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Comment by jlarocco | Hacker News Reader

Sure, but any business can survive indefinitely if they're given unlimited funding with no expectation of returns.

In your opinion, what's the point of being the main funnel to theaters if you're losing money hand over fist to do so? What was the plan for profitability? Was the goal to somehow strong arm movie theaters into discounted pricing? Why would theaters agree to that when there's no benefit for them to do so, they're the ones with the actual product and it's irrelevant to them if MoviePass survives?

The only way their business model can work is if the majority of customers sign up and never use it, which is a very weird thing for a business to depend on, IMO.

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Gym membership.

> no benefit

Movie theater attendance has been dropping steadily. Theaters, especially today's multi-plexes, are vast wastelands of empty seats the majority of the time. There absolutely is a benefit to them selling more tickets at off-peak times, or to not-so-hot films, or just as an incentive to sell popcorn. Keep in mind all this extra volume would cost theaters ZERO in additional marketing expense.

> Gym membership. > Movie theater attendance has been dropping steadily. Theaters, especially today's multi-plexes, are vast wastelands of empty seats the majority of the time. There absolutely is a benefit to them selling more tickets at off-peak times, or to not-so-hot films, or just as an incentive to sell popcorn. Keep in mind all this extra volume would cost theaters ZERO in additional marketing expense.

But if theaters wanted to do that then they would lower prices themselves.

And for all we know, most people signing up for MoviePass were the same people who were still going to the movies anyways.

> The only way their business model can work is if the majority of customers sign up and never use it, which is a very weird thing for a business to depend on, IMO.

This is essentially the concept of insurance, is it not?

Kind of, but the insurance business depends on the costly events being rare and mostly independent of the customers' choices (e.g., getting sick is the event for health insurance, getting into a car accident for auto insurance).

MoviePass is the opposite. It sells/sold a product that is frequent enough and dependent on customers' choices. The MoviePass product is pitched as way to go to the movies whenever and as often as you want, thus maximizing the frequency of costly events (i.e., paying for theater tickets).

It's not the same at all.

Insurance protects people financially from unlikely and *undesirable* events they don't want to happen. Nobody in good faith wants to get in a car accident or have a medical emergency. Insurance "works" by assuming most people won't have to or want to use it.

MoviePass is doing exactly the opposite, though. They're selling a desirable product for much cheaper than normal while paying full price themselves and hoping people won't actually take advantage.

I didn't suggest that MoviePass functioned like insurance, only that it's not really an unusual concept. It's just clearly not workable as you point out.

Insurance has the additional model of finding ways to avoid paying out claims even when people do try to use it. I think MoviePass would have a hard time stopping users from using their tickets once they already purchased them through the app (although they did try by blacking out certain movies).

Insurance works best when it's something that appeals widely (eg: all drivers must carry insurance) but is used rarely (very few drivers will have an accident at any given time). MoviePass was offering a service with narrow appeal (avid moviegoers) that used the service frequently.

> The only way their business model can work is if the majority of customers sign up and never use it, which is a very weird thing for a business to depend on, IMO.

This is basically how gyms are profitable.

Most traditional gyms also have very high up front costs and extremely low unit costs, so the benefit from scale. You could go every day and they're still not really losing money on you (I don't think you can do $50 of wesr and tear every month).

Of course there's a limit to how many daily active users one gym can service and it's better for them if they have lots of paying, inactive users. But at no point does a user's activity cost the gym money.

Maybe, but a gym membership isn't trying to sell me somebody else's product for 1/3 the price, while paying the full price themself.

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