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Comment by legitster | Hacker News Reader

If I am a traditional 'tech' company - I can afford to lose money when I am investing it in my platform or technology. It's like borrowing money to invest in your assets.

For MoviePass, they are losing money and passing it off to theaters - it's like borrowing money to buy more ingredients for a failing restaurant. You can't charge less than the marginal cost, it doesn't make sense!

I am trying to wrap my head around what MoviePass is trying to do - especially given the number of friends I have who say they would easily be willing to pay 2x or 3x for the service. The data they are gathering cannot be more valuable than the cost of a movie ticket.

I have to imagine they were making a play at building up a huge enough audience to strongarm theaters into lowering their rates. Well the joke is on them - everyone knows that they have no bargaining power. Plus, signing up was so hard, their audience is skewed towards power users and people persistent in their cheapness.

An emergency loan with no change to the service whatsoever? They are really having a deer in the headlights moment.

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>You can't charge less than the marginal cost, it doesn't make sense!

The old joke is "Sure we have marginal losses, but we'll make up for it with volume!"

How do you make money doing this? The answer is simple: volume.

https://www.nbc.com/saturday-night-live/video/first-citiwide...

I mean the plan seems to be that except the marginal losses are supposed to go down as they reach higher volumes. Attract the heavy movie goers first and lose money on them till you can attract enough light movie goers that will buy this and forget about so you can afford the people seeing more than 2 movies a month. There's other ways to drop that marginal cost like getting deals from theaters on tickets for bringing people in (eg give us a better deal or we'll block our users from your theaters) and sell data.

I don't think this is going to work out but I can see how this would look workable in a model and pitch.

That might have worked before Netflix and Amazon Prime and other online movie services. The light movie goers are all online now. Only the heavy duty die-hards are still going to theaters to see first-run films. I haven't gone to a theater movie in over three years.

The never ending stream of largest box office takes makes that seem unlikely. Seems there's still a pretty strong desire for blockbusters and kids movies.

Ticket prices keep going up too.

> I haven't gone to a theater movie in over three years.

The funny thing about this is that sometimes my wife and I want to go to a movie on a date night but we can't even find something that we actually want to go see. We'll go out for dinner and then instead of going to a movie we'll come home and watch another episode or two of a good TV show. High budget TV serials are so good now that movies can barely compete.

Exactly. Most people aren't stupid enough to sign up for things they won't use.

The subscription model where you assume your customers just forget to unsubscribe will never go anywhere.

> Most people aren't stupid enough to sign up for things they won't use.

That's the gym model, sign up people in January for a yearly gym membership, have 90% of those people not visit past the end of the month.

And gyms often lock you in for a year, so it's not like the people have forgotten about it... they just can't cancel yet.

I assumed their plan was to have such great volume that they'd eventually be able to negotiate (larger?) bulk discounts with theater chains and thereby get their marginal profit back above zero.

Agreed. Somehow, they need to get the theaters and/or the studios to share in their model.

If they can demonstrate to the theaters that their heavy users are worth a lot more than just a ticket, perhaps high concession sales (through coupon redemption), then maybe the theaters would consider giving them a break on ticket price because they're supplying high-value customers.

Secondly, if they can pump the hell out of new movies so the studios or distributors get an even bigger bump on opening weekend, then the studios might be willing to fully or partially fund those tickets for that publicity (aka "trade spend").

Someone suggested that you could finance a money-losing startup by shorting the stock of its legacy competitors.

Right, the old "Let's sell $1 bills for $0.99!" Make up the loss with volume! =)

An emergency loan with no change to the service whatsoever? They are really having a deer in the headlights moment.

Reminds me of a startup I worked with once.

The goal wasn't to make a viable product. It was to make a big splash and get bought.

  10 Start a product/service
  20 Make a big hype and get lots of publicity
  30 Get bought by some larger company that sees you as a threat/opportunity
  40 Founders get big cash payout, everyone else gets the shaft
  50 GOTO 10

This unfortunately is probably the untold goal of 80% of startups around the Bay area that have unsustainable business models.

