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Comment by BEEdwards | Hacker News Reader

I'm still not sure how this company makes money or how they make the theaters money.

So they sell tickets for way under what they cost, they take their cut and pass it on to the theater and studio, and then claim money somehow that simply putting butts in seats is their value add.

It just doesn't make sense.

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> they sell tickets for way under what they cost, they take their cut and pass it on to the theater

That's not how it works. You select a specific movie in a specific theater in their app, it loads the exact amount on to the moviepass mastercard, and then you purchase the ticket with the mastercard. The theater gets the full ticket price.

They claim they're going to be harvesting the data from their customers and sell that to make a profit. I personally think it's a red herring, if I were in their shoes I'd aggressively undercut the price, secure a dominant market position, and then place pressure on chains to play ball, or raise the price of the subscription in small increments ala Netflix. Honestly, it'll probably be a combination of both.

This all can sound a bit nefarious but at the same time I don't see the movie theater industry surviving without some sort of subscription model such as this. AMC, Regal, and Cinemark are squandering their market dominance by not implementing some sort of similar plan for their own specific chain (cinemark's $8.99/mo plan isn't even comprable).

"...I'd aggressively undercut the price"

Aren't they? For $10/mo, I can go see one movie a day, no additional cost to me. And it's not the theater chains that need convincing- it's the studios. The theaters just aren't permitted to take any sizable percentage of the ticket price.

If anything, "butts in seats" shows demand. If demand drives prices, then the studios think the prices can go up because demand is up. If MoviePass's plan is to profit from data, I personally don't have faith in their future.

I wrote that response quickly, but that's what I was saying:

> If I were in their shoes, I'd [do what they're doing right now and] agressively undercut the price...

I also agree, if they're telling the truth that their plan is to make their earnings off the data, yes I don't have faith either. I'm saying, if they managed to pull a miracle and get a majority of the movie-going public on to movie pass, they could be in a position to then negotiate with the theaters (and other forces down the line) to strong-arm their way into profitability. Even if it's just "oh hey pay us and we'll feature your theatre to our users in the area".

This is all conjecture, arm-chair theory.

I think you’re underestimating the leverage MoviePass could have over cinemas (and thus the studios who dictate terms to cinemas). As an extreme example, imagine MoviePass tells AMC that if they don’t cut some rev share deal, MoviePass will turn off AMC support and drive their price-sensitive customers to competing cinemas.

Consumer psychology.

Instead of $10 a month think of it as $120 a year. If a theater charges $12 a ticket (just to pull a round yet realistic number that means less than a movie a month at $10/month) then an annualized MoviePass subscription breaks even at 10 tickets per year.

As somebody who likes to go to the movies, how many times did you go to a theater this year, really? Six, seven times maybe? Maybe once in the late winter or spring, two or three times in the summer, once in the fall, whatever Star Wars movie comes out in the winter, maybe another time with your family during the holidays?

The truth is that people don't really change their media consumption habits, in aggregate, when they're presented with unlimited subscriptions. People just like to feel like they could get anything they want and that they don't have to look at the price tag anymore, but they don't actually consume more in aggregate. Sure, you get some binge subscribers who exploit the system, but they're not enough to bring down the entire enterprise.

If the industry could transition from $10/album to $10/month unlimited music subscriptions, from $10 eBooks to $10/month Kindle Unlimited eBook subscriptions, from $10 DVDs (actually, usually more than that) to $10/month Netflix subscriptions, then why can't the industry support a transition from $10 movie tickets to $10/month theater subscriptions?

For me, I certainly have changed my habits, because if movies are free, I am willing to see a lot more of them. Most movies aren't worth seeing in theatres for the previous price point with the exceptions you more or less listed. The lower one makes it worth it for me. I've seen 13 movies in the past 4 months. I would have seen maybe 5 or less otherwise. At my ticket price (which is actually around $12 a ticket), even without changing my habits, I would have still saved money at 4. I know too many college students like myself thriving off this.

I mean, like I said, it's not that exploitation won't occur, it's that the exploitation will be too sporadic to make a meaningful difference in overall cash flow.

That MoviePass isn't profitable right now isn't so much because exploitation is more widespread than the MoviePass founders expected, and more because it's still new enough that most subscribers are going through their initial binges before they'll settle into their normative consumption habits.

The average American adult goes to some five movies per year [0]. Increasing that to your new rate of consumption of roughly once per week - more than fifty movies per year - would be an order of magnitude. Even if attendance increased only to the break-even point, it would basically double attendance.

So either MoviePass has no or little affect on aggregate movie attendance, in which case they make money hand-over-fist for extracting twice the money from aggregate subscribers for the same amount of aggregate product, or MoviePass has a strong positive affect on attendance, in which case there are other avenues for profits, as other people have mentioned - data mining, concessions, etc.

