A few weeks ago, I was interviewed by a reporter from Vice for an article on the winners and losers of the MoviePass business model. We discussed the viability of the future of the company and the reasons why it was or wasn’t a truly disruptive innovation. At the time of the interview, MoviePass was about to run out of money. For a while, many touted MoviePass as the next big startup disrupter, just like Netflix and Amazon. The company was going to change the entertainment world by creating an all-you-can-watch monthly subscription to any movie in any U. Not a bad deal, especially given some theaters charge more than that monthly fee for a moviepasss ticket. No wonder two million people eventually subscribed to the wit. If you look at the evolution of MoviePass’s business model, it’s clear the company has been struggling to find one. On the one hand, experimenting with how to make money is a natural part of the moviepasss process.
Then you probably wondered: How the hell does MoviePass expect to make money? The answer comes in the form of a buzzy phrase that’s catnip to corporate executives, venture capitalists, and Silicon Valley dreamers: Big Data. For those unfamiliar with MoviePass, the app has been both a boon and a source of confusion and frustration to film fans. Perhaps the biggest question facing the layperson user, however, is whether Moviepass, which clearly doesn’t care about generating revenue off each subscriber, will last long enough for you to take advantage of the ridiculously low cost. The answer seems to be yes In an eye-opening interview with Screen Junkies , MoviePass CEO Mitch Lowe notes that turning a net profit doesn’t matter in the business world in the same way it matters in personal life. He points out that Amazon lost money until very recently, saying, «We’re just losing tens of millions of dollars every month while we build this business, and eventually we get to profitability. If that reminds you of the famous South Park meme , you’re not far off. The key to MoviePass’s plans lies in your phone, where the app’s terms and conditions give the company access to your location.
Users of MoviePass ask about limitations of the subscription service from restrictions on theater locations to whether or not users are allowed to see the same movie twice. There are actually few limitations of service which further poses the question, how does MoviePass make money? Following is a transcript of the video. MoviePass, you pay 10 bucks a month, and you can watch pretty much unlimited movies in theaters. Mitch Lowe: I always find it interesting that, to get that question, because, you know, Netflix has to borrow billions of dollars a year to stay in business; to create the content, that they don’t earn enough money to pay for. If you read the reports about Spotify, they spent two billion dollars more on content than the revenue they generated. And we’re no different. We’re building a big subscriber base of film lovers who, over time, we have dozens of ways to make money. For example, marketing on behalf of studios. The film distribution system is completely broken. It’s so hard to get a film out in the theater that’s not a big blockbuster hit. And there’s hundreds of millions of dollars spent marketing those films.
Four lessons about business model innovation we can learn from MoviePass.
The institutions definitely understand the model. They understand where we’re going. And I think that we’ve gotten there in record time. MoviePass recommended on Twitter that users wait for a resolution or use e-ticketing, which it said had not been affected. When you sign up for MoviePass, they’ll send you a MasterCard in the mail with their branding and your name.
1. Aggregate fragmented markets into a marketplace business model.
After Netflix , the biggest disruption the entertainment industry has witnessed is a theatrical subscription service brought to the users by MoviePass. The company took the US movie market by storm and was able to get more than 3 million subscribers in the last 2 years. To make such partnerships with movie theatres possible, Moviepass partnered with Mastercard. Moviepass was launched in with a motive of earning money just like any other gym with a subscription option. This was a voucher-based model where the members used to print vouchers and redeemed them for movie tickets at participating movie theatres. To tackle this problem of less partners, the company partnered with Hollywood Movie Monkey which already had an established partnership with 36, cinemas including AMC. This made it easy for movie buffs to get their MoviePass vouchers exchanged for tickets. It retired the voucher-based ticketing system and introduced MoviePass cards in partnership with MasterCard which automatically got filled with the exact amount needed to buy the ticket.
Late last summer, MoviePass introduced a seemingly impossible offer : See a movie every single day in theaters, paying only a monthly fee that, in most markets, amounts to less than a single ticket. It worked. Earlier this month, MoviePass hit 1. But amassing customers was never going to be the hard part. MoviePass now has to show that it can actually, you know, make money. A little less than six months in, it looks as though it just might have an answer—although a fresh spat with AMC shows that not everyone will like it. To be absolutely clear: The more subscribers MoviePass signs up, the more money it loses. It pays theaters full price for each ticket, whether a member visits once or 31 times a month. It has to provide for customer service to support those 1. Analyst Brian Kintsligner of Maxim Group recently wrote that the company had «an estimated seven months of cash» to cover losses incurred by heavy-usage members. The question, then, might not be whether MoviePass has a long-term plan for success—it’s if the company can stick around long enough to see it through. Perhaps understandably, Lowe focuses on the opportunities that the MoviePass masses afford him. Besides, for MoviePass, more users means more data, which in turn means more leverage.
After Netflixthe biggest disruption the entertainment industry has witnessed is a theatrical subscription service brought to the users by MoviePass. The company took the US movie market by storm and was able to get more than 3 million subscribers in the last monsy years.
To make such partnerships with movie theatres possible, Moviepass partnered with Mastercard. Moviepass was launched in with a motive of earning money just like any other gym moviepass a subscription option. This was a voucher-based model where the members used to print vouchers and redeemed them for movie tickets at participating movie theatres. To tackle this problem of less partners, the company partnered with Hollywood Movie Monkey which already had an established partnership with 36, cinemas including AMC.
This made it easy for movie buffs to get their MoviePass vouchers exchanged for tickets. It retired the voucher-based ticketing system and introduced MoviePass cards in moviepasz with MasterCard which automatically got filled with the exact amount needed to buy the ticket. This resulted in a substantial increase in the subscribers despite the criticism and difficulties caused by AMC. It was followed by blocking weekend showtimes for certain movies. Movkepass two strategies resulted in a lot of criticism and were soon retired as in some cases, booking on MoviePass resulted to be costlier than buying tickets from the box office.
The breakage model was retired and the new data monetization model was brought into existence. Now the company sustains itself by selling behavioural data of its users to third parties.
Unlike as most of the users and critics think, MoviePass now has a well-defined business plan. The company has plans to make money out of the user data. The startup collects the behavioural data of the movies its users watch and when they watch them, and shares it with partners movie studios and marketing firms to help them in targeted marketing for their films.
Well, the company chose an industry no one chose to collect data. It is transparent about its data monetization strategies, and it provides its users with a service one-third of its actual cost. According to The Atlantic mak, Hollywood has started using more and more of big data to understand what the user wants, when he wants it and how he wants it to be marketed to.
So if MoviePass continues to get more users on board, its business model can actually result to be the biggest disruptor of the entertainment industry and can set a benchmark for all other business models which will be built around this premise.
Nevertheless, the current model of MoviePass has some limitations on the front end. There is still no family or couples plan and everything is targeted to an individual user. In order to sustain, the company must launch such plans as tbeaters are a group experience.
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