What I find ethically borderline is that no founders will admit this, they will all pretend their goal is to make it a super successful sustainable company.

As you said, the issue is that founders will usually get a moderate payout (a couple Million$), while even early employees will get almost nothing.

The problem isn't necessarily one of ethics, it's that employees aren't able to appropriately assess a companies business strategy.

1. What is your monetization strategy?

2. What is your plan for profitability?

I have to 100% disagree about your assessment of ethics. If you're hiding things from your employees so you can get your bailout and shaft everyone else, how is that ethical?

You're statement has an underlying assumption that founders are hiding things from employees.

As stated above, I think its that employees aren't asking the right questions.

It's like when purchasing a vehicle; it's up to the buyer to educate themselves. Savvy buyers get better deals. We'd like to think of our industry as a meritocracy; but it's still largely based on humans with monkey brains,and greed is a powerful incentive.

You'd better believe they are absolutely hiding things. Dont believe me? Go into the CEO's office and ask about the financials, and see what they do.

Who are we talking about here--founding employees who are presumably taking lower than market salaries for more equity, or someone else?

I asked our CEO to give us an update on our runway, and he told me. I guess he could be lying, but I don't see what purpose that would serve.

At my previous company, the CFO was invited to our semi annual engineering meetings, and he'd give us the last quarterly numbers, along with a lengthy Q&A.

At the startup I co-founded before that, the CEO/co-founder was very transparent about our financials and gave me all the time I required to understand the impacts of the business decisions he was making.

Before that, at INRIX, at least once a month during our weekly all-hands, we'd get our financials detailed to us.

Being a founder requires optics, progressive disclosure, and getting creative with the representation of data, but in my experience, I've yet to be in a situation where I felt I was lied to, or purposefully misled.

I actually worked for a startup and during its last days, they had weekly meetings telling us the status. We all knew the end was coming. After we all got laid off, we took our severance, and everyone had a job in two or three weeks.

If you receive options and exercise at least some of them then you'll become an actual shareholder with rights to see certain parts of the financials.

Exactly, also asymmetrical decision power and non-aligned incentives.

If you are a founder and you get a proposal for a 10M$ acquisition, you know you will make something around 2-3M$, which is not too bad.

The employee however will make a small 100k if he owns 1% after dilution, which is usually not the case. This is after many years of hardwork, probably taking a paycut of at least 100k$ per year compared to a big company.

Honestly, as an employee, I don’t care. I won’t be persuaded to take a lower than market salary for the promise of equity. If the company does well and I make some money off of my equity, it’s s bonus. If not, I call my list of recruiters and have another job in 2 weeks to a month. I’m no special snowflake, good developers who keep their skill set current can easily get a job. I’m nowhere near the west coast but it’s been the case for me for 20 years.

My criteria for a job is the technology stack, the environment, and the money.

What if founders were personally liable for losses?

I find it non acceptable that founders get out of LowBall acquisitions with a couple Million$ , while early employees that worked almost as much, will in the best case get out with 100k$, in the worst case nothing (depending on the shares classes)

On the ethical side, I fully agree, however that‘s not how things work. Investors are insured through liquidation preferences. If shit hits the fan, it‘s very probable that they will get at least their money back with a firesale or an aquihire. For all of these variants of an ordered shutdown, you‘ll need some coherency though. Nobody will buy a sinking ship with 90% of the crew already gone.

Im cases like these, founders are in a strong position, even if on paper, their shares would be worth zero. So for their service to stay on deck until the last moment and let the band play (in order to save some investor money), they are usually generously paid from the remains — the term you‘re looking for is carveout.

Punishing founders will make the investors look bad and cost big money, so both sides collude at the cost of the employees.

It is slimy, and I had to learn that the hard way. There is a lot of sleaze in our industry.

But as someone who has spent his entire career working startups, and just a human who has seen other scams before, I think the cliche about not being able to con an honest person is fairly true. If you buy the hype that you'll make an unreasonable amount of money in a short period of time, well, buyer beware.

The only possibly unethical thing here is if equity was used as a carrot when hiring you. Other than that- do you like the job? Are you happy with the pay?

