How Does MoviePass Make Money? | Hacker News Reader

How Does MoviePass Make Money?

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108 pointsdsr1276 comments

> Helios and Matheson, an analytics company which has a majority stake in MoviePass

This here is the juice: Big data. The more customers they have, the better - they have validated full names, birthdates, addresses and CC numbers (and most likely also ethnicity) linked with the data when they visited what movie and even if the customers repeatedly visited a movie.

MoviePass has, effectively, four distinct customers:

a) the moviegoers themselves, where MoviePass makes a profit on everyone watching less than 1 movie a month

b) the vast amount of adtech/big data/consumer analytics companies for which this data is a goldmine

c) the movie studios which can (as shown in the article) use MoviePass to promote movies

d) the cinemas which profit off the customers wanting to eat and drink

They have, of course, monetized a) and begun to discover how to monetize c) - it will be interesting if they find a way to monetize the data.

Is that data that valuable though? Its not that unique, off the top of my head there are several companies that have similar datasets, Every movie theatre chain, every online movie booking service, every movie review site

Yes, because:

- the theatre chains only have mostly generic datasets (the audience for movie X is mostly young white males) while MoviePass can do far more detailed analysis (and, in theory, could pass detailed questionnaires after you watched a movie, thus gathering more personalized data)

- online movie booking services (at least in my social bubble) are only used for movies where people think they don't have a chance to get a ticket without an early reservation

- movie review sites only have tiny bits of data about the readers, and the reviewer dataset is skewed - it only provides data about the people caring enough to do a review.

I agree with this mostly. However, the data coming from MoviePass may be flawed. I'm much more likely to see a movie I would never normally pay to see with a MoviePass subscription.

> I'm much more likely to see a movie I would never normally pay to see with a MoviePass subscription.

That is the exact thing that makes the data actually interesting: it removes the risk factor, aka "do I want to see a movie for $12/person and risk that it's trash?", from the viewer's decision process.

There's a lot more interesting data to mine there.

I'm a lot more willing to walk out of a movie I didn't pay for. There's not really a way to capture this data right now, but the MoviePass system requires you to have an app on your phone, and check in shortly before the movie, at the theater.

If I was them I'd be looking at putting audio fingerprinting on the phone to determine whether people leave before the movie ends.

the app requires a surprising amount of permissions also

It's not about the data, at least not yet.

The goal is simply to burn cash to get big enough that they can threaten AMC and Regal to do a rev share.

That's it for now. If this works, then the data might become valuable. But for now it's just a race to scale up before the cash runs out.

Chains have data only for the times people visited their own chains (and might not have much info for counter sales), online booking services have a similar problem, movie review sites are much more limited in that not everyone writes a review for any movie they watch, leave alone all the movies they watch.

> vast amount of adtech/big data/consumer analytics companies for which this data is a goldmine

Don't credit card companies already have this data?

Credit card companies and the banks behind them do not see which movie a customer went to, only that they went to see some movie.

Their data is useless. They have no way to tie purchases to the movie viewed. I just pick the first thing it’ll let me check in for, not the movie or time I want, and it always works.

> I just pick the first thing it’ll let me check in for, not the movie or time I want, and it always works.

This... is a great idea...

Do me a favor and turn off your GPS after purchase so the app doesn't track the viewing time of the movie you actually went to. Abuse of the service like what you're doing may force them to add restrictions. Not cool, IMO.

Doesn’t something like Fandango have that info too? I use their service and I’m assuming they are profitable.

I thought their business model was like a gym: hope that most people won't use it. (Source: I have MoviePass and I'm seeing less than 1 movie per month because I'm too busy :-D)

Instead, this article claims it's:

1. Studio of movie $M pays MoviePass $X to market it to subscribers.

2. Subscribers see a movie they otherwise wouldn't pay for. MoviePass eats this cost ($Y).

3. Subscribers' word-of-mouth network effects bring in extra revenue $E that otherwise wouldn't have come in.

4. MoviePass stays alive if $E > $X > $Y.

If people don’t use it then MoviePass won’t get any data for analytics.

MoviePass can’t use the gym model because most people actually like going to the movies, it’s not aspirational. MoviePass also has much higher cost per visit, since they have to pay full price to AMC.