[0] https://www.marketingcharts.com/industries/media-and-enterta...

I think it's the second, and I doubt the alternative ways to profit is my thing. I think they are banking on one of those paying off.

I doubt many people get movie pass and lose money on it frankly. Somewhere around 1-5%. If you are going to only 5 movies a year, and price isn't the issue, you have no reason to buy MoviePass. The majority of the customers are likely those who they will lose money on.

I think on average they are losing quite a lot per user, and the data can't be all that useful.

If it takes a year to get useful data, and they lose an average of $100 a year per person (a bit under two movies a month per person on average), is each person's data worth that?

As far as concessions, big theatres hate MoviePass right now and I don't see them getting a cut of that confessions profits anytime soon. I'm riding the wave of free movies but doubt they last. I think it's far more likely it pressures the industry to change its model but they aren't going to be getting rich off of it without a strong pivot from the current business model.

I completely agree. I and a few of my friends have Moviepass, and it has become easier to go see something only a few in the group really want to see, or kind of want to see, but not willing to pay $12 for it. Tickets are so expensive I only need to go 1x/mo to break even.

I'm also a lot more willing to spend $8 for a tub of popcorn when it "cost me $0" to see the movie (I know). Before Moviepass I was going to the movies about 2x/mo, and now it is up to maybe 3x, depending on whats out there and how busy I am.

It's amazing to me that time is really the only limiting factor, I imagine for many others. I've gone to 5 movies in the past 20 days because of being off for the holidays.

>Sure, you get some binge subscribers who exploit the system, but they're not enough to bring down the entire enterprise.

Especially for movie theaters, where the marginal cost of additional filmgoers isn't as high.

If I watch a second Netflix movie, Netflix has to spend 2x as much on bandwidth to serve it to me.

If I theater hop, the theater doesn't really have to spend anything more. The only cost to the theater is the opportunity cost of me not paying to see a movie I otherwise would have paid to see.

In other words, as long as the MoviePass subscription cost is higher than the opportunity cost of losing the average moviegoer's ticket revenue, then everyone wins. In fact, the theater probably really, REALLY wins because the more often I'm at the theater, the more often I have a chance to buy concessions.

  Netflix has to spend 2x as much on bandwidth

Obviously, things can change with Network Neutrality repeal, but: exactly whom are they paying for that incremental uptick in bandwidth usage (i.e. on the margin)?

Your analysis doesn't make sense to me, for a couple reasons:

1. You claim that unlimited subscriptions doesn't change behavior in aggregate, but do you have any evidence for this? Just look at Netflix - it has changed tons of people's behavior to watch more TV on Netflix than other entertainmentt options.

2. Your other examples of music subscriptions, eBooks, Netflix etc. aren't relevant because the economics are totally different. MoviePass is still paying full price for each movie. Spotify certainly isn't paying some sort of "full price" for each song you listen to. It seems like MoviePass would be most attractive to those who are most likely to take advantage of being able to watch tons of movies.

I agree with other commenters, I think MoviePass is trying to get mind share and heft so it can then be in a good negotiating position with theaters. That is, if you get a couple of theater chains to come on and agree to better economics with the subscription model, then consumers may start only going to MoviePass-supported theaters, putting MoviePass in a much stronger negotiating position.

I had assumed the theater wasn't a part of the exchange and that MoviePass is merely making money on the percentage of people that don't go to 1/2 movies in a month. If too many people do, they can up the price per month. With this approach, movie theaters don't know what's happening, can't prevent it (it's a normal ticket purchase), and, most importantly, don't care because they're still filling seats and getting concession monies.

Why do AMC care so much then?

Perhaps they're worried that people will switch to movie pass, and then Movie pass will fail in a few years, and those subscribers will then stop going to the cinema entirely?

Seems to be that they are concerned that:

1. If MoviePass doesn't work, AMC's customer service people will get yelled at for something outside of their control. This damages AMC's brand and wastes the time of their CS. 2. People will get used to MoviePass and then it will go bankrupt. This will reduce their likelihood to attend movies because they are now no longer used to paying the high prices set by studios.

The only thing I can think is that they assume they will make the money back in concessions. That plus the "gym membership" situation where you keep it because you want to know you have it but often go long periods of time without using it.

Putting butts in seats is a value add. It sells overpriced snacks, which has been the actual profit center for theaters for a couple decades now.

This is literally just a 'money in a box' subscription.

You're paying $10 a month for $20+ a month. Of course subscriptions are going through the roof. It's free money.

