SEC filing suggests MoviePass’ time is running out | Hacker News Reader

SEC filing suggests MoviePass’ time is running out

theverge.com

76 pointsthedarkginger112 comments

> When the company changed those rules to limit subscribers so they could only see a given movie once, no matter how long it runs in theaters, a support ticket stated, “we hope this will encourage you to see new movies and enjoy something different!” It turns out that was a blatant effort to cut costs, with today’s filing explaining that the move “enabled us to reduce our cash deficit during the first week of May 2018 by more than 35 [percent].”

> There are a lot of ways to read that percentage, and in MoviePass’ defense, the company has also said that the goal was to prevent people from using MoviePass to buy tickets for friends who aren’t subscribers. But either way, a savings of more than a third represents a radical shift. Couple that with the fact that the most popular movie the first week of May was Avengers: Infinity War, whose astounding box-office performance is driven by repeat visits, and the connection seems clearer — MoviePass is openly trying to save money by limiting features its customers actively use. It isn’t a “test” or an “experiment,” as the company has claimed in the past; it’s intentionally making the subscriptions people have already paid for less useful because its business model is unsustainable.

Getting rid of repeats saving 35% seems to point to some pretty widespread abuse. Who are these people seeing the same movie multiple times during its initial theater run?

I do know people who go to see the latest movies (particularly Marvel ones, Star Wars, etc.) more than once. I imagine MoviePass would only encourage that behavior. (but I agree that abuse probably has something to do with it as well)

I really don't see how theaters haven't caught on and started a subscription service of their own. Just an obvious way to get people to the theater (multiple times) and by snacks.

They have. I'm a member of the Cinemark Movie Club.

because the subscription service that would serve as the blueprint seems to be on a trajectory towards bankruptcy?

Unless you can get the vendors who sell theaters the digital film to reduce their prices for new releases, there is still an intrinsic cost to the movie itself that isn't going to be defeated by a small increase in snack purchases. Actually, I hear this being a big selling point (increased snack sales), but of the 5 people I know who use MoviePass, 4 of them sneak snacks in via purses. Anecdotal as it may be, I don't trust this reasoning to be a theater's savior either.

Odeon chain in the UK have a subscription with unlimited(ish) viewing

http://mobi.odeon.co.uk/limitless/

I don't go to the cinema often enough to make it worthwhile but it is popular with my peers.

"Abuse" is a strong word and the quote you've given addresses this when it says:

> ... whose astounding box-office performance is driven by repeat visits

I think you underestimate how often people will see the same movie.

Getting tickets for your friends for MoviePass is a whole separate issue (and clearly abuse). But is seeing the same movie more than once "abuse"? That's more debatable. But repeat viewings clearly happen.

If more than one-third of their ticket purchases are repeat viewings I find it really hard to believe anywhere near half of those are genuine, rather than tickets purchased for someone else. Anyway, it seems like a completely reasonable restriction to not allow someone to see the same movie more than once.

Agreed, it is completely reasonable. I would find it very hard to believe anyone would think otherwise.

The problem is the corporate doublespeak (lies) in the the way they presented the change. It speaks volumes about the way the company is managed. I'd be looking elsewhere if I worked there. Especially considering that there is absolutely no reason to spin the change. Just call it what it is.

Are you approaching this from the point of view that you don't believe that percentage of movie ticket sales are repeat viewings? I'd have a hard time believing that too.

Thing is, MoviePass subscribers aren't representative of the average movie-goer. It attracts those who see a lot of movies (repeat or not). It's also only a small percentage of viewers.

There's an important selection effect: these are people who bought MoviePass, which means they expected to watch more than one movie a month. That means people who do rewatch movies (like me, or my wife) are going to be wildly over-represented. And people are much more like to re-watch when the marginal cost is ~$0 instead of ~$20

It's not one-third of their ticket purchases. Limiting the viewings to one per movie reduced the cash deficit by 35%. These are not the same at all.

"Abuse" is a loaded word, but I can understand what they mean.

A lot of services depend on individual usage staying in certain bounds, and which would rarely be exceeded by the typical, intended usage; but where the provider doesn't want to commit to a hard cap (cough ISPs, Github). These services would collapse if everyone started re-selling the good, because it vastly changes the use profile. The term "abuse" is understandable (if not always warranted).