Heads up from a former customer that just cancelled: I was a huge fan 3 months ago, but they've been dropping theaters left and right. Around mountain view, they have gone and dropped both theaters I watch movies in.

In my opinion, this will be a better program if there was a guarantee that theaters will stay for X months.

I still remember when movie theaters provided a different experience - and I'm in my late 20's, so it was not that long ago.

Movie theaters became just another living room - people go there chat, comment and eat during the movie just like they were at home. It became such an obnoxious experience, where people are shoved into a room and door is closed.

This goes to say: movie theaters had a lot of distribution costs reduced over the years, and probably even the reform of projectors isn't such a big deal today due to digital distribution.

MoviePass is aiming to give them volume, at a reduced margin - that's how.

If the main business model works (see my other comment), then theaters' margins needn't be reduced.

I guess MoviePass thinks they deserve a cut of concessions since they're saving theaters - which might be true - but theaters control the end product, so I doubt they'd share revenue. They're more likely to compete against MoviePass if the plan works.

I've seen your post - it does make sense to be that way indeed.

>but theaters control the end product, so I doubt they'd share revenue. They're more likely to compete against MoviePass if the plan works.

This seems the most likely to me; I mean, if I were to buy a ticket subscription, I'd want that at the theaters that I go to often; I am happy to pay full price when I go somewhere unusual.

This means there's almost no network effect... my favorite theater could put up a subscription service that only worked at that one location, and it would instantly have more value than MoviePass that might or might not include access to that theater next month. Even better would be a regional service, but in this case, at least on the customer end, I don't think making the service national adds very much value at all.

It depends on the theatre. I only go to a regular movie theatre when I'm back home seeing my parents. I enjoy the theatre experience where you get reclining seats and you get to reserve your seat beforehand. The next step is the dinner and movie experience where you get to both enjoy reserved seating and get food served while you're eating. Those theatres by necessity aren't as crowded and you have a much better experience. The ticket costs for the movie and dinner type places are usually cheaper since they can make it up on food.

We also still have a decent drive in in our area where the sound comes through your fm radio. You can see two new releases there for like $8 a person. You can bring your own food - usually we do take out.

Movie pass is a no go for popular movies for us because you can't use it to reserve movies in advance online.

> The ticket costs for the movie and dinner type places are usually cheaper since they can make it up on food

For some of them, this may be true. However, one I visited in the Midwest put their 'eat & watch' section in an exclusive balcony above the standard seating area and was charging almost double per ticket (along with sub-Applebee's food at Chili's prices). They have apparently been in business for over five years doing this.

I enjoyed the experience, but I ultimately didn't feel it was worth the extra cost, and the sound of silverware on ceramic plates & bowls was a bit distracting. Handheld food and fancy paper/plastic plates and utensils would be how I'd run that operation.

I have seen both. I went to a theatre in Miami where you had to pay more for the eat and dine experience and just to be in the lobby.

Where we usually go - Studio Movie Grill - you can usually get a ticket for $5. The prices of the food and the quality is around AppleBeds like you said.

That's true about the silverware, it's never been distracting but another place we go - a small place with about a capacity of 70 that has live music uses paper plates and utensils.

moviepass works for new movies, you just have to show up first thing in the morning and reserve a night show. Never had problems getting a good seat myself at a regal with reclining/reserved seats.

That's weird — here, the more full-service a theater is, the more expensive it is. Some theaters have more extensive food selections and serve booze, and those are more expensive than normal theaters. Others actually have servers take your order and bring it to you in the theater, and those are more expensive still. I figured it was a sort of price discrimination — the people who want to eat expensive food while watching a movie are less likely to care if the ticket cost an extra $5 because that's a tiny fraction of the evening's total cost.

I'm not disagreeing with you. I've seen the price difference in other cities, but in Atlanta.

Studio Movie Grill.

https://www.studiomoviegrill.com/Ticketing/Tickets

Adult ticket $11.25

They are always offering $5 Groupon deals.

https://www.groupon.com/biz/alpharetta-ga/studio-movie-grill

Https://Cinebistro.com

Adult tickets $16.50

Random Regal Cinema in a non upscale part of town (South metro Atlanta) - $12.85

Hummm I have not experienced this, atleast in big amc type theaters. What I like about movie theater is that its one of the last places that exist where nobody is on the phone and you are enjoying distraction free.