>As you said, the issue is that founders will usually get a moderate payout (a couple Million$), while even early employees will get almost nothing.

How is that an issue? To quote Robert T. Kiyosaki's book "Rich Dad's Cashflow Quadrant: Rich Dad's Guide to Financial Freedom": "Your boss' job is not to make you rich. Your boss' job is to make sure you get your paycheck. It's your job to become rich if you want to."

There is a funny south park episode that goes over this: https://www.marketwatch.com/story/what-south-park-can-teach-...

Unfortunately, I know of a startup that did exactly this and made out like a bandit.

An acquaintance of mine started some Java/Web startup when the web and Java were just taking off (1998? 1999?). He made a lot of noise. Then he hired a top B-school alumnus to specifically get his company bought out, and promised him a large chunk (30%? I don't remember) of the company if it went for more than $X million. Well, lo and behold, the B-school guy found a sucker and the company sold for close to $50M. This guy retired right away, and now cruises around as an "angel investor".

This is likely all too common.

After all, who's in a better position to know when someone's trying to sucker an investor?

Yeah, that was a popular pattern in the early 90s. Basically take a EE PhD thesis, dress it up and build some early engineering samples, file a patent application then go to Cisco saying "buy us or we'll make this product".

It worked a little too well.

"A startup I worked with once"?! That's the dominant start-up model.

It's crazy. The data is basically worthless. I honestly don't know if they will survive for more than a few months.

I was just thinking, what could they possibly do to survive as long as possible?

They could introduce incentives to reduce the number of movies people saw a week? Maybe some kind of credit system, where customers built up points towards a premium membership.

They could also start taking the most expensive users of their platform. For whatever reason they could. Ban users sharing accounts. Introduce friction somehow. Get them to reenter their payment info.

The customer data is mostly worthless but it's scary. They could weaponize it. Announce to high use customers that they're going to sell non premium customer data. Might scare off some privacy minded customers.

Strong arm theaters somehow? Send customers to certain theaters and away from others by dangling credits toward premium or some other incentive structure

Weaponizing customer data like that would literally be illegal in the EU, so doesn't seem like the best plan...

Other ideas might work!

Moviepass is not available in the EU.

Oh okay, that's alright then /s

true, but I think their point is that if the policy catches on there as popular, what is to prevent the US (or others) from implementing similar laws? Relying on a business model that could reasonably be illegal after the stroke of a pen by a legislator is not a good thing. And legislators are at least putting on the appearance of being concerned about user data after the Facebook/Cambridge Analytica thing would cause one to exercise even more caution.

Regulatory capture, bribes (AKA lobbying), a culture that devalues privacy, a culture that places corporate rights over individual rights, a culture that doesn't like sane limitations on contracts, etc...

So long as Google is an 800B behemoth who invests more than anyone else in lobbying, monetizing customer data (and sucking up massively more data than needed) is going to be legal.

> They could introduce incentives to reduce the number of movies people saw a week? They could also start taking the most expensive users of their platform

They've already done this. Just like unlimited data doesn't really mean unlimited. I guess they need to lower the thresh hold even more and affect more of their customers?

> They could introduce incentives to reduce the number of movies people saw a week?

Since I joined, they pretty much did this by limiting people from seeing a movie more than once. There just aren't that many movies, and nobody really wants to see every movie that's out.

It's pretty frustrating how they sold me a year-long subscription and then immediately started changing what I bought. I'd rather they used some of this borrowed money to refund the remainder of my year.

> I'd rather they used some of this borrowed money to refund the remainder of my year

Issue a chargeback.

Use some of the funding to start their own theater chains?

Becoming movie payola was the way I thought they would go. They could be an avenue for studio to discount tickets to specific films without some of the problems of traditional couponing. This could either just drive buzz, or could allow studios to goose opening weekend sales by paying MoviePass to push films, as well as reimbursing MoviePass the ticket cost.

Probably not enough to become profitable though.

Didn't moviepass just show they aren't capable of pushing a movie with their big "Gotti" campaign?