But you're right: one individual seeing the movie more than once is not inherently "abusive", even in that sense. But reselling is, for sure: the typical user is not going to see a movie every day, and the MoviePass model is based on such a "gentlemen's agreement", where people won't go out of their way to use every day's ticket (except the rare oddball user).

As a way to root out actual abuse, they have to use some crude heuristics, and one of them is repeat movie viewings. Yes, some honest non-resellers see movies more than once, but the most common case is this kind of reselling.

> the company has also said that the goal was to prevent people from using MoviePass to buy tickets for friends who aren’t subscribers.

Yes, I saw that, but the article seems to suggest that they're being disingenuous.

I know several MoviePass subscribers who do this. Apparently, if you purchase at the theatre with your MoviePass then MP counts the purchase as 'that day', but the ticket kiosk lets you select a future date and MP is none the wiser regarding the details of the purchase. People who pass by a theatre on a regular basis (on the way to work, the gym, etc) can simply collect up a batch of tickets for a future showing and then take a bunch of friends.

I don't get this since MoviePass can only be used once per day.

Since you can buy tickets in advance, people were buying tickets on different days for a future showing.

You've only ever been able to buy tickets for showtimes on the same day they were bought.

You need to tell MoviePass that you're buying a ticket for that day, and they load the money onto a debit card. You can then use that money to buy whatever ticket you want.

Because of that, MoviePass recently began requiring people to take photos of the tickets they buy. This introduced a new step to the process: now, you need to buy a ticket, take a photo for MoviePass, and then exchange it for the ticket you actually want.

Funny, I never thought to do that.

That only prevents people from going to see the movie with their friends after buying their ticket. People oculd still buy tickets for their friends to go separately.

According to the filing, this change reduced the cash deficit by 35%. That's very different from saying that it reduced overall expenses, or the number of tickets purchased, by 35%.

It's not possible to draw conclusions about how many people were "abusing" the service without a lot more information.

You are right. Still, unless there was widespread purchasing of tickets for non subscribers going on, I would expect the effect of that change to be a blip, not a substantial drop in their cash deficit.

Unless you know more than us about their deficit, we can't really say how big this was. If they were spending 101% of revenues, for example, 35% off their deficit _is_ a blip.

I'm just going by this article, but it also suggests their financial situation is so dicey they are in danger of shutting down soon, so that seems unlikely.

> Who are these people seeing the same movie multiple times during its initial theater run?

I just logged into MP last weekend and there was a pop-up reminding us that accounts were not to be shared in addition to the new, "you can only see a movie once" rule. Total speculation, but my guess is that a good chunk of that was people sharing accounts.

Sorry if it wasn't clear, but yes, that is my thinking too.

When they announced the policy change last week, I saw some tweets along the lines of: "I love contributing 15$ to Black Panther's global box office total every time I want to use the slightly nicer bathroom at the mall."

I've seen 3 movies in theaters in the past year - Star Wars, Greatest Showman, and Avengers.

My wife, a Moviepass subscriber, has been to the movies some 60 times since December. She typically goes 30-40 times a year, it's one of her and her friends' favorite hobbies. You might go to coffee or the bar, I might go to the park or the gym, she and her friends love going to the movies. It's just a thing to do for a couple hours on a weeknight.

There was no 'abuse' in the sense of sharing her pass among friends, or buying tickets and not going to the movie. She does like a frozen coke sith her movie, and she buys the $35 free refill popcorn bucket 3 times a year, so there was quite a bit of profit for the theater, but she was not profitable to Moviepass and they might feel that normal use for her was abuse.

She would not be profitable unless (a) Moviepass can negotiate <50-cent tickets with the theater with kickbacks for concessions, or (b) she convinced enough people close to her (like me) to buy a moviepass and buy fewer tickets than the subscription costs.

The problem is, it's super easy to do the math on whether or not you would have spent more on tickets than moviepass.

When I referred to abuse what I meant to say is that the number of repeats suggests that a great many ticket purchases are not for the subscriber.

There are a handful of movies that are not surprises, but just fun to watch.

Avengers, TLJ, Black Panther, Greatest Showman are all movies that someone can enjoy watching more than once.

