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Comment by k1ns | Hacker News Reader

I might be uneducated about the issue as a whole, but I don't really see the negative side to this service.

$10/month for 3 viewings per month. That's 3 movies for the price of 0.76 movies where I'm from (last time I went tickets were $13). Then, after you hit that cap, extra viewings are $5 less per ticket which has to be less than any one movie ticket for any new feature anywhere in America. Am I missing something? Are they just getting hate because they lacked foresight in the beginning? Is it because they gambled with investor money on a ridiculous business model? I have a genuine curiosity around where the hate is coming from.

I don't like going to movie theaters but if I did I would think this was a great deal.

EDIT: to correct the misinformation that each additional ticket was $5

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It is a great deal. The problem is that MoviePass persisted for so long with a model that made no financial sense whatsoever, and now their customers have gotten used to it. There's no way to sell this as anything other than a giant downgrade.

> MoviePass persisted for so long with a model that made no financial sense whatsoever

You can say that about almost every start up discussed on HN

That's not really true. MoviePass is an outlier in its crazy business model that loses money on every customer. Most other start-ups just have high cap ex but make marginal profits per sale.

Funny enough I worked at a ecommerce clothing “startup” that had upwards of $75 million in sales but wasn’t profitable

...how? What was the game plan? Why would they do this?

Happened all the time in the dotcom bubble:

"We lose money on each sale but we'll make it up in volume!"

Having started my career at the start of the dot-com boom (and later bust), that was damn near every startup I came across.

Our little agency ended up moving into eTour's space in Atlanta (VaHi) when they departed. Nice movie theatre built into the space.

Customer acquisition? In some cases it might make financial sense to lose a small amount of money per customer if the cost per acquisition is more than the amount they're losing.

Network effect? I'm not sure this would apply to a clothing retailer, but there are lots of services out there that have a marginal cost per customer but can't effectively monetize until they have a sufficiently large customer base and therefore have access to enough data to be marketable.

Exit strategy? A company with x million customers, even if unprofitable and unsustainable in its current state, is worth more than a company with x/n customers that is marginally profitable in many cases.

As for this case in particular... I don't know. I suspect that a case could be made that the money they're losing has them in the media enough that they're basically paying for advertising by being unprofitable. I doubt I would have ever heard of MoviePass if not for them being constantly in the news.

The CLTV is high in fashion - people return to shops they like over and over. If they're in high growth, they're spending a lot in marketing to get new customers acquainted with the brand.

Facebook wasn't profitable until what, like year 8 of their existence?

Similarly SpaceX now is being awarded more than 50% of all commercial space launches, but burned money in the beginning.

SpaceX is trying to develop a new kind of rocket, with insane upfront R&D costs.

MoviePass is trying to sell movie tickets for less than they paid for them.

I don't think those are similar at all.

This is facially true. But I don't think MoviePass would describe their service this way. They would say they are gathering unprecedented amounts of personal data about movie preferences, which can be worth millions to movie studios and TV production companies that want to know what type of content will attract viewers. Framed this way, it is more understandable that they would need to burn cash in order to get the ball rolling on data collection.

Still, it's not rocket science and probably could have been done much more cheaply (just offering subscription coupons or something).

is said personal data harvesting going to be worth multiple dollars per movie somebody watches?

somehow i doubt it.

SpaceX lost money on R&D, they didnt lose money on the launch itself. i.e. every actual customer increased the money in their bank account.

I recall Jet.com (now owned by Walmart) tried to meet to meet or beat Amazon prices without the efficiencies of Amazon. So it was burning through VC capital losing money on most sales. I dont know if the model have changed under Walmart.

It's not about profitabity. It's about marginal revenue per usage.

If amazon initially dropped ship books to you that they ordered from Borders for $12 and sold to you for $10, they would have gone bankrupt. Amazon generally made money on each individual order.

Planet Fitness isn't burning money every time you go into their gyms.

MoviePass assets decrease every single time any user makes use of them. AMC A-List can possibly survive, MoviePass can't as is.

MoviePass has to demonstrate a model where the marginal revenue per usage is > 0 or that the total cost of a user is easily managable to be under their monthly subscription cost. I'm not convinced either are possible.

I'm a happier customer because I know what I'm getting and have seen 100+ movies on my costco annual subscription, but have zero expectations for them to survive.

Let me try....

"We know you're bummed, but you've gotten a great deal from us in the past. We continue to offer a great deal, one that is sustainable enough that we can continue to offer you great deals in the future.

Thank you for your understanding -- go see some great movies!

Love,

MoviePass "

Just playing devil's advocate...

"Why did you offer me a service that was unsustainable in the first place? I just want the keep paying the same for the same product you've sold me for the last x months."

