🎟 MoviePass: Doomed to Fail?
Sometimes just a good idea is not enough to build a successful company. MoviePass is the prime example of this. Here's why it failed despite its revolutionary idea.
What if we told you that you could watch unlimited movies in the theatre for the price of one ticket?Â
For all the theatre buffs this would be a dream come true.
But that's all it would be, right? A dream? Because how could something like this even be possible?
Well, one company dared to make it possible: MoviePass.
Wondering how it managed to make money?
It didn't. It dared to dream but crash landed. But now it is back again. So, let's take you through the theatrical journey of MoviePass.
The First Act
The company launched in 2012 with a revolutionary idea: to make movies more affordable for Americans.Â
You see, movie prices at the time were pretty high and for the cost of one ticket (around $8-$10) Americans could get a monthly subscription of Netflix or any other streaming service and get access to unlimited content.
So, MoviePass decided to launch a subscription service that would allow people to watch more movies at a lesser cost, bringing more people back to the theatre.
Initially, its subscription service was pretty reasonably priced, around $24.99-$39.99. And for this price, you would get one movie ticket per day. So, almost 30 movies at the cost of 4 to 5 movies.
Customers were overjoyed with this but MoviePass couldn't make profits. You see, the company had initially thought people would treat this subscription like a gym subscription. Most people pay for the full year but hardly any use it.Â
Here's where MoviePass made a blunder. It didn't understand customer behaviour. And MoviePass was close to bankruptcy as it was losing money on each subscriber.
Twist in the Tale
But a miracle happened in December 2017. It was acquired by data analytics firm Helios and Matheson. They had the brilliant idea that they could leverage MoviePass’ data to better understand the theatre industry.Â
For this, they needed to acquire a large consumer base. So, they further reduced subscription prices. Yeah, you read that right. They reduced subscription prices to around $9.95 a month, which was the price of one movie ticket.
Customers were overjoyed but industry experts said the company was doomed to fail. And one of the world's biggest theatre chains agreed: AMC.
AMC barred the use of MoviePass from its theatres saying its model was setting up customers for disappointment.Â
Why did AMC care? MoviePass was paying it the full price for tickets, so its unsustainable business model shouldn't have bothered AMC.Â
Because AMC was farsighted. It saw that if MoviePass amassed a huge following, it would leverage it to get theatres to reduce their prices.Â
This and the fact that it was already bleeding an insane amount of money ($146.7 million in Q3 2018 alone), led the company to go bankrupt again. It shut down for good in 2019.
So, you see, a great idea that would have benefited customers immensely didn't work out just because the company didn't understand the economics of the business and consumer behaviour.Â
Like Amazon, it wanted to play the long game. Acquire a huge customer base first and then leverage it whichever way possible. But not every company is Amazon.
And one of the biggest mistakes that MoviePass made was antagonising theatres. Instead, if it had partnered with them, it would be a win-win for both parties. Instead of just offering consumers an unlimited amount of movies, it could have worked with theatres to give deals that worked out for both of them, like free refills for popcorn or drinks. It could have even leveraged its data to give theatres better insights on how to improve the theatre-going experience. And in turn, it could have gotten a commission from them.Â
The possibilities were endless.
But all hope is not lost. One of MoviePass' co-founder Stacy Spikes has once again bought the company and announced that it will be relaunching in the summer. They have got a second chance.
And times have changed. Movie theatres this time need it as much as it needs them. In fact, it has already partnered with two theatres.
This time MoviePass won't offer dirt cheap movie tickets, it has already announced that there will be a tier-based subscription model where customers will buy credits and redeem them to watch movies. It has also introduced another way to earn credits: by watching ads.
But you can't just let these ads play. MoviePass will track your eyeballs to make sure you're watching these ads.Â
That's not all, the company will be built on a Web3 platform to ensure that too much traffic does not overwhelm it. And it also wants to enter the metaverse.
Will MoviePass finally be successful? Or will history repeat itself?
Only time will tell…
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