I've seen that kind of behaviour in the US (and that was 10 years ago already).

I've never seen it in Europe however, I just thought that's the way Americans enjoy a movie in a theater (a way that really turns me off, actually).

Where in the US have you been watching movies? I’ve never experienced this. The worst I’ve seen (and it bugs the heck out of me still) is people clapping when something big happens, but that is still quite rare.

I’ve seen films in upstate NY, SF, SD, LA area, and beautiful New Hampshire.

That was in the Bay Area (SF, Mountain View, San Mateo...)

I've noticed a huge difference between movie behavior based on city. It makes sense that it would vary by regional culture. In Los Angeles, clapping was semi-common, particularly during the early days of a big new release; it seemed to vary in direct proportion to how many people were in the theater. I consider that extremely obnoxious. I've almost never seen clapping during a movie anywhere on the east coast however.

Same here - and I've been to theatres in multiple EU countries. People definitely don't talk, absolutely don't talk on their phones(they would be kicked out if they did), and eating - meh, just the standard popcorn stuff. I've been to one theatre which also served proper food but you actually sat at a table not in a theatre seat, it felt more like a restaurant with the film playing in the background.

For me "the standard popcorn stuff" is already enough to ruin my experience. I'd gladly pay more to go to a cinema where eating or drinking anything is strictly prohibited (as it still is, for example, in my hometown's best cinema, which sells absolutely nothing apart from tickets and subscriptions).

At least in my case, by continuing to charge me monthly even after I canceled the service. Their customer service is non-existent, so I had to file a dispute with my credit card company to make it stop.

I don't quite follow the angle of promoting smaller studios' movies. If I am such a studio, and pay moviepass $100k to push a movie, and then that results in $1M tickets sold thru MoviePass, and I get $500k (or whatever), didn't MoviePass just lose $900k? MoviePass is both the marketing channel AND consumer. The studio has to make a profit and that has to come from somewhere - MoviePass' profit.

Ah, but it their customers watched other movies, they would have lost $1M, so it's better. If the intent is to get movie attendance data at any cost (as it seems), getting it at less cost is better.

True. How do you know they would've gone to see a movie though?

That's what seems weird about this whole gravy train - the various drivers of the business clash with each other. More movies per person, more data, but more margin loss. Fewer movies per person, more margin, less data. More studio deals, more revenue, less margin.

I think they're exploring various business models and finding where the sustainable value is. Will be interesting to see!

This is a way to reduce the costs, but it can't be a way to make any profit (or just break even). You'll always burn a lot of money.

I can't believe there isn't a way to get movie attendance data for less than, say, 5$ per data point.

I think most people are missing the point here. MoviePass has many ways to monetize from begin to end. It currently has more then 1.5 million subscribers & growing very fast (fastest subscription service growth ever, even faster then netflix). Most people miss the opportunities MoviePass has. It will control the demand & distribution of movies through its subscribers. Movie theater goers have been declining year over year and MoviePass will help reverse this.

It currently makes money by

a) subscriptions $9.95/month b) $2-3 rebate per ticket contracts with about 1000 theaters (5 new contracts a week are signed) c) 20-30% of concession revenue with about 1000 theaters (5 new contracts a week are signed) d) Bought "America Animal" movie rights for North American release at Sundance Festival

They also now take cuts from ticket prices and upto a 20% cut from concessions.

More information here: https://techcrunch.com/2018/01/26/moviepass-pulls-out-of-amc...

The article makes it sound like Moviepass now has more leverage than the theatres themselves, which is super interesting.

Based on another article I saw, this doesn’t seem to be the case with AMC.[1]

Basically, all of MoviePass’ subscribers is still a tiny portion of AMC’s sales, so they’re refusing to share any of their revenue with MoviePass.

[1] https://www.theverge.com/2018/1/26/16936952/moviepass-amc-th...

A: It almost certainly doesn’t make money.

Since you have to buy the ticket at the theater, they are probably trying to sell analytics re: influencing selection. Good luck with that.

http://www.businessinsider.com/how-does-moviepass-make-money...

