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Couldn't they just milk it until that happens and then release a more sustainable option? If the theatres say no, what is MoviePass's option? They have no real

Couldn't they just milk it until that happens and then release a more sustainable option? If the theatres say no, what is MoviePass's option? They have no real control there. I'm not claiming to know everything about this, literally just a 23 year old wanting to learn more. How is this different from me (hypothetically) with a ton of money offering to give everyone their weeks groceries for $10 a month for $40 worth of goods and then turning around and saying to the grocery chain pay me $x for this. It just seems completely bizarre, if they could already offer the price they are asking , why wouldn't they do that instead of paying the middleman?

slg 9y ago
Because the unlimited aspect of MoviePass likely changes user behavior. Let's throw together a simplified example scenario. Imagine a user that previously went to the movies 12 times a year paying $10 per ticket. In a world without MoviePass the theater collects $120 from that customer. However with MoviePass that user might now go 15 times a year and the theater collects $150 total from MoviePass. That is an added $30 in revenue for the theater that was created by MoviePass. The theater still comes out ahead of any revenue sharing model with MoviePass that costs them less than $30 per year. Perhaps more importantly they also reduce the risk that the customer's $120-$150 per year ends up going to a different theater across town that is willing to make an agreement with MoviePass.
dragonwriter 9y ago
> Couldn't they just milk it until that happens and then release a more sustainable option? No, because consumers aren't rational value maximizers even if businesses might sometimes approximate that; consumer behavior is strongly shaped by path-dependent expectation setting, and once theaters have let MoviePass model become dominant enough to set pricing expectations, they will catastrophically lose business if that model collapses. Eventually, if they survive, he public might be drawn back, so the industry might survive in some form, but each individual firm in the industry faced serious risk of being wiped out by that. It's much better for them to not encourage MoviePass to consumers and do everything practical to distrsct from it while finding other ways to attract price-conscious customers in a more sustainable way.

slg 9y ago

Because the unlimited aspect of MoviePass likely changes user behavior. Let's throw together a simplified example scenario. Imagine a user that previously went to the movies 12 times a year paying $10 per ticket. In a world without MoviePass the theater collects $120 from that customer. However with MoviePass that user might now go 15 times a year and the theater collects $150 total from MoviePass. That is an added $30 in revenue for the theater that was created by MoviePass. The theater still comes out ahead of any revenue sharing model with MoviePass that costs them less than $30 per year. Perhaps more importantly they also reduce the risk that the customer's $120-$150 per year ends up going to a different theater across town that is willing to make an agreement with MoviePass.

dragonwriter 9y ago

> Couldn't they just milk it until that happens and then release a more sustainable option? No, because consumers aren't rational value maximizers even if businesses might sometimes approximate that; consumer behavior is strongly shaped by path-dependent expectation setting, and once theaters have let MoviePass model become dominant enough to set pricing expectations, they will catastrophically lose business if that model collapses. Eventually, if they survive, he public might be drawn back, so the industry might survive in some form, but each individual firm in the industry faced serious risk of being wiped out by that. It's much better for them to not encourage MoviePass to consumers and do everything practical to distrsct from it while finding other ways to attract price-conscious customers in a more sustainable way.