By Sarah Sluis
Back in June, the upstart company MoviePass announced that it was selling all-you-can-watch passes to movie theatres for $50/month. The plan quickly soured when theatre chains balked at letting consumers redeem their passes. Turns out they hadn't been consulted, and weren't so into giving discounts they hadn't approved of. Now MoviePass is back with a new partner. Hollywood Movie Money, a company offering movie passes, has longstanding relations with exhibitors and studios, which appears to have helped smooth things over. But now a bigger question has emerged. Will people subscribe to MoviePass? And how will the company make money?
From a customer perspective, MoviePass is a mixed bag. With the average movie ticket price across the country around $9, you would have to see six movies each month in order to make back your investment. Certainly there are many people who go to the movies once a week, but twice a week? During summer movie season or the winter holidays, it might be worth it to subscribe for a month and see all the good movies that have piled up, but the rest of the year? Nah. To account for the seasonality of good movies, it appears that MoviePass is thinking about offering discounts when you sign up for multiple months. In this customer survey, they ask if people would commit to a year for $29.99 a month or $39.99 for six months.
An oft-quoted adage about the movie business is that they get 80% of their revenue from 20% of the customers. Will MoviePass end up capping the amount of money frequent moviegoers spend to $50/month? Or will it move more twice-a-month moviegoers up to the $50/month range, increasing the amount of high spenders? It's tough to tell.
Then there's the issue of redeeming the passes. During the launch, apparently some movie theatres rejected the passes people had paid for. Consumers hate redeeming coupons as it is, so if theatres make the process hard for subscribers, that will definitely turn off viewers. In MoviePass' favor is the popularity of sites such as Groupon that have made coupons more socially acceptable. Plus, if people have smartphones they can simply flash the screen to the theatre instead of printing out vouchers.
MoviePass' business model is currently a bit muddy. Some articles have suggested that the business will make money by having customers who watch fewer movies than they paid for. If that's true, I think MoviePass is destined for extinction. Netflix, which also offers an all-you-can-watch model, is all about giving recommendations to its members so they watch more moves, get their money's worth, and don't cancel. However, Wired reveals that MoviePass intends to use its customers as a marketing base. They will try to sell DVDs, merchandise, and other movie-related goodies to their customers. They also plan to have promotional screenings for their viewers and give them customized recommendations based on their movie-watching habits. This could add revenue to the company's base. Ultimately, I don't see how MoviePass will survive unless they cut a deal with studios to get specially-priced tickets. But before they do that, they will have to build a big enough customer base to get Hollywood to pay attention.