A couple of months ago, I wrote about the return of MoviePass. For those that missed it, MoviePass is a subscription service where you pay a flat fee and can basically see as many standard, 2D movies as you want per month.
When I started using the service back in 2013, it cost $34.99 per month. That was easily worth it for me since most screenings in my town cost about $12, so I only needed to see three movies per month for it to pay for itself. Since I have been averaging between 8 and 10 movies a month for the last several years, it was a no-brainer at that price. But this past August, the company surprised basically everyone with a new, pretty stunning deal: $9.99 a month. At that price, the service pays for itself with the very first movie each month.
And then, earlier this week, they went a step further, offering a new annual plan: $89.99 per year with a $6.55 processing fee. That means it’s now charging slightly over $8.00 per month. And the basics of the service haven’t changed: subscribers are still able to see one standard, 2D movie per day in almost any local theater. (Some very small independent theaters might not be supported, but all of the big ones are.)
Another way to look at it is that under the monthly plan, you really needed to see one movie a month to make the service work for you. Under this new plan, though, the service will pay for itself if you see only 8 movies per year. (Assuming you live in a place like I do where tickets cost about $12. If you live somewhere like New York or LA, where tickets run north of $15, it pays for itself even faster.) So now it makes sense for even more people to try it out.
Why are they doing this? Well, like a lot of disruptive start-ups, MoviePass is bleeding money. The way the system works is that the theater gets the full ticket price for every purchase. And following the price drop in August, they went from having a few tens of thousands of subscribers to having a few million. And it’s safe to assume that most of those millions of people are using their cards, and thus costing MoviePass lots of money. Switching to an annual billing program means that they get a big influx of cash right now.
Does MoviePass have a viable business plan? Who knows. Just before the price drop, they sold a majority of shares to a company that is in data analytics, and they’ve made no secret about their desire to sell subscribers’ usage information. The hope is that they’ll be able to sell this data not only to the theaters and studios to use in marketing films, but also to cab companies, restaurants, and other businesses that might benefit from having more people go to the movies.
In addition, CEO Mitch Lowe has said that he hopes to eventually work out a deal with the big theater chains–AMC, Regal, and Cinemark–to stop paying full price for his subscribers’ tickets. The idea there is that more people going to the theater means more concession sales, so it would, in theory, be in the chains’ interests to support the program. So far, the theaters have had the opposite take, with AMC in particular spending a lot of time spewing vitriol at MoviePass. They’ve also hinted at selling digital copies of movies to subscribers, and even starting a streaming service.
There’s a good chance that none of this does make good business sense and that MoviePass won’t be long for this world. But it’s worth noting that plenty of start-ups have lost money, sometimes a lot of money, for many years, and ended up being successful. It took Amazon six years to turn a profit. Twitter lost over $100M last year, and it might–might–finally turn a profit next year. Plus, Mitch Lowe does have a history of success with start-ups, having previously run both Netflix and Redbox.
But even in a worst-case scenario, this latest price from MoviePass is still too good to pass up. All they need to do is stay in business long enough for you to see $90 worth of movies. If you figure on seeing The Last Jedi at least three or four times, then you’ll only need to hit the theater four or five more times in December and January for it to have paid for itself for the year. After that, everything else is essentially free. It’s a win-win proposition with almost no risk. Even if the company were to fold in the middle of next year, you’re still almost certain to come out ahead.
So if you see more than 8 movies a year (and it’s worth noting that in some parts of the country, like LA and New York, tickets are a lot more than $12, so it’ll pay for itself even faster), it makes no economic sense at all to not go and sign up for MoviePass.