The Nerdwriter has a good video (short, just 6 minutes) about it: https://www.youtube.com/watch?v=w876zZZIb10

The gist of it is, they're hoping to grow so big that movie theaters will have no choice but to negotiate with them, to share part of the revenues they bring theaters from people who normally don't come watch movies on a whim anymore.

But why not increase the membership fee marginally in the meantime to stay afloat? I suspect the vast majority of members would stay.

Also as another user posted below, set a cap on the number of movies you can view per month and offer a premium unlimited membership upsell.

They are starting to do it. One of their new features is charging a few dollars on "hot" show time.

I'd rather just get a ticket to a different movie twice, via moviepass, and just pay to see the "hot" movie normally.

I hate this surge pricing bullshit. It's just scalping and I'd rather lose moviepass entirely than every contribute to that shit.

Isn't that kind of rent-seeking?

Not if they are providing a better customer experience along the way as well as drawing new customers to the market. "Rent-seeking" implies a desire to simply extract cash without providing any value to anyone.

And the movie theatres just created thier own subscription service. Why should they pay a third party?

Being able to go to a different chain is nice. For example, near home there is Regal theater, but near where everyone hangs out there is an AMC.

I'm considering switching from MoviePass to AMC A-Stubs or whatever it's called, but will lose out on the opportunity to walk to my local theater for a free flick.

The best part about this is that you called them "free flicks". Are they actually? I was under the impression you were paying something for them?

If you're paying $10 a month, you normally see 1 movie per month, and you're thinking of the monthly fee as paying for that one movie, any additional movies you see are effectively free.

Offhand, I don't think I actually see 12+ movies a year on average.

In recent years it's mostly been Marvel films + a random other thing that I also happened to be interested in seeing (E.G. Incrediables 2).

My wife and I were exactly the same way. Only the “event” films were worth seeing in the theatre. Most other movies we would see when they fell off of a truck onto my Plex Server.

We have gone to see a lot more movies this month since we had it. If you see two movies a month you break even. If we see one $17.26 IMAX movie we almost break even.

But more importantly, for us. It is a commitment device. There are a lot of times that life gets busy and my wife and I don’t go out. Now we just get out the house once or twice a week and go to a movie. We can even meet for an extended lunch sometimes since my wife had a split shift during the school year. She’s off during the summer.

Yeah, I'm definitely going to at least 1 movie each month. So MoviePass was a no-brainer. Walking to the theater and watching The Foreigner felt completely free to me. I would never have seen that in theaters. That night I would have been home alone playing games or watching TV.

This is sort of like Amazon's tactic with ebooks and such. Lose until your volume is high, then when you've cornered that particular market, negotiate a workable cost per unit.

I really hope it works out -- but in all sincerity, I don't see why the theaters themselves aren't just copying this for their chains. MoviePass has already demonstrated the market.

Theaters are copying this for their chains - see Cinemark Movie Club and AMC Stubs A-List.

And to me that means Moviepass has done its job. I subscribed to the annual Moviepass plan, tried to use it last night (which failed, see article), so signed up for the Cinemark Movieclub, which lets me buy tickets online, and days in advance.

I might sign up for the AMC one, or regal.

mostly I like to see movies at Cinerama though. Just way way better.

They've done this in the UK for at least a decade. The two biggest chains each have an unlimited subscription service. They're both £18 though, so a lot more than moviepass

I don't see how it makes sense to copy a strategy that loses money when someone else is already following that strategy and going broke due to all the money they're paying you.

The strategy only loses money because they are paying full-retail price for movie tickets.

AMC's A-List (costs $19.99) does not pay $9-$13 per showing a la MoviePass. They pay the same space/personnel costs per seat they always have. Tickets have never been a theater's largest or most desirable source of revenue.

It was my understanding the ticket price basically covered the film licensing cost, the movie theater made basically zero profit of that. They make their profits off concessions. I don’t know if that’s true still or not, but used to be the case.

> I don't see why the theaters themselves aren't just copying this for their chains

They are.

> You can't charge less than the marginal cost, it doesn't make sense!

It worked for Uber tho. And now they've raised prices in markets where they are established.

