How does moviepass make money

The haste with which the company hit the million subscriber milestone — announcing on Dec. It took Netflix, of which MoviePass Chief Executive Mitch Lowe was a founding executive and which, of course, began life as a DVDs-by-mail service, more than three years to hit the 1 million subscriber mark. MoviePass had roughly 20, subscribers before the price cut, but demand for the service since has been much higher omviepass Chief Executive Mitch Moviepss expected. But the bottle will stand on its. But it is still shelling out the full price of tickets to studios and movie theaters. If MoviePass is able to prove makf it can drive incremental box-office revenue to studios and cinemas, Lowe said, the company can strike deals to share in moviepsas revenue from those sales, as well as from concessions. That could then lead to studios paying MoviePass to promote films to its users. Farnsworth and Lowe said they want to partner with restaurants located near cinemas and possibly even with Uber to get users a ride to the theater.

From an outsider’s perspective, MoviePass appears to be some sort of mystical phenomenon. The leak was immediately secured, but customers were concerned about the safety of their personal data. One month later, the company announced it was closing down. On September 13, , MoviePass officially announced it would shut down the following day. MoviePass went from 3 million to , subscribers in April and laid of several employees focused on building relationships with movie theaters, foreshadowing its impending end. With a few exceptions, MoviePass basically pays full price for every single ticket their subscribers purchase. Though they tried to partner with larger retail chains like AMC and Regal, they just couldn’t make it happen. As far as most theaters are concerned, MoviePass is basically your rich friend who seems totally willing to purchase your movie tickets for you. As you might imagine, this in and of itself isn’t a great deal for MoviePass in the long run. On July 26, , the service experienced an outage after MoviePass was unable to afford tickets.

On July 30, , the service went black. Users saw an error message on their screens reading, «Error getting available plans. Please refresh browser. In June , MoviePass subscribers started getting promotional emails from the company advertising official merchandise. Under the «About» section of the site, it is suggested «Since you made this trip to the MoviePass Store, you might as well bring something back with you to the real world. In an effort to make some financial gain, Moviepass announced that they were introducing surge pricing — or what they are calling «high demand pricing» — for popular movies. The company is also introducing a «Bring A Friend» option which allows members to purchase tickets for friends who are not part of the service.

1. Aggregate fragmented markets into a marketplace business model.

The largest theater chain in the US instead described MoviePass as an existential threat. Or maybe it all does, but just not fast enough to catch up to all the money going out the movieoass. On a larger scale, however, this information can also be sold to studios trying to promote movies that might have how does moviepass make money. MoviePass went from 3 million tosubscribers in April and laid of several employees focused on building relationships with movie theaters, foreshadowing its impending end. 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. In fact, MoviePass appears to have started that offensive. The company is also introducing a «Bring A Friend» option which allows members to purchase tickets for friends who are not part movieoass the service. But amassing customers was never going to be the hard. He envisions certain films being exclusive to MoviePass members on their open weekends, and bringing the bingeing experience to the big screen. It pays theaters full price for each ticket, whether a member visits once or 31 times a month.

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 JunkiesMoviePass 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 memeyou’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. We watch where you go. What does MoviePass plan to do with this data, which is apparently the New Oil?

Build features like a «night at the movies,» which would direct people to restaurants and other activities nearby; which is to say, super-targeted advertising. If MoviePass knows when and where you’re going to be, it can sell that information to restaurants or other businesses looking to juice sales. On a larger scale, however, this information can also be sold to studios trying to promote movies that might have underperformed.

Think of Netflix’s recommendationswhich are based on your viewing history. If studios knew which kinds of movies you saw in theaters, where you saw them, what times you preferred, they could partner ,oviepass MoviePass to advertise only to those people most likely to buy tickets to their movies.

It’s not hard to see why that would be far more valuable than, say, spending money on a national TV slot to air a trailer that only a handful of viewers might see, and only movie;ass small portion of whom find interesting enough to omney a ticket to see it in theaters. It’s easy to mock MoviePass for its apparently naive pricing scheme, but Lowe is a veteran of Netflix and Redbox, and points out that people said the same thing about Netflix when it launched as a DVD mailing company.

The fact that Netflix charged a flat rate and eliminated jake fees encouraged subscribers to experiment more and rent movies they might overlook at the local Blockbuster which built its profitability model on late fees. You can envision the same thing happening with MoviePass: Why not see the foreign film advertised on your app? You already went to one movie this month, so you’re playing with house money!

This, more than the geolocation data that would help create a «night at the movies» program, is where MoviePass can dooes make the most money. Lowe told Screen Junkies that data mining is a big part of MoviePass’s business because it will «help the studios know who wants to watch a particular film… the worst part about making movies is that it’s very inefficient to find that customer who’s gonna love it, and get them to the theater.

Add to that the fact that most people don’t actually go mae the movies more than once a month, moviepqss MoviePass’s model doesn’t seem as crazy, especially for theaters themselves; when the result is more foot traffic to the theaters, it makes Lowe’s assertion that the most vocal theater chain opponent, AMC, will «come around» sound like a smart bet.

While all of this may combine to make MoviePass’s pricing more comprehensible from a business perspective, Silicon Valley disruption math is at play when you look at the bigger picture. There’s an implicit, additional cost to the 10 bucks you shell out each month: access to your location and viewing habits.

It’s no surprise, in that light, that Lowe occasionally compares MoviePass to insurance; the high-volume users lose money for the company, but everyone else helps them make it. It’s creepy, sure, but obtaining at least some of noviepass personal information is what virtually every other app requires in its terms and conditions.

If you have a smartphone, you can be tracked, and most consumers are aware — whether they actively think about it or not — that they’re trading less privacy for the convenience of a do-everything device on them at all times. MoviePass may know when and where you’re going to see Black Pantherwhat you eat afterward, and when you go home, but betting on a subscriber revolt movjepass likely make you look foolish, since data collection hasn’t exactly slowed down the likes of Google or Facebook.

Few will acknowledge it, but the value judgment we’ve collectively made is that invasion of privacy is no longer a detriment, but an attractive feature of contemporary life.

Anthony Schneck is an entertainment editor at Thrillist. Follow him on Twitter AnthonySchneck. Share on Facebook Tweet this article Pin it Email. Want More? Like Us.

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.

Four lessons about business model innovation we can learn from MoviePass.

But amassing customers was never going to be the hard. 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 Amke 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 mpney be whether MoviePass has a long-term plan for makke if the company can stick around long enough to see it. Perhaps understandably, Lowe focuses on the opportunities that the MoviePass masses afford. Besides, for MoviePass, more users means more data, which in turn means more leverage. But the challenge for MoviePass isn’t merely to demonstrate its value to studios. The company needs to show how does moviepass make money it can directly influence subscriber behavior through marketing maneuvers, whether in-app or through email and social media. It’s already scored some demonstrable wins. Which has already led to some actual revenue.