People Loved MoviePass Nearly to Death
bloomberg.com
bloomberg.com
"Mitch Lowe, chief executive of MoviePass, in the company’s office at a WeWork in Manhattan."
So the movie company selling dollar bills for half price is leasing their HQ from a real estate company that owns no physical asssets but has $5b in upcoming leasing liabilities as they proudly arbitrage 15 year triple net leases into 1 - 3 year terms for startups.
At some point the gas on the fire will stop and it may be awful cold for a while.
For those unaware, this is not a metaphor.
https://www.wsj.com/articles/weworks-debt-receives-junk-rati...
https://www.bloomberg.com/gadfly/articles/2018-04-25/wework-...
To apply to this case: WeWork's services are aimed very heavily at startups, small design/creative operations and solo operators, all of whom could easily be floating at the moment upon the same bubble. If that bubble were to burst, those customers would vanish and WeWork would be in a heap of trouble.
They work for our satellite offices in Denver (one designer) and London (two account people).
WeWork has a creative solution to this vulnerability:
"In mid-2017, the giant landlord Brookfield Property Partners L.P was in advanced talks to buy the Lord & Taylor department store building in New York City for about $700 million, when an unexpected buyer swooped in and sealed a deal... Behind the deal was WeWork Cos., which put together the $850 million purchase...
WeWork didn’t put up the money. Instead, it came from a new real estate fund co-managed by WeWork and one of its early shareholders, private-equity firm Rhône Group. The fund aims to raise tens of billions of dollars from investors in coming years to buy buildings where WeWork would become a tenant, people familiar with the fund said."
https://www.wsj.com/articles/wework-the-workspace-giant-want...
Unless of course they are giving a deep discount to Wework, which would be concerning.
So, either the new owner is correct that WeWork's model is sustainable will make them 21% more profit, or they'll be hurt once they try to turn into e.g. Brookfield (or sell their property to e.g. Brookfield for a loss).
Azure seems to be more popular with large profitable enterprises than startups.
The hopeful part here is that a mass weeding out of these companies with no business models at this point would obviously have an impact on those getting free movie tickets and taxi rides today, as well as the relatively modest number of people working for those companies and their associated suppliers. But, at least on the surface, it's not clear how many people outside of the mostly Silicon Valley startup scene would even notice if the bubble popped.
To be fair, that's just a rehash of the way things played out in 2008. I'm sure when the crunch comes, it'll come from somewhere less expected.
- Conditions apply. No more than one movie per calendar week. Surcharges applicable for IMAX, 3D, and other premium features. Opening nights and weekends excluded. Blackout dates apply.
The unit cost of one person in a cinema is normally negligible after all, so a specific cinema just need to convince members to spend a little more, and to always spend it at their cinema. Moviepass does neither of these things.
This is definitely a model which can work for cinemas. Just not at this price point and business model.
The other problem is that I think the cost of someone using a subscription service will be higher than the average moviegoer, simply because going to the movies often is cost prohibitive for a lot of people.
Maybe it's a matter of just not allowing subscription passes for opening weekend (or only at the door if it's undersold rather than in advance). Maybe you get your seat allocated at ticket pick up rather than in advance so full-fare paying customers get the best seats. There's obviously going to be a compromise somewhere, but it doesn't have to be unworkable.
Percentage of revenue, i.e. per ticket sold [1]. That said, the studios' take rates vary "as you move into the second and third weeks of release," when "the percentage starts to swing to" a greater take rate for the cinema. A movie pass which blacks out the first N weeks after release could thus be economical (if something the studios would fight tooth and nail).
It's hilarious because a weekend evening ticket is $7.75 a ticket, and if I buy an IMAX ticket, the "premium upcharge" is exactly $1.76, the price needed to cost the exact same as a normal IMAX ticket ($10.75).
The only reason it makes sense for me to get it is how often I buy several IMAX tickets online, and there's a $1.50 per ticket in "online fees" they waive for movie club members. There was a cost neutral way to avoid online fees before, but they removed it when they launched this to push signups.
I visit the theater enough that it makes sense to do this, but it's sole benefit to me is removing penalties... not gaining any sort of positive discount.
They probably are in high-cost urban markets which probably account for a large share of their volume.
> It's hilarious because a weekend evening ticket is $7.75 a ticket,
My local Cinemarks' prices for weekend evening tickets for standard-format 2D (they don't have IMAX, but do have XD at an upcharge) range from $11.75-$12.75.
It's strange to hear there are places Cinemark has significantly higher prices: I live in a fairly affluent suburban area, my Cinemark is literally around the corner from a significant number of multi-million dollar properties. Anyone who sees movies near me can arguably afford the higher ticket prices.
But thanks for the non-local perspective on the matter!
https://www.strongtowns.org/journal/2017/8/9/gary-morris-law...
"Unsurprisingly, Manhattan (average adult ticket price of $12.59 when matinee pricing is included) was the most expensive of the city’s five boroughs. Not a single Manhattan theater we studied offered a sub-$10 price for a regular adult ticket. The average cost of the borough’s 28 theaters was $14.30."