There are many movies I've watching twice or even many times, but I'll usually give it some time.

> The problem is, it's super easy to do the math on whether or not you would have spent more on tickets than moviepass.

This is the crux of the problem, I think. People who see one movie a month are not going to buy it. So they need to be profitable for high-usage customers. Unless they are getting incredible discounts... just not going to work.

For it to make sense, there need to be some restrictions -- e.g., only Sunday through Thursday nights (times when fewer people go to the movies... whatever they might be). But then a lot of people like me, who are too busy to go at that time, will skip it.

If you want me to over-pay for an option, it needs to have some intangible value. For example, if buying a moviepass gave me X times a month that someone else could come "free"... I might value that above market cost, because I could tell others "don't sweat it, it's free" and get friends to come along without feeling I'm pressuring them to spend a lot of money.

It’s a good point. Also, with many subscriptions, the choice is between buying a subscription or doing without. You may or may not get value from the subscription but there’s no a la cartel alternative to compare against.

This seems much closer to simply comparing dollar costs of two different purchase alternatives.

Since MoviePass buys it tickets at retail costs, a single heavy user is exceptionally costly. Imagine someone who purchases a $15 ticket 25 times a month for a total of $375. MoviePass would need something like 40 users paying $10 a month who barely use the service in order to offset that single user. It therefore isn't surprising that MoviePass is making changes to curtail those heavy users. Even if only something like 1% of users abuse the system by sharing accounts or reselling tickets, that could be enough to sink the entire company.

Buying its tickets at retail cost is crazy...

It's all about Failing Fast and Failing Often in today's world of silly business sayings.

Or as we used to say, anyone can sell a dollar for ninety cents.

You win! That's definitely a fast fail.

The phrase is not my invention :) it or something like it was about during the first dotcom boom, said about companies like webvan and pets.com

Their plan is to make it up in volume, clearly.

It’s either this, or grow big enough fast enough before the cash runs out that they have a strong bargaining position with big cinema chains to cut deals for cheaper tickets, perhaps also using the carrot of some kind of concession promotion to encourage subscribers to buy popcorn etc.

If this model works, it isn’t exactly hard for a large chain like AMC to do in house at all, I really don’t see the incentive to get into bed with MoviePass. Some European cinema chains already do this, like Cineworld in the UK.

>>Getting rid of repeats saving 35% seems to point to some pretty widespread abuse. Who are these people seeing the same movie multiple times during its initial theater run?

I wouldn't be surprised if there were people (especially those that buy MoviePass, I'd expect them to be movie fans) that see big blockbusters two or three times. But yeah at 35% savings that's gotta be largely abuse.

I don’t think it’s largely abuse. Some of us wanted to go again with another group of friends. Example, I saw jumanji alone, liked it enough I brought some friends and watched it again. Star Wars was the same way. I’m fine with them removing it since I’m still getting way more from the service than I’m putting in, but I don’t want to be called an abuser for doing what their own terms said I could do.

Oh, I want to be clear - I don't think it's abuse at all to use it as you describe - even if you want to go to the same movie every day that seems completely fine to me. Abuse would be getting the ticket using MoviePass and then giving it away/selling it to someone else.

I saw Black Panther three times in theaters with my MoviePass because, well, why not? The only theater near me only has 5 screens (I live in a small town), so my wife and I end up with some repeat viewings.

That said, I love MoviePass but know it's not sustainable. I wish they had rolled out these changes earlier. Something like no repeat viewings, 8 movies per month, different price depending on where you live (tickets at my theater are only $9 normally), etc, could have made this thing much more sustainable, and still probably had most of the growth.

I can't see the appeal of watching a movie I literally just watched.

I'm not a big movie watcher but I definitely repeatedly consume other media. Music in particular, tv and print as well. If an album comes out that I like a lot, I'll often play it front to back a dozen of times in a week.

because it was awesome?

The world is full of awesome movies. Cinema has existed for more than a century.

What you will understand someday in life is that as we grow older, we have less desire to explore new things, and prefer to revisit familiar things while we still can.

Watching the same movie three times in a week (which has just come out and so can hardly be a nostalgic favorite) is taking that to a bit of an extreme, more reminiscent of the viewing habits of a child.

lol

Sometimes I fall asleep and have to go see the movie again.