Why did you sign up to an unsustainable service in the first place? It's not a big deal if they change the price. Pay up or leave, I don't see any problem here at all. In the UK phone companies are allowed to raise prices during the duration of a fixed price fixed duration contract.

As an end-user, am I responsible when you create a business with an unsustainable business plan? I think even the most educated consumer would look at that and think "great deal to be gotten while I can".

Moviepass probably shouldn't have any right to complain if they lose users, but users should definitely complain because they are being screwed, at least until the new plan becomes the new normal.

How are you being screwed?

Moviepass has changed the terms of the original agreement when signing up with the service. Just because they can do so and legally doesn't make it any less of a screwing. Just a legal one.

You can cancel. They're letting you know.

Just because they can do so and legally doesn't make it any less of a screwing.

I'm pretty sure you can legally ask them to pull out at any time, especially if contract terms have changed. They must have a cancellation procedure (that I'm sure is quick and easy /s).

I don't see how this is any different from, for instance, AT&T changing their rate plans on a regular basis and charging more for tethered data (which used to be included), or Cox instituting a data cap and charging $50 to remove it (which used to not exist).

Lots of businesses run on a subscription model, and lots of those change their subscription plans with no grandfathering.

Yeah, and it's a crap customer experience imo. You're lured in with an attractive starting offer only for the company to change the deal after you've signed up. Maybe im just being overly optimistic in thinking it'd be nice if companies would just sell me their product/service at some sustainable, relatively stable rate?

It happens a lot with car insurance companies in the UK. They start you off with a low quote for your first year then when the renewal comes around suddenly the price doubles. Then you phone them up, tell them about how you found another quote for half the price and magically they can halve the renewal quote they gave you just last week.

The difference is movie pass is changing the rules every month or more.

"If we were to continue offer our product at that price, MoviePass would be no more within a month, and we couldn't bring you movies at any price. We continue to offer great movies at an exceptional price, and look forward to working with you for years to come.

Love,

MoviePass "

The model still makes no financial sense. This reduces their burn rate by pushing away their most costly customers, but it doesn't address the underlying problem. MoviePass isn't creating value. Subscribers might receive positive value from the service, but all that value is simply payments from investors to use the service.

The idea has always been acquiring lots of customers (essentially by gifts) and then being able to negotiate hard with cinemas on that basis.

But cinemas are hardly a monopoly-- so there really is no room for the price to go down. They are presumably already operating at long run minimum average cost, which is equal to price, and there's zero economic profit being made. I would guess that if a service like MoviePass can exist it's because it's increasing efficiency in some non-obvious way, like reducing transaction costs or enhancing advertising.

In 2017 AMC made 5 billion in revenue and took home 500M in cash. I would say they are doing just fine.

https://www.nasdaq.com/symbol/amc/financials?query=cash-flow

I would disagree that movie theaters are hardly a monopoly. You usually only have one in a given geographical area. In a major metro you may have more options within a short distance but even then they are usually not walking distance from one another. And even if there are multiple options in same locale they may be same company and still a local monopoly. For example in Chicago, there are 4 movie theaters in downtown area, 3 of them AMC.

>In 2017 AMC made 5 billion in revenue and took home 500M in cash. I would say they are doing just fine.

That's why I was careful to say "economic profit". On the books numbers are all well and good. But the only indicator I'll take as a sure sign that an industry is profitable in the economic sense is if the number of firms in the market is climbing (i.e. new people are scrambling to get in on whatever benefits they perceive there are to being on the supply side of the market). And movie theaters seem to be more or less in an equilibrium to me.

Isn't that definition a bit flawed? By this logic, wouldn't Google's search product and their industry be economically unprofitable? The number of search firms is not climbing (in fact its dropping) but Google's search business makes lots of profit (and growing).

Your counter-example describes profit/growth due to monopoly.

Perhaps the parent meant a distinct defintion, for a competitive industry.

In a world of perfect competition you'd be correct. The airline business is close enough to that ideal, that little profits are made. But the reality of the Cinema business in the US is they make healthy profits.

On concessions, not on the movie tickets. Most of the price of a movie ticket goes to the studio/distributor for the first month. By the time the theater takes >50% of the price of the ticket, the audience has dropped to the low single-digits per showing.

The MoviePass customers that most used the service (aka >3 movies a month) were also the ones least likely to buy concessions. Thus, theaters had no incentive to give MoviePass a share of their gross (meaning total) concessions revenue in lieu for increased ticket revenue.

yes/no. I used to never buy concessions. spending an additional $5-$10 on top of my $15 ticket wasn't something i was willing to do.

However, if my marginal cost to see the movie is $0, it turns out I was willing to spend $5 or so every so often to get something to munch on during the movie.