This one just happens to be my closest, preferred theater:
"The most expensive regular adult ticket in New York City was for $17.49 at the AMC Loews on Manhattan’s Upper West Side."
At those prices, MoviePass is a ridiculous deal for me.
Source: https://www.valuepenguin.com/2015/04/movie-ticket-prices-ins...
People will go to a lot of movies if you make them free while burning through VC money? Holy shit what a scoop!
I worry we are approaching peak hubris
I pay €23.40/month (about $27.50/month) to be able to watch as many movies as I want in all German UCI cinemas. There are no limitations (I think our record is watching five movies in a day) or surcharges. (I think some select newly renovated or built cinemas do take surcharges for certain special seats or cinemas, but I’m not affected in the city I am in.)
That’s definitely worth it for me, considering that I watch a couple hundred movies per year in the cinema. (You need about 3-4 movies/month to easily get above the €23.40.)
The other big chain chain cinema in the city (cinemaxx) offers a similar flat rate (but at a higher price) and this flat rate hasn’t been in place forever, but for at least a couple of years. I would have assumed that you can get something similar everywhere and if not, why not?
At the time there were a few restrictions, you needed to pay more for 3D or IMAX, and you had to collect tickets from the counter. This last part meant going at peak times was discouraged (as you needed to queue and weren’t guaranteed a ticket), so I usually went at off peak times when the cinema was usually empty.
If my local Cinema (incidentally Cineworld) offered it I would seriously consider going there more often.
https://www.cineworld.co.uk/unlimited
For reference, at my local Cineworld in Greenwich, 17.90 is less than the cost of two adult tickets.
Obviously you shouldn’t watch the new Avengers movie during the first couple of weeks, but I wouldn’t watch it during those weeks even if I had no flat rate. Cinemas full of people are awful. (Also, I think I can even order online, but in practice that was never necessary and I do want to sit next to my friends.)
Because this is a discussion forum and OP is discussing this price point.
€400 for a year (€33/month) and you have to pay it upfront.
I would probably go for it if I had to, but that’s close to my personal limit of what I’m willing to pay. Especially the whole prepaid aspect is a bit hard to swallow. (Since I have my UCI Unlimited Card now for more than a year I can cancel it monthly.)
I know film buffs who would grab this deal in a heartbeat. The cinemas would win, too, by turning brand-indifferent customers into loyal ones (without having to invest in reclining seats or liquor licenses).
One thing you see time and time again is some version of the old joke: “We lose money on every unit, but we make it up on volume!”
It's a smart way to grow your app, but they need to be smart to sell something good to monetize their usr base wel now.
Their business was selling dollar bills, and their model was to start by charging $0.75 to drum up business. Once they had a large user base and a well-tested service, they were going to raise prices to $1.25 to become profitable.
(MoviePass might be a good idea, but it looks like almost all the value they actually offered came from the unsustainable pricing.)
No business survives when its runs on their customers stupidity.
"Most businesses would close if their customers never showed up. An empty restaurant is a disaster. An empty store means bankruptcy. At a gym, emptiness equals success.
Today on the show, the mind games that gyms play with you. From design to pricing to free bagels, gyms want to be a product that everyone buys, but no one actually uses."
From Planet Money: https://www.npr.org/sections/money/2014/12/17/371463435/epis...
Still, the NPR story mentions 15$/month Gym! in Manhattan! And its a huge place that can hold 300 people.
Americans are crazy...
The question comes down to one of runway, and it's tough to tell if the CEO is being truthful about future investment.
It seems risky but I'm curious to see if I should give it a try now vs. waiting until they get more "creative" with their plans.
But yeah it’s pretty dumb for that to be their only game plan. They could pivot and license their tech out to chains to run their own programs - especially smaller chains.
Since it's now only good for once a week, they will not.
If movie pass owned the product they were selling they might have been able to pull it off.
If only 1% of your members want to use a squat rack at peak hours, you need gear and space for one rack per 100 members. But if 10% of your members are in squatting at noon on Saturday, you have 10x the capital and maintenance costs. And that's even before hardcore members create other costs like wanting unusual equipment most people won't use.
The obvious answer is pricing discrimination - people who work out more care enough to pay more. But it's hard for one gym to sell tiered access to facilities, plus the different groups often don't want to work out together. Hence, Planet Fitness.
It's hard for me to see what MoviePass could do in this vein. They have the same low-occupancy objective, but much less consumer optimism (who makes a New Year's Resolution to see more movies?) and much less ability to shape behavior; either you want to see a movie or you don't. The only option I can think of is horizontal integration - gyms target either high- or low-use consumers with open access, but MoviePass can more easily sell "x visits per month" for a range of X.
PF has the lunk alarm. Netflix's dvd service use to give preference to its less active customers on new releases. If MoviePass owned their product they could play that game as well. Like price discrimination, but modifying the value.