Not my usual reaction to films that put me to sleep.

It's pretty common to notice new details when reviewing things, where you don't need to focus on the same details you did last time.

Foreshadowing is all over in movies, as well as artifacts of cut subplots/scenes. Re: /r/moviedetails

Some people enjoy reveling in the details they missed the first time around. Different strokes for different folks.

Great, that's your preference. Other people do enjoy it. People have different preferences.

It seems to me with relatively minor tweaks there should be a sustainable product. Like maybe you can't repeat the same move within a week or something. Because for the vast majority of movies there's a lot of empty seats and empty seats mean no overpriced snack sales.

Back when Titanic came out, some classmates of mine saw the movie 9 times in theaters.

Abuse is likely a big factor but there are likely some honest actors in there too.

Question is, how do they know it’s abuse? I have a feeling they’re just using that as a catch all for all heavy users.

Well, the heuristic seems to be that if you are getting tickets to the same film more than once, you're likely abusing the service.

When I was 13 in 1977 I saw Star Wars in the theaters about that many times. Of course, in those days there was no expectation that in a couple of months you'd be able to watch on your hi-def home theater-size TV, and the big screen was still actually a big screen.

>Who are these people seeing the same movie multiple times during its initial theater run?

You must be very unfamiliar with modern movie audiences, especially comic book movie fans. Plenty of people see movies they're fans of multiple times after release.

It appears from comments below that you personally don't like watching the same movie over again. Other people, however, do. Your personal bias is skewing your ability to understand the situation.

What's actually going on is that the service customers have paid for is being reduced while the price hasn't changed, screwing the customers.

I've still got my 4 ticket stubs from seeing Star Wars: The Phantom Menace repeatedly.

(cut me some slack in 1999 Star Wars had a ton of goodwill and excitement built up, we couldn't know what the Prequel Era would end up being :)

In the Netherlands we have our own “MoviePass” (called Pathé Unlimited) started by the country’s biggest theater chain (Pathé) since the early 2000s, so the concept is definitely not new to us, I was actually surprised to learn that Cinemark didn’t have their own subscription model when I moved here since it worked really well in Europe (both for customers and for Pathé).

The reason why the model works for Pathé and not for MoviePass is because of 2 reasons:

- Pathé owns their own theaters, so they can run the subscription program at a loss, but make the money back with condiments sales because of the increased flow of visitors

- Pathé owns the most theaters in NL, there’s always one closeby. The subscription program is usable by the majority of the population because of physical proximity.

So for this to work in the US, the big chains basically need to offer this themselves. I hope that Cinemark will learn from MoviePass’s validation of the market (clearly there’s a huge demand) and undercut them by offering their own program. #lastmoveradvantage

It also appears to be EUR 20 per month. MoviePass is less then half that at USD 10. Often less then a single regular movie ticket.

And yet the 20 Euro one appears to have been a _sustainable_ business model.

Cineworld cinemas in the UK do a very similar offer, and again it costs roughly 20 Euros.

MoviePass pricing has always reminded me of the old adage, "If it seems too good to be true, it probably is.", especially when you consider they are paying full face value, which none of the European competitors I'm familiar with do, as they typically run both the subscription service and the cinemas themselves.

The more pressing question to me is why hasn't a large cinema chain in the US tried this model, when it is clearly working in many other foreign markets?

S/condiments/concessions? Thanks for the take, that makes a lot of sense. Maybe movie pass will be bought / cloned by a theatre chain here.

    s/condiments/confections

Why buy them out though? Implementing a subscription on top of an existing service isn't that hard, is it?

The userbase would be worth something. Buying the moviepass user database gives whichever theatre chain first crack at converting a bunch of frequent customers before their competitors can.

If Regal bought moviepass and sent an email that everyone was now a "Regal Subscriber" for 9.99 a month I'd be completely happy.

Yes concessions, sorry, my non-native-English brain knew it was con-something.

That filing did hurt, the stock's gone from 1.35 at the open to 0.94 cents now. Heck the short sale rule is in effect for them now.

Now they have to convince their customers to use the service less, while trying to increase the number of subscribers they get reoccurring revenue from .

