5 ms·

Mitch Lowe co-founded Netflix, now he's hacking movie night

29 points by tooba 9y ago

seunosewa 9y ago
The $10 pricing certainly seems extremely unsustainable. I don't get it.
- zimpenfish 9y ago
  > Moviepass is going to sink the cost in the hope that eventually, somehow, they will be able to make up the deficit by taking a profit share from other cinema-related spending.
  - seunosewa 9y ago
    I saw that, but I don't understand why the theatres would volunteer to share profits with them, and I can't fathom how any amount so shared would be sufficient to cover the enormous losses that Moviepass will incur at the $10/month price.
    - zimpenfish 9y ago
      Ah, my apologies. I agree with you - I can't see any kind of future where the theatres go "Oh, you're bringing more people in and we're making more money from consumables. Sure, please, have some of our profits!"
      - arethuza 9y ago
        Or perhaps one of those "profit sharing" deals where the costs mysteriously increase to the point where there aren't any profits to share... (AKA "Hollywood Accounting").
    - falcor84 9y ago
      I presume that the idea is for specific cinema chains to strike such deals that would make the price/experience with them better than with the competitors.
- ghaff 9y ago
  The key point is sort of buried in the article. They hope to parlay this into revenue-sharing deals. I could actually see something like this making sense--provided that the card issuer gets at least a cut of refreshments. I don't know the exact numbers but my understanding is that movie tickets are basically breakeven for the theater. They make most of their money on refreshments. (Of course, people also buy subscriptions and then don't get around to using them much but I suspect the revenue sharing is key. I'd also wonder though if the theater chains aren't really in a better position to go this route.)
  - dsr_ 9y ago
    AMC's 10k is pretty informative: http://investor.amctheatres.com/Doc/Index?did=39811732 http://investor.amctheatres.com/Doc/Index?did=39811732 Page 17 or so is good: "We predominantly license “first-run” films from distributors owned by major film production companies and from independent distributors on a film-by-film and theatre-by-theatre basis. Film exhibition costs are accrued based on the applicable admissions revenues and estimates of the final settlement pursuant to our film licenses. Licenses that we enter into typically state that rental fees are based on aggregate terms established prior to the opening of the picture." and then: "Food and beverage sales are our second largest source of revenue after box office admissions." The ratio, seen later in the document, is basically 65% admissions, 33% food/beverage. (This surprised me, I had thought it was around 25% admissions.) I don't see theaters being willing to give up any of that in exchange for a vague promise of extra customers. On the other hand, I don't see why theaters feel antagonistic towards a company that promises to take investment money and buy full-price tickets with it. That's a complete win for the theaters.
    - ghaff 9y ago
      That's revenue though. If you look at the income statement, films have about a 50% profit margin while refreshments have about an 85% profit margin. If you allocate all other expenses evenly, that makes it about 50-50 between film and refreshments. That may or may not be appropriate cost accounting (there's another big chunk of operating expense that isn't under G&A or rent) and I just took a quick glance. More of their profit comes from film than I thought--or at least used to be the case--but refreshments still makes a good 50%.
- jvdh 9y ago
  I'm guessing they are also going after the "fitness club" like profit idea. That is, get a subscription, use it frantically in the beginning. Then slowly you go less and less, but still keep the subscription because you never know when you might want to be healthy again. Or cancelling it is too much of a hassle for just $10/month.
- balladeer 9y ago
  If they give a taste of what it is like (for a month or two) and I like it (and I've decent number of diverse options) then I would rather pay $20 per month to be able to watch films in theatres than $10 or so to watch films inside a browser.
- new299 9y ago