I think if you wanted to make a blue apron level unicorn, just selling a subscription for a $20 bill in an envelope every month for $10/month would give you a better user growth story with lower churn rates and customer acquisition costs than this.

You just gotta make sure you get the $20 from someone you detest and then you have $10 profit.

I've been thinking of getting this. I typically go to the movies when they're otherwise empty or at least not very crowded, weekday afternoons or early shows on the weekend. For the theater this would otherwise be an empty, wasted seat. Something is bound to be better than nothing.

Outside of Friday/Saturday night, shows are pretty unlikely to be sold out.

Plus, if you're at the theater, you'll buy popcorn, candy, and drinks, which is where the actual theater makes most of their money.

I've always heard that theaters make the majority of their profit on everything besides the ticket since most of that goes back to the distributors/studios. So I would imagine more butts in seats == more overpriced popcorn sold and potentially more profit.

Butts in seats is a huge value add if those butts are buying concessions.

What the hell buys concessions in 2017? I don't know a single person throughout my entire life who doesn't just bringing something in from outside.

You don't have to personally know someone who does it to see people standing in lines at the concession when you walk in. I don't know how old you are, but at a certain point sneaking things into the theater is something you grow out of.

> but at a certain point sneaking things into the theater is something you grow out of

Why do you need to sneak anything in though? Do cinemas care about people taking in their own food and drinks? Is it in their terms and conditions of sale that you cannot do that? If it is then it isn't enforced.

I don't think I even see let alone talk to any members of staff when I go to the cinema these days - it's all automated ticket machines and then you just go into the theatre for your film. There's nobody to enforce it even if they were going to.

People talk online like they're master criminals for sneaking in a packet of sweets but really I don't think anyone even remotely cares.

At the Cinermarks near me (there are two), they always have one or two people tearing tickets as people walk in. These people will make you throw away food or candy, etc. if you try to bring them into the theater.

I've had conversations with them about coffee as they don't sell it there but they have been adamant about preventing me from bringing it in.

Wow I believe you, but that's insane and nothing like I've ever seen or heard myself. Maybe it varies by country.

It goes even further than that - some theaters will bag check. If you have a purse / bag, they make you open it and they'll shine a flashlight in, etc. No pat-downs, thankfully lol.

Now I feel like chrisseaton; I believe you, but that is insane! I don't know how I'd feel if they were checking my bag _for candy_... That might push me to stop seeing movies in theaters, honestly.

I've never seen any type of pocket checks thankfully, just bag checks. And I've never seen the bag handed over, just opened and quickly shined with a flashlight

Are they looking for candy or weapons?

Candy, to my knowledge, though I can't imagine they'd ignore a gun haha.

Most theaters I frequent typically have someone taking tickets, but they don't seem to usually care if you have outside food. I remember when I was younger we very brazenly brought in fast food to a local AMC, not trying to hide it, and nobody said a thing. But then that might depend on the employees. Seasonal hires seem like bigger sticklers for the rules in general, as evidenced by them not giving me rewards points while using my moviepass card, as opposed to someone in September literally charging me full price on Tuesday (instead of regular half price for people on the rewards program) so I got more points since moviepass covered the cost, so considering all that the enforcement may depend on time of year.

Interesting. My wife and I both had MoviePass a few years ago, for about 18 months (haven't signed up again yet). We used it all the time, and one of the best perks were the AMC Stubs points; not only were the tickets free, we got a free drink every other movie we went to.

Most of the time the employees had no idea what the cards were, confused as to why I needed to run 2 tickets as individual transactions on separate cards. Maybe this was before it really became an issue for them? Are the policies about not giving rewards official?

I have no idea if they're "official" or something recommended to owners. I think I'll try next month once the holiday season has wound down. Otherwise I'll probably just take my business to other theaters.

I believe most cinemas do have rules against outside food, yes. You're right that most likely will not check, or even care if they see it, but it's possible (as cmiles74's comment shows) that there could be bag checks at some theaters.

Do you really want to risk the embarrassment of being asked to throw your sneaked in candy away? There's sort of a societal status-pressure to stop doing this sort of small rule-breaking once you reach a certain age.

> Do you really want to risk the embarrassment of being asked to throw your sneaked in candy away? There's sort of a societal status-pressure to stop doing this sort of small rule-breaking once you reach a certain age.

Well I personally just buy a cup of tea and don't eat during movies anyway, but I wasn't talking about myself, rather people in general.

In New York they will generally ask you to throw away stuff and may even ask to check your bags.

I'm old enough that embarrassment is now something I dish out, rather than receive.

Ask me to throw away my outside food or beverage, and I will ask you to either leave me alone and give me what I paid for, or refund my ticket price in cash, so that I can walk myself to a theater willing to do that without angling for additional passes at my wallet. It is not my responsibility to support any captive-audience business model, nor do I have any desire to put up with non-negotiable, one-sided adhesion contracts.