Uber has a network effect, so it's naturally monopolistic. Cinema passes have a network effect too (you only want the pass if the cinemas near you have it), but firstly it's much much weaker because you literally only need your local cinema, and secondly that's a network effect that helps the actual cinema, not a random middle man like moviepass.

Uber has a network effect, but it's not exclusive—hence the larger number of drivers driving for both Uber and Lyft. I don't see Uber's position as being very entrenched at this point.

Uber also plans to cut costs significantly in the future w/ autonomous cars. May be a pipe dream, but if they believe in the successful widespread deployment of the technology, that means they just have to stay afloat until then.

MoviePass could start to make their own movies, but that would require a substantial investment and isn't really comparable

Wow that would be something...

what would happen if Universal Pictures stepped in with a subscription model (or whatever Moviepass does) for their movies?

Why build when you can buy?

Universal just has to buy MoviePass. Assuming it has the cash. From what I've read over the last few years, the big Hollywood studios are not cash-rich.

I forgot where I read it, but I though Moviepass's ability to geolocate and push money onto a credit card was considered a good idea and could sold.

Hardly seems like a large barrier. I would think the biggest issue would be finding the card company to partner up with, and then it doesn't sound like a very high barrier.

For theatres it's even easier to offer an unlimited option since they can just have the accounts internally. Studios can partner with theatres, though that seems overly complicated (I went to Mission Impossible last night, so I need a paramount account?)

Uber will not invent SDCs much sooner than the other companies, at which point they will have to cut their own prices too to compete with the other SDC companies. So there would be a very small window for monopoly profits.

If by "worked" you mean "burned through ten billion in cash" then sure, it worked.

True, I think that maybe Uber found the fine line (could be pure luck) between creating enough buzz right before running out of cash (several times) and simply going bankrupt.

That Q1 profit was interesting, but it's nowhere near a trend.

They may need another ten or twenty billion, or maybe infinite billions because their business model is critically flawed.

Except Uber was building a market.

If I start a company that just subsidizes Uber rides I'm never going to make money. Unless Moviepass provides some actual value to theatres, they won't make money. Theatres aren't going to give them discount rates to Star Wars or Avengers 4 because those movies sell out anyway.

Uber has a 30% take rate and zero marginal cost. Wrong example.

Uber offers a real, irreplaceable service though. I can walk out of my apartment and be on the way to my office in an Uber pool in 5 minutes. The cost is basically 2x of the bus ticket I'd need to buy. As far as I know this service was being offered by absolutely nobody before Uber.

Maybe hoping to make their money back when people let their subscriptions idle during the off season for movies...but this is most attractive avid movie goers so I don't see this working. People who don't go to movies all the time likely won't get it.

The problem with this idea is that (at $9.95) someone in my area needs to see one movie in the evening and they're ahead. Two movies, and MoviePass needs them to not see a movie for a full month to almost catchup, and they'd still be behind by $1.50. During the big movie seasons, it's easy to see 2-5 movies in a month. I've only seen 2 movies (since April) that I wouldn't have seen without MoviePass. I've seen 15 movies.

MoviePass has paid $137.00 for me, and I've paid them $89.95 (I bought the annual pass, joke's on me now, but I did get enough in to be better than break even). If I'd done the monthly I'd have spent $38.80 over that same time, they'd be out $100. They'd need me to idle for 10 months to catch up.

you didn't really break even as you said it yourself you would only have paid for two movies out of the 15.

The question is, do you really value the other 13 movies at (70$/13) a piece ? In my case probably not.

Perhaps I worded that poorly. I saw 13 movies I would've seen regardless, and 2 I wouldn't have seen. So I did break even (a bit better than, actually).

I, personally, enjoy going ot the theater, I always have. And in past years have seen at least this many movies (though with an emphasis on catching matinees and discounted options, like two-dollar Tuesday or whatever). Two movies (average) per month is not uncommon going back about 6 years for me, with some years being lower than others depending on the releases.

I've seen 1, maybe 2, movies with moviepass that I otherwise wouldn't have gone to the theatre for.

I think they are about even with me.

Would be behind, but their card wouldn't work last time I went. oh well.