  It's easy. The true play is an augmented reality game... wait a minute... hear me out. So, you sign up for 10USD a month, for unlimited cinema visits. Any more than one visit means that Moviepass loses money. So while they are selling you this service... they also need to do everything in their power to ensure you don't use it. Buried in the terms and conditions and innocuous sounding statement which gives them the unrestricted right to warp your understanding of reality. For example, you're walking down the street on your way to see Guardians of the Galaxy 15: 2Guardians2Galaxy when you receive a text message indicating incoming North Korean ICBMs... this is it... you quickly check some news sites (which they access to through an information sharing agreement, or by sub-contracting to a money starved NSA) and they all say the same thing: to have any hope of survival you need to get out of the city now... and find shelter. Obviously by the time you figure it was all a fake you've missed your showing and need to wait another 24 hours, when they'll have another more extreme and equally convincing scenario to distract you. I can even envisage that they'll start sub-contracting this out mech-turk style. "$1 to convince 1000 people not to go to the cinema today using information warfare" that kind of thing. In case this isn't the true play, any VCs out their let me know, I'm seeking 10MUSD for 15%. My MVP is this post.
bathory 9y ago
This may be derailing the core of the intended discussion, but this is again one of those things which is only available in the US, whereas the rest of the world (at least western Europe) is lagging behind. It really makes me wonder why this kind of innovation isn't available here? I can't even get an unlimited pass to the only cinema I frequent.
- zimpenfish 9y ago
  Here in the UK, it's available in a couple of the big chains. http://www.odeon.co.uk/limitless/ http://www.odeon.co.uk/limitless/ https://www.cineworld.co.uk/unlimited https://www.cineworld.co.uk/unlimited
  - DanBC 9y ago
    Cineworld is £17.90 per month, which is roughly $23.
    - zimpenfish 9y ago
      Sure but the comment was about it not existing, not the price.
      - DanBC 9y ago
        Yes, sorry! I was just providing a little bit of extra information.
    - Ntrails 9y ago
      It also doesn't have the limit to one film per day as far as I know, but unlike the other is limited to the one chain of cinemas and is a yearly thing - can't just do one month. I still think it's an incredibly good deal vs buying a ticket @£12 for one film
      - zimpenfish 9y ago
        Also I think both Odeon and Cineworld charge more if you want to include Central London cinemas. But definitely still a good deal even if you only go twice a month.
adithyah 9y ago
How is this remotely sustainable ?? I do not see avenues for Add on's which can still make MoviePass profitable ! And the article compares it to Uber , but I highly doubt that Uber is making that heavy of a loss when someone hails a cab ! Infact Uber even takes a cut of each transaction unlike Moviepass . What could i be missing ?
empath75 9y ago
They are literally selling $20 for $10. That's one model for growth.
gourou 9y ago
Moviepass is hurting AMC's business and doesn't seem to have plans to make a profit. If I were AMC I would buy this company just to shut it down.
- ghaff 9y ago
  At the moment, it would seem to help AMC's business by driving more (paying from AMC's perspective) customers to their theaters. The problem is that AMC apparently wants to introduce their own card, likely at a higher price point. >"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," the company said. Is pretty much the definition of BS.
- tass 9y ago
  Its there any explanation as to how this hurts their business?
  - gourou 9y ago
    They have a competing card service that's more expensive
Al-Khwarizmi 9y ago
I don't know in the US, but in Spain, cinemas have been closing en masse in the last few years due to unrealistic prices. I still go, but most people I know say paying €8 for a ticket (the same price as one month of Netflix, a 3-course set meal, or four beers in a bar) is just outrageous. Something like this could save cinema here.
- lol768 9y ago
  They are expensive (though I find it's usually the refreshments that're marked up the most vs the ticket in the UK), but I'm not so sure on your price comparisons... can you really get a 3 course lunch or 4 pints for ~£8 in Spain? I think you'd be lucky to get one course or 2 pints here for that.
  - Al-Khwarizmi 9y ago
    You can definitely get a 3 course lunch for €8, which is less than £8. Not in highly touristic places or in the center of Madrid or Barcelona, but I live in a 250K city and there are many places offering simple 3-course meals (salad or entrée + fish or meat + dessert) with that price. And if you go to €9 you can get fancy meals and all. The beer analogy may have been misleading, though. You can indeed get 4 beers for €8, but the standard size of a beer here is 300 ml, which is much less than a pint (568 ml I think).
dustinmoris 9y ago