> The same day it announced the $10-a-month plan, MoviePass raised cash by selling a majority stake to the data firm Helios and Matheson Analytics Inc.. With a new price-point designed to attract as many subscribers as possible, MoviePass is hoping to attract a large enough user base so as to be able to monetize it.

> “If you get a trailer right now for Spiderman on Facebook, Facebook can’t tell if you ever actually go to the movie. We can,” he told Wired. “We can tell if you look at 'Spider-Man' and look at 'Wonder Woman' and 'Mission: Impossible,' we can tell you exactly what movie you went to out of all three trailers.”

> Farnsworth envisions movie studios using MoviePass' valuable data to do targeted marketing for their films. Once MoviePass has millions of subscribers, its ability fill seats can make the difference between a hit movie or a flop, he explained. MoviePass plans to hold an IPO in March, he noted.

Oh bull. So many people tag themselves in Facebook posts when they go to the movies. Facebook absolutely has enough data to determine this.

Maybe for your friend group, but absolutely not mine (20-25). That market is huge for advertisers.

Thar said I can't imagine their losses ever being recouped in ads.

Maybe I am mistaken, but I find it hard to believe that if people in that demo are on Facebook enough to see movie trailers there that they wouldn't then post about the movie they just saw.

I have about 1000 Facebook friends, most within that age group. About 15 people still post there at all. I know more people using Facebook for college meme groups than for social interaction.

How do so many other companies like this make money? For example, HQ: the live trivia game show app that gives away a few thousand dollars multiple times per day. There's no ads, and no in app purchases. Besides burning through VC money like it's 1998, what's the business model?

No ads doesn't mean your data isn't being used for ads. It's likely being sold to orthogonal adtech businesses. i.e. the company collecting the data is rarely the one using it, it usually just sells it.

And how well does that work out? My experience with ad targeting is that it's mostly awful. Amazon can track every book I purchase through them, and the ads for books to buy on my Kindle are awful. Facebook has oodles of information about me, and if I turn off AdBlock for a moment there, the ads I see are... diabetes test strips (I do not have diabetes) and something involving Brook Shields that I bet is a total sham. The only online ads I see where data on me, and not just inventory, seems to play a major role is retargeting, where I look at something on Amazon and it's shown to me again in an ad in case I changed my mind about not buying it. The whole adtech industry is in awful shape, and the idea that MoviePass can be profitable by being such a periphery part of the adtech industry is laughable. People will just tell Facebook and Twitter what movies they've seen for free, there's no reason to subsidize movie tickets to get that data. This is a case of "let's spend VC money like water to get enough customers to get a huge valuation and then figure out a business model."

I'm curious, does Amazon continue to recommend items you either just bought or are similar to something you recently bought? I get this all the time and it is annoying. It seems like the recommended stuff is related to my searches and doesn't get changed by my purchases.

I think the whole online ad industry is broken. I don't know why people keep pouring money into it. Most people have learned to ignore ads, or they use an ad blocker. I don't care to see an ad for something I already bought.

I doubt a system like this would actually work, but I'd explicitly tell them what kind of products I'm looking for if they asked. This passive "we can get into their mind through searches" doesn't work very well.

HQ gets 1m+ people to watch to same thing with 100% attention twice a day. They can cover that costs with ads easy. Will people keep tuning in? Maybe. But their burn is a lot less than movie pass.

I wonder how much longer the theater experience will command such a high premium. Beyond a true IMAX experience, the theater doesn't seem to add much value for average movies.

One possible pivot for MoviePass would be to partner with Netflix, Amazon, HBO, or Hulu to run exclusive "members-only" premiers of their content in theaters. I could see some value in the community aspect of the theater for some of the more popular streaming shows.

For me, a movie theater is subpar to my apartment. I would much rather watch new releases on a streaming site than shlep to a theater, fight the desire to waste money on bad snacks, and sell my viewing history to god knows who.

I have a big screen 4k HDR TV, a 7.1 Dolby Atmos system, and very comfortable recliners.

But I would never consider a movie theater a subpar experience to my condo for any movie worth seeing on the big screen.