It’s the dumbest thing I’ve ever seen and I’m still bullish on subscription commerce in general. A multi-brand theater pass doesn’t make much sense. Chains are much better off offering their own subscription. I’ve heard theaters pay distributors per ticket sold (not per screening or day) so it doesn’t have the dynamics of a perishable good. I don’t understand who would lend it money or buy its shares at this point.

They are trying to buy customers at a loss, then get so big that they can shake down theaters + their own customers for more money. It didn't work.

Many subscription services start to make money as users start to use the service less and less but are too lazy to cancel the subscription.

I listened to a podcast from the CEO about what their ultimate objective would be. The idea is to at one point have MoviePass be sponsored or paid ( or get a cut) of recommending things aside from the movie experience. For example, you'd get a deal with Uber to get to the theater or a list of great restaurants to try close to the cinema. Package an overall experience. I also think the data collected from movies that people are most interested in seeing would be of great use to publishers ( Box-Office seems to already help satisfy that). Problem is I think their cash burn rate won't allow them to get to that stage soon enough and I can't really see a light at the end of the tunnel for them especially considering AMC has started its own similar experience.

This is a very hand-wavy, Web 1.0-esque monetization model.

Acted-upon, local recommendations aren't worth as much as MoviePass is paying for customer movie tickets.

I was under the impression they were trying to have a big enough block of customers to take to the studios and try to get a percentage. As if their service would have sufficient numbers to sway debuts and over all movie numbers.

> The data they are gathering cannot be more valuable than the cost of a movie ticket.

Yeah, but they think they can get the loss low enough that it becomes feasible to overcome that with data. And it goes beyond just knowing what movies someone is watching.

For example, they know the exact location and time of where people are going to be (the app requires location to work). So MoviePass can use that info to upsell their customers to restaurants/etc around the theater and even transportation there and back. Create packages around this.

If I run a restaurant near a theater, why would I want their data?

I already know the clientele that visits the area, whether that's relatively high-end, working folks on their one-movie-night-escape a week, high school kids on date night, etc.

I can already trivially find show (and run-) times from the theater and plan to stay open later or otherwise staff accordingly.

I can advertise, in the theater even, for not a whole lot of money, and reach the people who saw "movie x". Theaters are happy to take your money for a 30-second spot in between pre-roll movie trivia clips.

If I'm an uber/lyft/taxi driver, the same thing applies -- it's easy to find out when movies are out, so it's easy to be in the area.

I guess I just don't see the value in "exact location and time" (at the theater, shortly before the movie starts) or any other data they can provide.

What am I missing? What use-case is there for that data that makes it worth paying for?

Oh, I didn't mean that they'd sell the data. But that MoviePass would use it themselves to generate more revenue from their users.

Instead of just movie tickets, they'll combine it with other things. Dinner and a movie. Movie then a ride home. Stuff like that. I think their plan is to take commissions.

> You can't charge less than the marginal cost, it doesn't make sense!

You can if you are dumping to achieve a monopoly and/or monopsony where you will then have pricing power on one or the other side of the transaction you are in the middle of.

But that's a game you either win completely before you run out of money or die horribly; there's no glidepath to a sustainable but not dominant position. And MoviePass seems very close to the die horribly outcome.

> it's like borrowing money to buy more ingredients for a failing restaurant.

Well, they're gathering people's information & movie consumption habits as well. I could imagine a similar business losing money on the movie cost but making up for it by exploiting people's data. Not sure how "well" they're doing on that front though.

“...be more valuable than the cost of a movie ticket.”

That’s the gamble right there. You think a movie ticket is worth what the movie theaters is telling you. MoviePass is calling their bluff by undercutting them on their own service if they get enough of the market theaters will have to cut them a deal they can survive on.

But isn't the marginal cost of a movie seat pretty low for the overwhelming majority of showtimes? I think they're banking on eventually becoming a reseller of inventory the chains themselves can't move.

The deer in the headlights moment might be when this outfit decides to pay for movies that people want to see.

I assume HN knows that most Hollywood movies are deliberately made for export to Chinese and Indian audiences.