Interesting concept, but I am afraid this will (if ever) only work in the US. Here in the UK and in Europe people would get the cheap tickets and then still smuggle their own drinks and snacks into the movies, because that's what we've always done and that's the culture here - especially among the millenials who think they can outsmart everything and everyone and feel entitled so. Also people on this side of the pond don't really fancy the massive buckets of sugary drinks or XXL sized hot dogs like our American friends.
- zimpenfish 9y ago
  > then still smuggle their own drinks and snacks into the movies I do that because the cinemas don't sell anything at their concession stand I want to or can eat. > massive buckets of sugary drinks Don't forget the massive buckets of popcorn - you can easily clear 600+ calories in a single medium portion.
- k-mcgrady 9y ago
  >> especially among the millenials who think they can outsmart everything and everyone and feel entitled so While I agree with your comment mostly this bit seems ridiculous. When it comes to going to the cinema in particular I find (anecdotally obviously) that it is the older generation unwilling to pay for snacks. I've lost count of how many times people of my parents generation have asked me to fill my pockets with all kinds of stuff when I, the broke millennial, am happy to pay for a drink/snack. I think the last time my friends or I tried to sneak in food/drink was when we were young teenagers below working age.
- Cakez0r 9y ago
  Speak for yourself!
- mulletbum 9y ago
  I have Movie pass and went 2 days ago. The kid next to me brought in a book-bag full of candy and pop. He was popping can lids the entire movie and crunching bags. I live in the US
- chrisseaton 9y ago
balladeer 9y ago
I like this idea. I don't have Netflix subscription. Because where I live Netflix catalogue is laughable - this is one of the reasons. Anyway, that's another matter. I really like watching films in theatres and prices are going sky high. Some of the films turn out to be really bad and I would rather like to leave in the middle (of course not walking out abruptly blocking others' views). Something like MoviePass could be very handy to me.
buro9 9y ago
Forget the cinema in this product. The real product is a new model for subscription services based on the issuing of prepaid payment cards and a payment system that enforces how it is paid. That's pretty huge. Imagine your employer giving a transit allowance and food allowance via this, and that it could only be used on a given transit mode and with the n local places to the work place, at some set amounts per month. Or that parents could use a Uni subscription card that allows for purchases from the campus grocery store and the bookshop to be capped at a reasonable rate. This is essentially a new breed of subscription that can be used across multiple outlets and yet have a set of controls built into it that make it seem more like a coupon. As a new mechanism for subscriptions... this is far bigger than the cinema model. You could even allow for the creation of custom controls to create subscription models that are totally personalised, or go further and sell this capability to other businesses.
- ghaff 9y ago
  Subscription probably isn't a necessary element. On the other hand, gift cards can already effectively cap purchases at a particular outlet. And pay-as-you-go transit passes can do the same thing for transit. The idea of limiting purchases to a pre-selected catalog is potentially interesting although I'm not sure how broad the use cases are. In the Uni examples, do you really need something other than a credit card with a reasonable credit limit?
- dhruvrrp 9y ago
  Privacy, a startup/bank(?) has already refined issuing cards with restricted usage options to use for one-off purchases, subscriptions, etc. I think they currently cater to individuals, but they seem to be in a much better position to pivot towards employers providing allowances to employees, allowing them to restrict what that they could spend it on. https://privacy.com/ https://privacy.com/
- sjg007 9y ago
  I mean EBT cards (aka food stamps) already pioneered this.
- bpicolo 9y ago
  > Or that parents could use a Uni subscription card that allows for purchases from the campus grocery store and the bookshop to be capped at a reasonable rate A bunch of unis already have this model and their own card for it, and even extend purchases to local businesses e.g. http://bluebucks.umich.edu/p/home.html http://bluebucks.umich.edu/p/home.html
dhruvrrp 9y ago
I am surprised that the article says that moviePass is looking to get a share of beverage revenues from theaters to turn a profit. I remember when the price drop happened there were articles circulating that MoviePass aimed to make a profit by collecting the data they get from the movie goers. Which makes more sense when you realize that Helios and Matheson Analytics owns a majority share of MoviePass.