That's an almost sisyphean task.

Even harder will be convincing one of the chains to buy them.

I'm guessing that if we don't see an announcement of a sale to one of the movie theater chains in the next week they'll end up bankrupt and one of hte major theater chains will by at least their data at that point.

How do you go about convincing a company to buy you when they know that you'll be there in bankruptcy court to buy at a cheaper price.

Wasn't there some article a while back about how MoviePass was trying to have a big enough market-share in terms of movie-goers (read: popcorn and soda revenue for theaters) to be able to start pushing theaters around? In other words, they could say to theater companies "hey, maybe you should think about giving us tickets at a discount so you don't lose out on that sweet sweet concession money." Or maybe even play one theater brand off against another?

I wonder if theaters have figured this is a waiting game and they can just let MoviePass die and go back to business as usual...

I thought that was blatantly obvious from the very start? Their entire business model is to gain enough subscribers, that they can use to leverage theaters.

That's addressed toward the end of the article - basically the AMC CEO calling the pricing Moviepass wanted 'ridiculous', and saying it's not sustainable.

He's not wrong

Cinemark came out with their own subscription service. Not the same type of deal as MoviePass but still, it made me decide to go with theirs over MoviePass. Sure it means I'm locked in to Cinemark only if I want to make use of it but I know my benefits of the sub won't change month to month.

They explicitly tried that with AMC, by denying customer access to the top ten AMC theaters in the US to prove that Moviepass has market pull.

I found out in the lobby of the AMC, bought my own damn ticket, and mulled over cancelling Moviepass for two weeks. AMC didn't blink, though, so those theaters were re-enabled right before I was about to switch to Sinemia.

Yes. From http://deadline.com/2018/01/moviepass-lack-of-amc-theatres-c... :

> On Thursday, MoviePass shaved 10 of the busiest AMC locations off its app in an effort to take a hard position against the nation’s largest movie theater chain. MoviePass is seeking a $3 cut on AMC tickets that it covers, plus 20% of concessions given the foot traffic it sends to AMC (a total estimated at about $2 million a week, per MoviePass insiders).

I believe further analysis showed that the "$2 million a week" was ridiculously inflated.

It doesn't seem to be the sort of thing that even has a chance of being profitable... The only reason to join is to save money on tickets, the only way they make money is if people spend more on membership fees than the tickets they buy.

Yeah, I wonder what the people who started the business even had in mind. Did they decide to just wing it long term?

Not that I have any insight, but I always got the impression that they were planning to get a significant fraction of the moving going public under their service. Then they could say "give us discounts or well take your chain off of our service" to the chains.

The long term plan was probably to get a large enough subscriber base that they could get some pricing deal from a couple major theater chains. Combine that with some money from selling customer data and they thought they could get profitable and probably could.

I could easily imagine myself signing up for a service like this and then forgetting about it for a month or two at a time.

You’ve pretty much described my usage of Netflix’ DVD rental plan and HBO streaming.

Yeah... I'm not speaking from pure conjecture here.

I got mine around the time I was appointed as the DPO-equivalent for GDPR compliance in my company.

I still have it, but I consider it an aspirational purchase for a time when I can actually go to movies. I think I'm averaging about 2 movies for every 3 months.

Well the company had vague promises of utilizing the vast subscriber base and information to sell to third parties.

As an amateur stock picker, I've been on the sidelines watching the back and forth commentary on this company (Helios and Matheson) and MoviePass since it was (I believe) in the 30's.

It seemed like everyone knew from the get go that the model wasn't going to turn a profit, but they were hoping for some of the other stuff to generate a return somehow (the information being valuable).

The stock price partially is because a Netflix co-founder is behind the company. However, part of me wonders whether it was a pump-and-dump scheme.

I feel like they're just waiting to gut the service (4 movies a month, or less) and hoping enough people stick around that they're better off.

Before the price drop they were taking in about $1 million/month (20,000 subs at $50). They're over ~2~ 4 million subscribers now at $10/month.

If they have even a 5% retention rate they'll have increased their revenue to $2 million/month.

They're already at 4/mo for new subscribers.

Oh wow. I was just going off of wikipedia numbers. 5% retention rate then.