Not saying it’s a good strategy but amazon seems to have done/is doing something similar. Each purchase is a loss when shipping is taken into account. But if the bleeding is slow enough the created ingress can be enough to shift the landscape so that there are new opportunities. Cultural lockin followed by price increases is a typical one.

Like the hub and spoke model of pizza shops. Basically bet that spoke opportunities will appear if the hub is engaging enough.

Amazon has since stop losing money on shipping. Especially considering all of the money they make on Prime memberships.

Amazon's losses to shipping can actually be lowered by improving logistics, alternative delivery systems, and negotiating better contracts because of the massive volume.

Plus I won't believe the "every purchase is a loss" narrative unless I see evidence. Especially recently.

Amazon has pretty much always been margin positive even after shipping so not a good comparison.

"The data they are gathering cannot be more valuable than the cost of a movie ticket."

When you install the app what does seek to access? Given that most movie theaters are surrounded by food & drink establishments then it would seem they're not too far from becoming a "niche" Groupon. That's got to add some revenue.

Moi? The data is a privacy issue. But I'm a fringe minority. Most ppl see deal and convenience and ignore the risks.

They already do strongarm some smaller theaters into getting a cut of concessions.

What leverage do they have to strongarm? If a theater is popular, that means MoviePass customers like the theater. MoviePass needs the theater more than the theater needs MoviePass. If MoviePass chooses not to pay for tickets at the theater, that’s a MoviePass problem.

It becomes the theater's problem if the customers have alternatives. In my area, they don't. There are 2 theater companies and 3 theaters. But say you're in Atlanta, there are tons of theaters, and often not too far from each other. So the decision to go to theater X or theater Y could easily be determined by which one accepts MoviePass.

Customer's line of thought: I've already paid for this service. It'd be stupid to see a movie without using it, because I'd be double paying (not entirely accurate, but this is the thinking). I can go 2 more miles and see the same movie at a similar time and not have to pay for the ticket. Sold!

The problem for MoviePass is the customers will do that, and MoviePass can't actually afford the tickets (since most of their spending, now, seems to be from borrowed money).

If MoviePass represent let's say 50% of your customer and suddenly they remove your theater from the list, I will bet you will lose about 90% of those MoviePass customers, so you will lose about 45% of your customers.

I have a MoviePass, and when they removed a big AMC theater around my place a couple months ago, I simply drove two more miles to the Century theater. I have zero loyalty to a specific theater//chain, I care a little bit about better seats though.

So yeah, their goal was to get that bargaining power by getting as many users as possible.

MoviePass' problem was that their biggest users were stingy as fuck. They would smuggle in their own snack and drink, instead of purchasing from the movie concessions stands.

This might not have been much of an issue (since MoviePass pays full price for the tickets), but they tried to make a play for all of a theater's concessions revenue rather than just the revenue traceable to MoviePass customers.

I agree and that's the issue when you compete and differentiate on price in the low market. The customers that subscribe, will do everything possible to save a couple $s.

It's the GroupOn problem. You're allowing people to self-select for being cheap, wanting deals.

The MoviePass system was probably pitched like a health-club membership with the expectation that nobody would ever use it, or like a streaming service people forgot they were subscribing to, but it seems they've captured a base of enthusiasts taking full advantage of the program.

Or at least selecting for the heavy user/expensive customer. I rarely go to the movies for reasons that have nothing to do with ticket prices. They’d love me as a customer but I’d never sign up.

Anecdotally 30-50% of Studio Movie Grill (southern chain of dine & drink theaters) patrons are Moviepass subscribers. The food and drinks are their primary profit centers to the point that they often don't even bother with ticket monkeys. If Moviepass interrupts that stream of customers, the theater starts losing out on sellout showings nearly everybody is purchasing a meal and drinks.

I'm not 1000% up on how they tried to do it, but I remember seeing (on HN, I think) that they would see a non-chain theater be popular, and so they would threaten to not list their theater in the app unless they gave them a cut. The commenter said they saw it with 2 theaters, both initially told MoviePass to go pound sand, so they were delisted. One barely noticed, but the other saw a significant decline in patronage, so they had to go back to MoviePass, hat in hand.

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