Netflix needs very little commitment to use, just a few mouse clicks and you are in. With moviepass you actually need to go to a movie theter and hope the sits are not full and needs your physical commitment to use their service.
Like Gym membership, the first few months of every year people might jump into it but that not so much - but most likely will continue to pay for it.
I am not saying moviepass will be a success but there are some solid logic to their business model and it just might work, as long as they have the fund for the initial loss from new users.
Going off-topic here but: you're doing it wrong. The gym is supposed to be fun; have you tried joining different classes or swimming? If you're not into working out solo (I'm usually not for example) there are usually group classes of all types available. Talk to them: they'll be happy to help you find something that you'll enjoy doing or alternatively just cancel the membership, if you find that embarrassing just don't mention it to anyone.
Nobody would ever go to the gym regularly if they didn't find it to be a genuinely fun activity.
Still not fun and was never fun. Working out while watching TV even makes TV unenjoyable.
Even the activities I did as a kid weren't fun: soccer, dance, gymnastics (which I was good at).
I did it for the same reason I clean the dishes, because it's something I "should" do and it improvedy quality of life.
I can certainly appreciate some people get enjoyment out of physical activity, but just the same, some people find it miserable.
Personally there are a lot of reasons why I usually watch at home but sometimes go to a new release on a big screen. Money doesn't really factor in.
The experience of watching a movie at home, with a few close friends, on a 65 inch OLED, with a Dolby Atmos system, and access to my beer fridge and refreshments from the supermarket, is far superior to anything a cinema could offer.
This, at least, theaters seem to have realized. Increasingly, (urban) theaters are offering seat choice at booking, cushy reclining chairs, real food, and full bars. Sure, you've got to go out, and dinner and two beers will run you $40. But if you don't care about cost, you can at least see new releases under conditions as nice as home.
It might be too little, too late, but there's at least some recognition that a big screen and good sound are no longer a theater-exclusive draw.
I also wish it wasn't essentially a flat price for everything. A small, medium or large anything is generally just fifty cents to a dollar away from any other size. I want a small soda and popcorn I get pressed to size-up for that extra few cents to get a gallon/barrel of each.
Not that it's your problem as a consumer, but factor in that your ticket price pretty much all goes to the studio. (correct?) And getting $8.50 for the large which costs $0.14 better than getting $8.00 for small which costs $0.12
But if AMC adds their own pass subscription, I don’t think they would be. My impression is that theater chains have great margins and very low marginal cost to add one more viewer. In my area, there are only a few theaters playing the major hit movies, and I don’t think it would be a problem to subscribe to a particular theater.
I really think AMC is holding onto a $19/month plan for unlimited movies, which would be profitable for them out of the gate.
Time to cancel MoviePass, and I guess also time to admit that I just don't care that much about seeing movies on the big screen.
On one hand, the subscription costs less than a single movie ticket where I live, and even as an infrequent movie-goer I'm pretty sure I'd save money.
On the other hand, they're obviously going to crash and burn, and who knows what they'll do with my account at that point. What's the worst I can expect? Spam? Robocalls? Identity theft?
I had it for a month and then tried to cancel before my renewal; it took 3 full weeks (21 days!) of pestering their support over email every 3-5 days to escalate my refund case, and I had to threaten a BBB case before my ticket actually got escalated, and I finally got refunded 4 days after the threat. They do not have phone support at all.
(Might be newly added depending on when you cancelled). Doesn't necessarily mean they have good customer support, but probably a step in the right direction.
So there you are, a simple way to terminate your own account :-)
But probably even closer to insolvency. I love it though.
When it goes under, you lose just that months fee. In the mean time you get to go the movie theatre.
As a MoviePass customer I buy more concessions since my budget isn't blown on the ticket.
The AMC average ticket price for watching a movie at AMC Theatres in the most recent financial quarter was $9.33. From what we can tell, by definition and absent some other form of other compensation, MoviePass will be losing money on every subscriber seeing two movies or more in a month. [...] In AMC’s view, 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. AMC also believes that promising essentially unlimited first-run movie content at a price below $10 per month over time will not provide sufficient revenue to operate quality theatres nor will it produce enough income to provide film makers with sufficient incentive to make great new movies. Therefore, AMC will not be able to offer discounts to MoviePass in the future, which seems to be among their aims. While AMC is not opposed to subscription programs generally, the one envisioned by MoviePass is not one AMC can embrace.
MoviePass has proven theaters are interesting to more people than I'd have thought in a world of 70"+ TVs and 4K streaming. A smarter Pass could experiment with non-peak times, second release movies, and concessions.
Average ticket price really isn't the best metric with the fixed costs of a theater.
If Movie Pass fails it still helps set an unrealistic price for the cinemas who won't be able to match it. It may drive even more people away from cinemas who no longer wish to pay full price.
MoviePass would make sense if the major theater chains did it and focused on slow days. If the lights are one, movie playing and theater staff has to be on site, adding additional users would cost next to nothing. Add popcorn and soda purchases and they'd make out like bandits.