They've brought the 9.95 "unlimited" plan back, and the cheaper 7.95 plan now only offers 3 tickets per month.

but at $10/month you need most people to not even go to 1 movie a month to even have a chance of breaking even.

The intention was for the core "unlimited movies for a monthly fee" to break even (which was plausible based on spiked usage up front that tails off ala gym memberships and things like bulk ticket buying). In addition to collecting analytics data and selling it to movie theaters and studios, the service also makes money by promoting movies within the app (paid placement).

https://www.recode.net/2018/2/18/17025372/transcript-moviepa...

gym memberships lock you into a commitment... MoviePass is currently month to month.

The play is to get enough users fast enough so that MoviePass sits between the theater chains and a big chunk of their customer base. Once that happens, MoviePass can start squeezing the theaters to discount the prices MP pays for tickets with threats of taking their theaters out of the MP system if they won't. If the MoviePass user base is a big enough fraction of the overall theatergoing population, the theaters will have to accept whatever price MoviePass offers them for tickets or risk losing access to their customers and kneecapping their business.

This is a long-term, Amazon-style play: burning capital up front to establish a commanding market position, at which point you can start raking it in by charging monopolist rents. But it assumes you can build a big enough user base to start dictating terms before you run out of capital, and if you can't, the whole thing falls apart pretty quickly.

Other than in the very early days Amazon wasn't burning cash; they very rarely went to the market for equity and were self-funding very quickly. They didn't post profits for a long time because there was no point, they used the margin for growth instead.

Reminds me of Classpass and it's business model evolution. Sounds like they have transitioned well after spending significant capital.

http://money.cnn.com/2018/03/01/technology/classpass-credit-...

If they had the same kind of investment support, hype, and customer satisfaction as Uber, they might be really successful. But it doesn't sound like they have any of them.

Uber is getting support from everyone to subsidize the cost of rides. And the ploy is to wait until self-driving cars are viable. I guess the market is saying that movie theater chains can hold out against bargaining for longer than that.

...and last I heard, Uber had a very high (>90%) annual churn rate in drivers, so if their flow of new victims slows (like a virus up against too high a percentage of the population with immunity now), they may not turn out as well in the end. It might suggest why Uber is maybe pushing to get self-driving cards as fast as possible; they may know they don't have all the time in the world before the current model stops working.

curious where did you see that >90% driver churn data? many drivers I speak with have been driving with uber / lyft for years (in SF)

I believe I first saw it here: https://www.cnbc.com/2017/04/20/only-4-percent-of-uber-drive...

I like my movie pass, and it has gotten me to the theatre more than I would have in the past... I aim for at least 1 movie a month, because a movie ticket costs 20 cents more than my movie pass subscription.

If I go twice in a month I can skip a month and not feel bad.

I don't buy concessions though, so theres no money to be made there.

Only being able to see a feature film once, not something I am entirely happy about because I'd have liked to see the new Avengers twice, but I can live with it. It does allow me to go to a movie I wouldn't usually see just because it's "free".

File this under: DUH!!!! This service never had a chance in hell at becoming profitable. Pretty sad that so much money is thrown at obviously trash ideas like this. I'm pretty sure that money would be better spent funding companies that are working to solve real problems.

I'm just sad I didn't sign up to blow through some of that sweet, sweet free VC money myself.

... I was somewhat expecting this to be possibility so we frontloaded our movie watching to get our money's worth but also bought through the Costco deal as we expect Costco to cover if they did go out of business given that Costco has a generous return/satisfaction policy.

Did you pay up front for a year? If you're just paying month to month, I don't understand teh concern, or the expectation for Coscto to 'cover'.

If you expected it to fail, it seems that going month to month would have been a better plan than expecting a third party to eat a loss at your gain.

I don't think I would subscribe for this - good movies are seasonal and if the movie isn't good the theater would need to pay me to go, maybe $250 would be a good fee for me to go to a movie of unknown quality.

MoviePass sorta feels like the insurance game - it makes sense from a business perspective if you can sell to enough people of varying interest in going to the theater to watch a movie...

I get my money's worth out of MoviePass. I'll milk that membership until it dies or the ROI goes negative.

I love you MoviePass, but you are not bright.

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