29 points by tooba 9y ago

seunosewa 9y ago

The $10 pricing certainly seems extremely unsustainable. I don't get it.

zimpenfish 9y ago
> Moviepass is going to sink the cost in the hope that eventually, somehow, they will be able to make up the deficit by taking a profit share from other cinema-related spending.
- seunosewa 9y ago
  I saw that, but I don't understand why the theatres would volunteer to share profits with them, and I can't fathom how any amount so shared would be sufficient to cover the enormous losses that Moviepass will incur at the $10/month price.
  - zimpenfish 9y ago
    Ah, my apologies. I agree with you - I can't see any kind of future where the theatres go "Oh, you're bringing more people in and we're making more money from consumables. Sure, please, have some of our profits!"
    - arethuza 9y ago
      Or perhaps one of those "profit sharing" deals where the costs mysteriously increase to the point where there aren't any profits to share... (AKA "Hollywood Accounting").
  - falcor84 9y ago
    I presume that the idea is for specific cinema chains to strike such deals that would make the price/experience with them better than with the competitors.
ghaff 9y ago
The key point is sort of buried in the article. They hope to parlay this into revenue-sharing deals. I could actually see something like this making sense--provided that the card issuer gets at least a cut of refreshments. I don't know the exact numbers but my understanding is that movie tickets are basically breakeven for the theater. They make most of their money on refreshments. (Of course, people also buy subscriptions and then don't get around to using them much but I suspect the revenue sharing is key. I'd also wonder though if the theater chains aren't really in a better position to go this route.)
- dsr_ 9y ago
  AMC's 10k is pretty informative: http://investor.amctheatres.com/Doc/Index?did=39811732 http://investor.amctheatres.com/Doc/Index?did=39811732 Page 17 or so is good: "We predominantly license “first-run” films from distributors owned by major film production companies and from independent distributors on a film-by-film and theatre-by-theatre basis. Film exhibition costs are accrued based on the applicable admissions revenues and estimates of the final settlement pursuant to our film licenses. Licenses that we enter into typically state that rental fees are based on aggregate terms established prior to the opening of the picture." and then: "Food and beverage sales are our second largest source of revenue after box office admissions." The ratio, seen later in the document, is basically 65% admissions, 33% food/beverage. (This surprised me, I had thought it was around 25% admissions.) I don't see theaters being willing to give up any of that in exchange for a vague promise of extra customers. On the other hand, I don't see why theaters feel antagonistic towards a company that promises to take investment money and buy full-price tickets with it. That's a complete win for the theaters.
  - ghaff 9y ago
    That's revenue though. If you look at the income statement, films have about a 50% profit margin while refreshments have about an 85% profit margin. If you allocate all other expenses evenly, that makes it about 50-50 between film and refreshments. That may or may not be appropriate cost accounting (there's another big chunk of operating expense that isn't under G&A or rent) and I just took a quick glance. More of their profit comes from film than I thought--or at least used to be the case--but refreshments still makes a good 50%.
jvdh 9y ago
I'm guessing they are also going after the "fitness club" like profit idea. That is, get a subscription, use it frantically in the beginning. Then slowly you go less and less, but still keep the subscription because you never know when you might want to be healthy again. Or cancelling it is too much of a hassle for just $10/month.
balladeer 9y ago
If they give a taste of what it is like (for a month or two) and I like it (and I've decent number of diverse options) then I would rather pay $20 per month to be able to watch films in theatres than $10 or so to watch films inside a browser.
new299 9y ago
It's easy. The true play is an augmented reality game... wait a minute... hear me out. So, you sign up for 10USD a month, for unlimited cinema visits. Any more than one visit means that Moviepass loses money. So while they are selling you this service... they also need to do everything in their power to ensure you don't use it. Buried in the terms and conditions and innocuous sounding statement which gives them the unrestricted right to warp your understanding of reality. For example, you're walking down the street on your way to see Guardians of the Galaxy 15: 2Guardians2Galaxy when you receive a text message indicating incoming North Korean ICBMs... this is it... you quickly check some news sites (which they access to through an information sharing agreement, or by sub-contracting to a money starved NSA) and they all say the same thing: to have any hope of survival you need to get out of the city now... and find shelter. Obviously by the time you figure it was all a fake you've missed your showing and need to wait another 24 hours, when they'll have another more extreme and equally convincing scenario to distract you. I can even envisage that they'll start sub-contracting this out mech-turk style. "$1 to convince 1000 people not to go to the cinema today using information warfare" that kind of thing. In case this isn't the true play, any VCs out their let me know, I'm seeking 10MUSD for 15%. My MVP is this post.

