Funny enough I worked at a ecommerce clothing “startup” that had upwards of $75 million in sales but wasn’t profitable
Similarly SpaceX now is being awarded more than 50% of all commercial space launches, but burned money in the beginning.
MoviePass is trying to sell movie tickets for less than they paid for them.
I don't think those are similar at all.
Still, it's not rocket science and probably could have been done much more cheaply (just offering subscription coupons or something).
somehow i doubt it.
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.
"We lose money on each sale but we'll make it up in volume!"
Our little agency ended up moving into eTour's space in Atlanta (VaHi) when they departed. Nice movie theatre built into the space.