Hacker News Reader

Comment by seunosewa | Hacker News Reader

The $10 pricing certainly seems extremely unsustainable. I don't get it.

I'm guessing they are also going after the "fitness club" like profit idea. That is, get a subscription, use it frantically in the beginning. Then slowly you go less and less, but still keep the subscription because you never know when you might want to be healthy again. Or cancelling it is too much of a hassle for just $10/month.

It's easy. The true play is an augmented reality game... wait a minute... hear me out.

So, you sign up for 10USD a month, for unlimited cinema visits. Any more than one visit means that Moviepass loses money.

So while they are selling you this service... they also need to do everything in their power to ensure you don't use it. Buried in the terms and conditions and innocuous sounding statement which gives them the unrestricted right to warp your understanding of reality.

For example, you're walking down the street on your way to see Guardians of the Galaxy 15: 2Guardians2Galaxy when you receive a text message indicating incoming North Korean ICBMs... this is it... you quickly check some news sites (which they access to through an information sharing agreement, or by sub-contracting to a money starved NSA) and they all say the same thing: to have any hope of survival you need to get out of the city now... and find shelter.

Obviously by the time you figure it was all a fake you've missed your showing and need to wait another 24 hours, when they'll have another more extreme and equally convincing scenario to distract you.

I can even envisage that they'll start sub-contracting this out mech-turk style. "$1 to convince 1000 people not to go to the cinema today using information warfare" that kind of thing.

In case this isn't the true play, any VCs out their let me know, I'm seeking 10MUSD for 15%. My MVP is this post.

The key point is sort of buried in the article. They hope to parlay this into revenue-sharing deals. I could actually see something like this making sense--provided that the card issuer gets at least a cut of refreshments. I don't know the exact numbers but my understanding is that movie tickets are basically breakeven for the theater. They make most of their money on refreshments.

(Of course, people also buy subscriptions and then don't get around to using them much but I suspect the revenue sharing is key. I'd also wonder though if the theater chains aren't really in a better position to go this route.)

AMC's 10k is pretty informative: http://investor.amctheatres.com/Doc/Index?did=39811732

Page 17 or so is good: "We predominantly license “first-run” films from distributors owned by major film production companies and from independent distributors on a film-by-film and theatre-by-theatre basis. Film exhibition costs are accrued based on the applicable admissions revenues and estimates of the final settlement pursuant to our film licenses. Licenses that we enter into typically state that rental fees are based on aggregate terms established prior to the opening of the picture."

and then: "Food and beverage sales are our second largest source of revenue after box office admissions."

The ratio, seen later in the document, is basically 65% admissions, 33% food/beverage.

(This surprised me, I had thought it was around 25% admissions.)

I don't see theaters being willing to give up any of that in exchange for a vague promise of extra customers.

On the other hand, I don't see why theaters feel antagonistic towards a company that promises to take investment money and buy full-price tickets with it. That's a complete win for the theaters.

That's revenue though. If you look at the income statement, films have about a 50% profit margin while refreshments have about an 85% profit margin. If you allocate all other expenses evenly, that makes it about 50-50 between film and refreshments. That may or may not be appropriate cost accounting (there's another big chunk of operating expense that isn't under G&A or rent) and I just took a quick glance. More of their profit comes from film than I thought--or at least used to be the case--but refreshments still makes a good 50%.

If they give a taste of what it is like (for a month or two) and I like it (and I've decent number of diverse options) then I would rather pay $20 per month to be able to watch films in theatres than $10 or so to watch films inside a browser.

> Moviepass is going to sink the cost in the hope that eventually, somehow, they will be able to make up the deficit by taking a profit share from other cinema-related spending.

I saw that, but I don't understand why the theatres would volunteer to share profits with them, and I can't fathom how any amount so shared would be sufficient to cover the enormous losses that Moviepass will incur at the $10/month price.

Ah, my apologies.

I agree with you - I can't see any kind of future where the theatres go "Oh, you're bringing more people in and we're making more money from consumables. Sure, please, have some of our profits!"

Or perhaps one of those "profit sharing" deals where the costs mysteriously increase to the point where there aren't any profits to share... (AKA "Hollywood Accounting").

I presume that the idea is for specific cinema chains to strike such deals that would make the price/experience with them better than with the competitors.

Reply on news.ycombinator.com