bathory 9y ago

This may be derailing the core of the intended discussion, but this is again one of those things which is only available in the US, whereas the rest of the world (at least western Europe) is lagging behind. It really makes me wonder why this kind of innovation isn't available here? I can't even get an unlimited pass to the only cinema I frequent.

zimpenfish 9y ago
Here in the UK, it's available in a couple of the big chains. http://www.odeon.co.uk/limitless/ http://www.odeon.co.uk/limitless/ https://www.cineworld.co.uk/unlimited https://www.cineworld.co.uk/unlimited
- DanBC 9y ago
  Cineworld is £17.90 per month, which is roughly $23.
  - zimpenfish 9y ago
    Sure but the comment was about it not existing, not the price.
    - DanBC 9y ago
      Yes, sorry! I was just providing a little bit of extra information.
  - Ntrails 9y ago
    It also doesn't have the limit to one film per day as far as I know, but unlike the other is limited to the one chain of cinemas and is a yearly thing - can't just do one month. I still think it's an incredibly good deal vs buying a ticket @£12 for one film
    - zimpenfish 9y ago
      Also I think both Odeon and Cineworld charge more if you want to include Central London cinemas. But definitely still a good deal even if you only go twice a month.

adithyah 9y ago

How is this remotely sustainable ?? I do not see avenues for Add on's which can still make MoviePass profitable ! And the article compares it to Uber , but I highly doubt that Uber is making that heavy of a loss when someone hails a cab ! Infact Uber even takes a cut of each transaction unlike Moviepass . What could i be missing ?

empath75 9y ago

They are literally selling $20 for $10. That's one model for growth.

gourou 9y ago

Moviepass is hurting AMC's business and doesn't seem to have plans to make a profit. If I were AMC I would buy this company just to shut it down.

ghaff 9y ago
At the moment, it would seem to help AMC's business by driving more (paying from AMC's perspective) customers to their theaters. The problem is that AMC apparently wants to introduce their own card, likely at a higher price point. >"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," the company said. Is pretty much the definition of BS.
tass 9y ago
Its there any explanation as to how this hurts their business?
- gourou 9y ago
  They have a competing card service that's more expensive

Al-Khwarizmi 9y ago

I don't know in the US, but in Spain, cinemas have been closing en masse in the last few years due to unrealistic prices. I still go, but most people I know say paying €8 for a ticket (the same price as one month of Netflix, a 3-course set meal, or four beers in a bar) is just outrageous. Something like this could save cinema here.

lol768 9y ago
They are expensive (though I find it's usually the refreshments that're marked up the most vs the ticket in the UK), but I'm not so sure on your price comparisons... can you really get a 3 course lunch or 4 pints for ~£8 in Spain? I think you'd be lucky to get one course or 2 pints here for that.
- Al-Khwarizmi 9y ago
  You can definitely get a 3 course lunch for €8, which is less than £8. Not in highly touristic places or in the center of Madrid or Barcelona, but I live in a 250K city and there are many places offering simple 3-course meals (salad or entrée + fish or meat + dessert) with that price. And if you go to €9 you can get fancy meals and all. The beer analogy may have been misleading, though. You can indeed get 4 beers for €8, but the standard size of a beer here is 300 ml, which is much less than a pint (568 ml I think).

