Merchant Innovation

MoviePass CEO: Why We Bought Moviefone

“Hello, and welcome to Moviefone!”

Anyone old enough to have gone to the movies by themselves during the 1990s knows that phrase – and the improbably cheery “man” who spoke those words.

That man, of course, was Mr. Moviefone – and a generation of film buffs relied on his expert wisdom to guide them to the nearest movie theater.

But in the era of the internet, Mr. Moviefone became an artifact almost overnight – although he didn’t disappear altogether.

Instead, Moviefone moved online – first as part of AOL and then as part of Verizon’s Oath unit (created out of the merged remains of AOL and Yahoo). It even held onto about six million monthly active users.

Still, it’s never quite regained the cultural cache it had when Mr. Moviefone was everyone’s movie concierge.

But MoviePass – the service that lets consumers see one film in a theater per day for a $10 monthly subscription – has big plans for Moviefone, which it recently acquired in a cash and stock deal that Variety reports was worth $23 million.

“Moviefone is an undervalued and underappreciated asset that we think we can resurrect as an excellent source for people looking for movie and entertainment information,” MoviePass CEO Mitch Lowe told Karen Webster. “That is a great service, and it is also a great funnel to tell people about MoviePass and how it might be a great way to rethink how they are going to the movies in a lot of ways.”

Fun With Moviefone

Consumers no longer need to call up Mr. Moviephone to find out the show times at their nearest theater, as the web has long since filled that need.

But customers – particularly the film lovers who tend to sign up for a MoviePass subscription – often want more information about films than just the times they are starting. The Moviefone site is an excellent platform on which to build what Lowe called “a hub for auxiliary movie services.”

For consumers, that means a one-stop shop for editorial content, designed to offer additional information and data about films, structured for “getting people excited about movies.”

That, of course, is a boon to MoviePass, as it also creates an attractive and sticky hub for just the kind of movie buffs who might want to sign up for a movie subscription service.

Apart from a chance to recruit new customers and better service their current base, Lowe noted, Moviefone also offers a further monetization opportunity for the firm in the form of advertising.

“Brands and studios have been telling us they want to expend some of the big advertising budget with us, and then ask us what our inventory is,” he said. “And right now, the truth is we don’t have any, because MoviePass doesn’t have ads in its current formulation. That will likely change, but this is a way to accelerate that revenue stream.”

Moreover, Lowe said, the Moviefone information destination offers MoviePass a new window into their  audience – both current and potential – to help them better understand the interests of consumers.

“That helps us figure out what people want to see, and what they will like in the future,” he pointed out. “This service has the power to be a lot bigger than it has been.”

And that’s good, according to Lowe – because MoviePass ambitions for changing the film viewing public are also pretty big.

Changing the Whens, Hows and Whats of Going to the Movies

Going to the movies can be a bit of an investment – the average U.S. ticket price is around $9, though in most major metropolitan areas it is generally above $10. And that price, as the below chart indicates, can pretty much be counted on to go up.

MoviePass’ $10 flat fee is an obviously better pricing option for those who intend to see more than one movie in a month, provided they live within range of one of MoviePass’ partner theater groups. Which means, unsurprisingly, that consumers who subscribe go to the movies more often.

And that, Lowe noted, is the experience their customers anecdotally report, as well as what their internal data shows. It also matches up with a study they did a few years ago with AMC theater chains.

As it turns out, if going to 30 movies in a month costs the consumer the same amount as going once a month, people tend go more often.

But once they arrive, their behavior changes. Movie theaters generally make the vast majority of their profits on concessions, and subscription moviegoers spend more at the concessions stand – roughly twice as much, according to the MoviePass AMC data.

And, perhaps most notably, what the customer watches at the theater changes as well.

There are “safe” movies out there for consumers – Star Wars, anyone? – but when it comes to taking a chance on something experimental or an indie movie, customers can be a lot more hesitant, Lowe noted.

But when the customer has already paid and the risk is removed, different behavior emerges.

Different and monetizable, as MoviePass recently learned when doing their first-ever film promotion run with the independent movie Gringo.

“Over the last month, we have been buying about 6 percent of all movie tickets nationwide,” Lowe said. “We promoted Gringo to our subscribers, and during the same time period bought 21 percent of the tickets nationwide for that film. We added 14 percent to that film’s nationwide box office.”

That add-on matters a lot for a filmmaker – particularly one who is in the business of small movies, because the more ticket sales it can claim, the more downstream value it has when it comes time to sell the rights to Netflix.

“People don’t use our service to see another Marvel movie – they will use it to take a chance on a movie like Gringo or Ladybird that they might not have seen.”

And, of course, they might just bring a friend.

Tapping the Social Power of the Movies

Even though we see them in silence sitting in a dark room, movies are a social experience. We go to the movies with friends and avidly look forward to recommending (or panning) films to the friends who haven’t seen them.

And, according to Lowe, MoviePass customers are also enthusiastic film reviewers, recommending movies at five times the rate of others – which is among the reasons they’ve recent made the Moviefone acquisition.

But, he noted, MoviePass is also looking for ways to make the social act of going to the movies easier to center with their app.

Today, a MoviePass user can get their ticket through the app – but if they are going to the movies with a friend who isn’t a subscriber, that friend has to buy her own ticket.

“But 60 percent of the time that our subscribers go to a movie, they are going with a non-subscriber. That is a conversion opportunity for us,” Lowe told Webster.

The goal, he said, is to make it possible for customers to purchase their own tickets through the app, and then add a friend ticket that can be added to their monthly bill – hopefully at a discount from full price.

“We are also looking to launch a couples and family package, [which] it is absolutely the most requested add-on to the service,” says Lowe.

Or, at least, it is for now.

Karen Webster noted that if MoviePass really wants to bring Moviefone back, they might have to consider bringing back Moviefone’s MVP, Mr. Moviefone. Lowe was open to the idea.

“We have not talked about it yet. But honestly, I would love to do that.”

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