While I haven't spent a huge amount on concessions, I've probably spent more on concessions in the 6 months I've had moviepass than in the combined 30+ years preceding it.

The theaters have access to lots of data on their moviegoers, especially through their rewards programs. Way more than what MoviePass has. If the data showed that MoviePass members were more likely to buy concessions to the extent that it affected the bottom line in a material way, right now we would all be feting MoviePass for its daring-do and forward thinking as it announces yet another theater partnership, instead of discussing its impending demise.

why? Do you not think AMC created a competing program for this vary reason.

They were planning a synergistic business model to market other businesses when you go to the movies. We hope you enjoyed your movie. Stop by Paulys Pizza next door for $2 slices.

Movie theaters already have that, it's called in-theater advertising, which nearby synergistic businesses have the greatest incentive to participate in (and create movie patron offers, sometimes in partnership with the theater, to promote in the ads), and do.

There's no need for the middle man.

That has yet to materialize. This move also would make that even less likely to ever come to fruition. The total MoviePass audience is now going to be strictly limited which removes most of the upside for theaters or distributors to negotiate with MoviePass.

Which might have worked, if they had targeted a geographic domain where their funding would give them sufficient runway to price low enough and advertise hard enough, for long enough, to essentially control the market.

“The whole United States” was far too broad of a market for them to be able to afford to make enough of an impact. They should probably have initially targeted a single metro market.

But they couldn't do it in the market they did target with the deal they had been offering, and targeting the same market with a worse deal may leave them solvent longer but it won't lead them to the kind of dominance they need to force theaters to the table.

> so long with a model that made no financial

The radical $9.95 model is just under a year old (11 months 22 days). I thought I would mention that because although MoviePass is much older, most folks only learned about it with the acquisition by Helios and Matheson and the subsequent drop in pricing which led to a surge of registrations.

Honestly, they should have just capped the registrations. I think a gym-membership style could have actually worked for them. I was an excited evangelist and early adopter, but I quickly found myself not seeing more than one movie a month if at all. Just like all the gym memberships out there that rely on you signing up and then not coming back regularly.

No, the comparison doesn’t work. Gyms count on going to the gym being something people have to force themselves to do, and so often fail to do so. Seeing movies is different: it’s a fun activity people want to do.

Additionally, I assume gyms are still profitable even if all of their members are making regular use of the service. The marginal cost of a single customer use is negligible. MoviePass cannot say the same.

While they're removing most of the most negative changes ('peak pricing' and the pointless 'take a picture of your ticket stub') for people who remain subscribed (pray they don't alter it any further), they're keeping their arbitrary blackouts of popular movies, which kills it for me. If I have to drive to the theatre to then get there and discover that MoviePass has decided I'm not allowed to see Movie X then I'm going to stop using it.

Currently they implement these blackouts either nationwide (you can't see Mission Impossible on MoviePass at all) or regionally, with showtimes vanishing from the app without warning after too many people elsewhere in your region buy tickets to the movie in question.

The problem with the service is inconsistency and never knowing if you'll actually be able to see a movie or not.

Also, if you were foolish enough to buy an annual subscription, then you don't get the limitation but you still have had your deal altered with movie blackouts and stub verification.

" If I have to drive to the theatre to then get there and discover that MoviePass has decided I'm not allowed to see Movie X then I'm going to stop using it."

Don't they have the app that shows you want movies you can see?

Yes, but they aren't integrated with most theaters' systems, meaning you often show up and find out the movie you were planning to see is sold out.

Yes, but the availability is not set when you open the app, it isn't set until you check-in, which you can't do until you get to theatre.

If you live a 20-minute drive from the theatre... You open the app at home, see your movie listed, then drive there. It is quite possible that by the time you get there MP has decided you can't watch that movie anymore.

There's no way to work around this and it makes the service basically unusable.

this is why gps spoofing should come as a feature, to prevent apps from doing this sort of baiting of users.

> Are they just getting hate because they lacked foresight in the beginning? Is it because they gambled with investor money on a ridiculous business model?

For me, both.

I want to live in a world where companies succeed by identifying a need and then providing a service/product that fills that need.

Not by taking investor money, using it to subsidize the cost of an existing service (essentially buying users), and then praying that a business model or exit offer appears after the users do but before their weight collapses the company's tenuous structure.

It's a good deal if viewed as a completely new product. The potential customer base probably doesn't overlap all that much with their previous customer base.

There's some irony that it's called MoviePass still despite not... really being that at all now. They should have rebranded and maybe it would have gone over better.

Despite being a good deal I'm skeptical that the offering is large enough to warranty the effort required to use the service. There's a market for it, likely, but I doubt there's one that will satisfy the investment.