dustinmoris 9y ago

Interesting concept, but I am afraid this will (if ever) only work in the US. Here in the UK and in Europe people would get the cheap tickets and then still smuggle their own drinks and snacks into the movies, because that's what we've always done and that's the culture here - especially among the millenials who think they can outsmart everything and everyone and feel entitled so. Also people on this side of the pond don't really fancy the massive buckets of sugary drinks or XXL sized hot dogs like our American friends.

zimpenfish 9y ago
> then still smuggle their own drinks and snacks into the movies I do that because the cinemas don't sell anything at their concession stand I want to or can eat. > massive buckets of sugary drinks Don't forget the massive buckets of popcorn - you can easily clear 600+ calories in a single medium portion.
k-mcgrady 9y ago
>> especially among the millenials who think they can outsmart everything and everyone and feel entitled so While I agree with your comment mostly this bit seems ridiculous. When it comes to going to the cinema in particular I find (anecdotally obviously) that it is the older generation unwilling to pay for snacks. I've lost count of how many times people of my parents generation have asked me to fill my pockets with all kinds of stuff when I, the broke millennial, am happy to pay for a drink/snack. I think the last time my friends or I tried to sneak in food/drink was when we were young teenagers below working age.
Cakez0r 9y ago
Speak for yourself!
mulletbum 9y ago
I have Movie pass and went 2 days ago. The kid next to me brought in a book-bag full of candy and pop. He was popping can lids the entire movie and crunching bags. I live in the US
chrisseaton 9y ago

balladeer 9y ago

I like this idea. I don't have Netflix subscription. Because where I live Netflix catalogue is laughable - this is one of the reasons. Anyway, that's another matter. I really like watching films in theatres and prices are going sky high. Some of the films turn out to be really bad and I would rather like to leave in the middle (of course not walking out abruptly blocking others' views). Something like MoviePass could be very handy to me.

buro9 9y ago

Forget the cinema in this product. The real product is a new model for subscription services based on the issuing of prepaid payment cards and a payment system that enforces how it is paid. That's pretty huge. Imagine your employer giving a transit allowance and food allowance via this, and that it could only be used on a given transit mode and with the n local places to the work place, at some set amounts per month. Or that parents could use a Uni subscription card that allows for purchases from the campus grocery store and the bookshop to be capped at a reasonable rate. This is essentially a new breed of subscription that can be used across multiple outlets and yet have a set of controls built into it that make it seem more like a coupon. As a new mechanism for subscriptions... this is far bigger than the cinema model. You could even allow for the creation of custom controls to create subscription models that are totally personalised, or go further and sell this capability to other businesses.

ghaff 9y ago
Subscription probably isn't a necessary element. On the other hand, gift cards can already effectively cap purchases at a particular outlet. And pay-as-you-go transit passes can do the same thing for transit. The idea of limiting purchases to a pre-selected catalog is potentially interesting although I'm not sure how broad the use cases are. In the Uni examples, do you really need something other than a credit card with a reasonable credit limit?
dhruvrrp 9y ago
Privacy, a startup/bank(?) has already refined issuing cards with restricted usage options to use for one-off purchases, subscriptions, etc. I think they currently cater to individuals, but they seem to be in a much better position to pivot towards employers providing allowances to employees, allowing them to restrict what that they could spend it on. https://privacy.com/ https://privacy.com/
sjg007 9y ago
I mean EBT cards (aka food stamps) already pioneered this.
bpicolo 9y ago
> Or that parents could use a Uni subscription card that allows for purchases from the campus grocery store and the bookshop to be capped at a reasonable rate A bunch of unis already have this model and their own card for it, and even extend purchases to local businesses e.g. http://bluebucks.umich.edu/p/home.html http://bluebucks.umich.edu/p/home.html

dhruvrrp 9y ago

I am surprised that the article says that moviePass is looking to get a share of beverage revenues from theaters to turn a profit. I remember when the price drop happened there were articles circulating that MoviePass aimed to make a profit by collecting the data they get from the movie goers. Which makes more sense when you realize that Helios and Matheson Analytics owns a majority share of MoviePass.