The MoviePass Effect. Why movie theaters should turn us into subscribers.

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When is the last time you went out to a movie theatre? Did you buy your ticket from the box office? A self-service kiosk? Online? Or, perhaps you used MoviePass, the subscription service allowing members to see a set number of movies for a pre-determined price. MoviePass may not be making money right now, but I don’t doubt the movie subscription model is going to gain momentum.

About MoviePass

MoviePass is a first mover in the subscription movie market. Subscribers who sign up for MoviePass get a MasterCard in the mail, which they can connect to a smartphone app, to “check in” to a specific screening of a film (once they’re within 150 feet of a theatre). Users still have to collect the ticket, but this lets them jump the queue, and they don’t need to have money in hand as the ticket is automatically loaded onto their card.

Still, MoviePass has hit some speed bumps. It has already been forced to make some major changes to its business model. In August 2017, it dropped its $45/month price to $9.95/month. For that price users could see one movie per day for the entire month. Lowering the cost saw the company’s subscription base grow from 12,000 in August 2017 to well over 2 million by March 2018. The service was expecting to grow to over 5 million users by the end of 2018.

Then in April of 2018, the pricing changed again — $29.85 for three months for four movies per month. Even still, in May the company was struggling for cash flow and its parent company Helios & Matehson’s stock price plunged.

Investopedia’s analysts observes that while the model “is super unprofitable right now,” Helios & Matheson’s betting on big data. After all, it has 2 million subscribers it can survey and collect data on to help studios, distributors, and theaters better understand how to connect with moviegoers.

Other Angles for MoviePass

While the MoviePass experiment demonstrates there is a willingness to convert people into subscribers for movies at the theaters, the business needs to do more to communicate the benefits of being a subscriber.

it’s not surprising that MoviePass is expanding its reach into other areas too. They’ve started partnering with smaller studios and distributors to promote particular movie titles to their subscribers. They are also looking to acquire and distribute films too.

But they can’t keep paying market price for tickets while the subscriber is enjoying a lower price. It’s not a sustainable business model. They need to look to the likes of Hulu, an online streaming subscription service owned by several big media companies. This partnership brings benefits to both sides — the media producers and the streaming service.

MoviePass could partner with AMC, Cinemark, or Regal to cut a deal. After all, MoviePass CEO Mitch Lowe told Wired that its customers spend “an average of $13 in popcorn and soda, which is more than double the norm, because they’re not shelling out money for their ticket.”

Yet the big chains may need some convincing. AMC, the largest American theater chain, was not happy when MoviePass cut its prices in 2017. In a statement the company said the “unsustainable” pricing “only sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled.”

Nevertheless, that’s a lot of concession stand money. And independent movie houses are more friendly to what MoviePass is doing. So, if the subscriber base does actually hit the aimed for 5 million, MoviePass could have the leverage to say cut us in or cut our ticket costs or we’ll push our users to go elsewhere.

I know I’ll be popping some popcorn to watch from home how this thrilling storyline plays out. Subscription models are working well, and it’s only a matter of time before a major distributor or movie chain figures out a way to capitalize or partner with MoviePass to be its radical innovation arm.

About Jeff

Email me at jeff@themeadecompany.com if you have any questions or would like to learn more about how I help marketing agencies earn status, attract new customers and grow their business.

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