I'd guess the current-and-previous customer base overlap is approaching 100%. If you want to see 1, 3, 31, or 100+ movies a month, it's still appears to be a great deal.

FTA: “up to a $5.00 discount for any additional movie tickets.”

That's not the same as $5/ticket.

Definitely read that wrong, thanks for the correction!

> I might be uneducated about the issue as a whole, but I don't really see the negative side to this service.

Two negatives:

(1) its worse than what they've gotten existing customers used to, and

(2) if they weren't able to capture enough of the market with the old deal to bring theaters to the table, they certainly won't with the new deal, which is still unsustainable without that leverage.

They'll die more slowly this way, but it's not a route to a viable service.

this seems to be the crux, everyone is saying how "this model is more sustainable" but as you pointed out, no, it absolutely isn't. without discounts from theaters moviepass can't survive and for the last year theaters have shown they don't need to offer those discounts.

I think the hate comes from the frequent changes to the way the program works. Customers feel like it's a bait and switch, even if it's because their model hasn't been sustainable.

It is a bait and switch. You can't just tell customers "you should have known that this deal was too good to be sustainable". It's your job as a business to figure out if you can afford to deliver what you are selling before you sell it, not afterwards.

It's a great deal and it's still going to bankrupt the company.

If I sent you $30 a month and you sent me $10 a month, that's a great deal for you, but how long can I do it?

They probably think this works like gyms,

"I should go more to the movies"

then people don't go after some months but keep the subscription.

Gyms have high fixed costs and low marginal costs. You don't cost them very much money every time you go.

Isn't the same true of movies?

(On the other hand, I'm pretty sure more people skip going to the gym than skip going to a movie!)

It's true of movie theaters. It's not true of people buying tickets at retail (which is what MoviePass is doing).

Source: I run a SaaS business for gyms and have spent 1000+ hours talking to gym owners about their priorities...

You do cost the gym money every time you go. But only after a certain point (anything more than light use) and if you go at peak times.

Basically, the space you take up at peak time is another membership they can't sell because of potential overcrowding.

> Basically, the space you take up at peak time is another membership they can't sell because of potential overcrowding.

Is that really a thing? I've _never- found a gym that has said "no sorry, we can't sell you a membership because we're full"

I’ve definitely tried out a gym and not joined because it was too crowded when I wanted to go

I've canceled a gym membership because it was too crowded at the times I wanted to go.

Yeah, except that this is a gym that you can only go to 3 times a month. So much more likely it will be used.

The purchasing service has been completely offline frequently in the past two weeks, which you don’t find out until you are at the theater. Not only that, they introduced “peak” pricing that was on basically every movie, so not really peak, just a surcharge on everything. Then they decided to start removing movies from the list of purchasable at random times throughout the day, so you could get to the theater and not be able to use it.

If it was just three movies for 10 it’d be a great deal, but the constant flux of being able to use it is awful.

> but I don't really see the negative side to this service.

1. They have changed the terms out from under their customers. Some pre-paid for a year of service.

2. They continually show movies as "prime time" when they really just aren't. Movies in empty theaters at 10 am going for full price.

3. Go check their twitter feed. They have had _numerous_ issues lately. People aren't getting what they were promised when they opened their checkbooks.

New plan gets rid of peak pricing and ticket validation. Their biggest problem is just how awful their customer support is.

Hard to trust these guys right now, we'll see. Between constant plan changes and movies just disappearing from the app (see twitter), who knows where they'll be in a week.

Seriously, my app hasn't showed anything all week but I'm also a pretty heavy user so I wouldn't be surprised if they're doing something fishy with that

There's a lot of hurdles involved with actually using the service -- many movies are explicitly unavailable, eligible screenings of available movies are very limited (only two showings per movie for the entire day this weekend for me, only between 4-7pm), and the main hassle of not being able to buy multiple seats at once or in advance.

I think the negative side is: the rules fluctuate, the service is intermittent and there's no reason to trust them anymore.

I know a pass holder who was turned away at the theater when they ran out of money a couple of weeks ago. Now the service they are already paying for has been downgraded.

Why would you trust them at this point?

I was turned away at a theater early this year when they tried to strongarm AMC by denying customer access to the top 10 AMC theaters.

I love going to movies, but I don't love struggling to fit a company's now constantly shifting criteria -- especially when I have higher priority time consuming hobbies that don't leave much in the way of flexibility.

I agree with all your points but as an aside tickets where I currently live are $5 before 6pm or $5 with a student ID (held on to college one) anytime. Moviepass still would be a deal here.

New features playing early on Sat and Sunday are $4-6 in Springfield, IL at an AMC. I haven't seen a feature at night in a very long time.

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