Bloomberg report, MoviePass has an IPO planned for next year, which seems awfully abrupt considering they’re about to implement a new business model.
The MoviePass model also doesn’t address the many other reasons people have stopped going to the movies. The cost of the movie ticket is just the tip of the iceberg — food and drink ends up costing more than the ticket itself, and many others are just tired of other people using their phones in the theater. It’s little wonder so many people have flocked to streaming movies at home.
All that said, if you like going to the movies, this sounds like a pretty sweet ride to hitch while you can. It’ll be interesting to see if MoviePass still raises the price on heavier users, too — it’s what they’ve done in the past, and it’s what a lot of similar services do. But, at least for the next few months, it’s a deal worth pouncing on.