Maybe I'm just lucky that I live in Tinseltown and we know how to operate good theaters here, but every major-chain local theater has laser projectors, massive sound systems, and reserved reclining seats. The concession stands offer beer, wine, and cooked foods. Security regularly patrols the theaters during screenings to make sure that people aren't on their phones or talking.

Part of it is seeing movies 3 months before DVD. Discount for delay happens in other entertainment industries--like video games.

At least in the UK each of the big cinema chains runs there own equivalent to this, and they push their staff hard to sell passes because the actual seat costs them a negligible amount of money, and people who “aren’t paying” for the seat are more likely to buy food and drink.

Is what they are doing even legal? Co-opting movie goers into their debit cards and then using that power to extort the movie theaters for money?

Imagine how much money your bank could make if they started doing this...

Because the marginal cost for a theatre to show a movie is virtually zero.

That has no effect on MoviePass. As per the article, what’s “interesting” (for certain definitions of interesting) is that MoviePass pays the theatres for the full price of the tickets for each user.

And the theatre companies are complaining about this, which blows my mind. It’s a phenomenally good deal for them at the moment — tons of free revenue they otherwise wouldn’t see at all, courtesy of VC capital. What a bunch of whiners.

The article quotes AMC about why they're complaining: they worry that if MoviePass fails, people will sour even more on theaters and that could be their death knell (btw, love the use of harrumphed!):

> The largest theater chain in the US instead described MoviePass as as an existential threat. “That price level is unsustainable and only sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled,” the company harrumphed.

(emphasis added)

I did read that and understand the potential downside for them in the long term. I still think publicly complaining about free money is a really bad look and just exposes them as the curmudgeonly dinosaurs they are.

It's amazing how curmudgeony they've been. Their comment that MoviePass is an "existential threat" is fascinating as a window into the minds of people just trying to survive rather than thrive.

> It’s a phenomenally good deal for them at the moment

The problem here is in the at the moment. MoviePass trains consumers to see the experience of going to the movies as effectively worth nothing. That is very bad for theaters, because when MoviePass goes away they will be left with a product---with small margins---that consumers see as incredibly expensive.

And the insidious part of this is that MoviePass doesn't have to fail. If they achieve sufficient market dominance they can ruin any theater that refuses to play ball by removing their ticket "subsidies".

"Heads I win, tails you lose."

The marginal cost to a theater, sure. But, as the 3rd paragraph points out, MoviePass is paying those theaters full price for each ticket. They're losing money hand over fist.

They can't just solve this by squeezing theaters, either. They're already struggling, if not barely surviving. If MoviePass simply tries to strong-arm them into accepting less than full price, without offering some other source of revenue in return, that's a lose-lose strategy for them. If they fail, they lose their ability to supply customers in that market with the service that they signed up for. If they succeed, they risk bankrupting the people who actually supply their customers in that market with the service that they signed up for, and so they still lose it.

If you believe what MoviePass is saying, they’re not losing money hand over fist. They claim most people stop going to the movies after the first couple of months. If someone doesn’t see 12 movies in a year, they aren’t losing money. They say the average is closer to 4.

> They claim most people stop going to the movies after the first couple of months.

Which of course hurts the ads/analytics side of their business. Not going to any movies means little or no data generation.

When the subscription price was higher, they have fewer members and the people that signed up went to a lot of movies and MoviePass was losing a lot of money. When the dropped the price, a lot more people signed up and most of these were casual movie goers.

In every way they are better off with two million subscribers that go to 8 movies a year than a hundred and fifty thousand subscribers that go to 25 movies a year.

And this is exactly why they pulled out of the top AMC theaters. No surprise they're also the most expensive ones. The AMC at citywalk in LA is almost 20 a ticket for a basic 2d showing.

It's apparently not the ticket price that they care about. They removed support for the River East 21 in Chicago, which has 21 screens and shows a lot of foreign and limited releases. You could probably go there every couple of days and see a new movie you haven't seen before. Ticket prices there are actually cheaper than the 600 N. Michigan AMC which they still support. But that theater only has 9 screens and basically only shows blockbusters.

Likewise, the Webster Regal in Chicago is about $3 more per ticket than theater they dropped support for. But they don't carry all the limited/foreign releases that River East does.

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