The societal pressure should be for theaters to stop doing this sort of small, self-serving rule-making.

The business is selling tickets to shows. That can't be the loss-leader for some other profitable business that goes on once people walk in the door. If I buy a ticket, I expect the theater to leave me in peace to enjoy the show. I don't want it fleecing me coming and going, like a bunch of carnival operators.

The only rules I implicitly agree to are those that ensure that no customer will detract from the other customers' enjoyment. Silence your phones. Silence yourselves. Keep your shoes on. If you must make out with your companion, do it quietly and non-obviously. Deposit trash in the designated receptacles. These are just ordinary rules for not being an ass in public.

You're unilaterally trying to self-righteously tell another entity what their business model is. If I saw that scene I'd definitely be embarrassed on your behalf, not the theater's. That said, it's a great attitude to not be worried what other people think.

Perhaps I should have been more specific. That's the business model that I'm willing to support with my consumer dollars. If the business actually has a different model, and is deceptively trying to pretend it is a movie theater, it deserves to be called out on that.

I go to a movie theater to see movies. I don't go to an concession stand that happens to also show movies to buy candy, liquid candy, and popcorn at grossly overinflated prices. I can get all of those things at better price, selection, and quality from businesses that don't have theaters attached. Those businesses have no problems covering their overhead and operating costs without showing the movies. And I can't help noticing that they always have plenty of employees manning the popcorn machines, but whenever I have to find someone to fix the sound or picture on the movie, there are tumbleweeds blowing through the corridors.

It's the same reason I don't go into the secure area of an airport to buy sandwiches and coffee. I go to an airport to board a plane and go somewhere else. If I consider buying sandwiches on the way, they had better be the same price and quality as those found in a mall food court, where people are free to come and go, or those businesses are not getting my money. They never are, so I bring food through security if I can't just wait to eat until reaching my destination.

It is one thing to charge more because you are offering a convenience. It is another thing entirely to charge more because you are compensating for an artificially imposed inconvenience. The former is acceptable, and the latter is deplorable.

Life is short risk the embarrassment.

Not me, fwiw. Though this is mainly because carb-loaded sweets aren't exactly health food. I bring in my own nuts/etc to eat.

Honestly, even if they had what I wanted, I'd still be dismayed to pay their price for it. It's such an extreme price hike that it feels like I'm being taken advantage of. Especially on top of the $20-30 that I'm paying simply to see a movie with a bunch of people talking and being annoying. The whole thing makes me quite price sensitive, I guess.

Another thing is that I don't often care about eating tons of things. A small bag of nuts is plenty for me. I don't need the massive American sized popcorn. If they offered human sized portions of things I'd be more tempted - but then again, it's all sweets anyway.

From averaging the people who buy popcorn and a drink and those who buy nothing and those in between, I'd say the average person buys an icee, which is not a bad markup

You're like HN comment I saw last weekend that didn't believe people saw iPhones as status symbols anymore because he didn't see them that way.

But while we're sharing anecdotes, I've never heard of someone sneaking in a large-gulp Coke and a bucket of popcorn, for one. -- The two things people seem to unanimously be holding in their arms as they enter the movie.

I once saw a person smuggle in a small bag of microwave popcorn in his hat.

Except he had overcooked it and it smelled terrible.

My family always "smuggled in" popcorn and snacks. Especially the candy. We'd have bought it at the theatre for a small markup, but the prices were just insane.

Now, I simply don't buy anything at the concession stand at all. Years of eating poorly have taken their toll and I'm paying the price.

The concession "stands" in theaters in my area (Boston) all sell hot food and alcohol[0,1] these days, because the traditional popcorn, 1/2 gallon of soda and raisinettes weren't selling to most people anymore. I think people are much less likely to sneak in a burger, truffle fries and 3 martinis.

0: https://www.amctheatres.com/food-and-drink/dine-in/full-serv... 1: https://www.showcasecinemas.com/dining

A lot of the theaters around DC now sell booze. What took them so long?

IMHO, it looks like a data play.

I do think that they will have compelling data to sell. They will have a lot of demographic information that the theaters don't have access to (age, distance traveled to theater, some income information, etc.) as well as what movie and what time.

I'm not sure how much data the theaters can gather from credit card ticket purchases, I would expect they glean nearly no data at all from cash purchases. I suspect they are trying to fill in these blanks with the goofy phone apps they are aggressively pushing.

In my opinion, MoviePass can likely sell a lot of this data back to to the companies that produce the films as well as the theater chains themselves.

If I owned a candy company I'd invest in this company big time!

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