There are tough years – and then there are MoviePass tough years. The firm announced yesterday (March 6) its intention to “implement a new business model” and to focus on a “new business strategy going forward.”
To many, that sounded ever so slightly familiar, since over the last 12 months so, the long-struggling subscription service has announced a new strategy and business model a couple of times.
Back in the good old days, MoviePass was best known for offering consumers a $9 monthly subscription for an “all-they-could-view” selection of movies in the theater for that month. MoviePass received no special discount offer from the theaters, and they paid the retail price of the tickets. As the average movie ticket in the U.S. costs around $9 – well, it doesn’t take a data scientist to suggest that the economic model for the business was more than a bit fragile.
The MoviePass founders hoped their business model would withstand the test of breakage. The average American doesn’t go to the movies more than a few times a year, so, in theory, things would work out. Except those who grabbed subscriptions were people who liked to go to the movies, particularly the young urban dwellers who go way more frequently than once a month – and at theaters that charge more than $9 per ticket.
So, Movie Pass began burning through money fast, and attempted quite a few live course corrections over the course of the summer and the fall of 2018. Some of the more noteworthy changes included doing away with the unlimited nature of the offer, only to bring it back again, but only for certain films and showtimes.
Nothing really quite did the trick; the firm has been on life support, even declared dead, or nearly so, several times. Competitors have emerged with rival offerings – AMC Theatres’ subscription service and rival startup Sinemia have both been actively recruiting from MoviePass’ unhappy and confused customer base.
The latest reset, however, seems to be larger and more fundamental than previous versions. The new strategic direction, as described in a press release sent out yesterday (March 6), centers on three main pillars: the MoviePass service, the MoviePass production wing and Moviefone, which it purchased from Verizon Media.
“Our new business model no longer depends on achieving revenues from studios or exhibitors to succeed,” the company wrote, “but instead will prioritize the economic relationship among our MoviePass subscription service, MoviePass Films production business and Moviefone multimedia information and advertising service.”
The brand believes it can reap the benefits of attacking three separate but related areas. By producing live content, a la Netflix, the firm aims to enhance the MoviePass subscription service, hoping that the subscription service will boost revenue for MoviePass Films productions at the box office.
“We believe this refocusing of our business model will enable us to demonstrate greater long-term value to our subscribers, partners and shareholders,” noted Mitch Lowe, CEO of MoviePass, in an emailed comment to PYMNTS. “If we’ve proved nothing else over the last year, it’s that there is great demand for a sustainable movie theater subscription service. We aim to remain the No. 1 recognized brand in this arena, while at the same time producing our own high-quality content for the big screen and streaming. We believe this combination will maximize subscriber participation in our unique entertainment ecosystem.”
It’s a strategy that could work – if MoviePass manages to produce the kind of content that gets that virtuous cycle up and running, the way Netflix did. That’s easier said than done, and there are suddenly a lot of players entering into the content creation business. Gotti, one of MoviePass’ original films, reportedly made $4.3 million but cost $10 million to make. Also, The Wall Street Journal noted that though the firm once touted a subscriber count of over 3.2 million, it failed to disclose active subscribers with its most recent reported earnings, which raises its own red flags.
Still, journalists have been burying MoviePass all year, and the firm has stubbornly stayed alive. And it is worth noting that once upon a time, Netflix had some problems picking a business model, particularly in the early days of its transition to a streaming service, and was written off a couple of times. Then House of Cards hit the airwaves, and the world marveled at the power of creating a television show out of user data algorithms.
Or at least they would have marveled, had they not been busy binge-watching House of Cards.
That’s a long way of noting that MoviePass may continue to provide more compelling entertainment than any movie at any theater – and there may still be plenty of twists and turns in this story.
It might make for a pretty good movie, actually … perhaps they should talk to their production teams.