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Consumer psychology. Instead of $10 a month think of it as $120 a year. If a theater charges $12 a ticket (just to pull a round yet realistic number that means

Consumer psychology. Instead of $10 a month think of it as $120 a year. If a theater charges $12 a ticket (just to pull a round yet realistic number that means less than a movie a month at $10/month) then an annualized MoviePass subscription breaks even at 10 tickets per year. As somebody who likes to go to the movies, how many times did you go to a theater this year, really? Six, seven times maybe? Maybe once in the late winter or spring, two or three times in the summer, once in the fall, whatever Star Wars movie comes out in the winter, maybe another time with your family during the holidays? The truth is that people don't really change their media consumption habits, in aggregate, when they're presented with unlimited subscriptions. People just like to feel like they could get anything they want and that they don't have to look at the price tag anymore, but they don't actually consume more in aggregate. Sure, you get some binge subscribers who exploit the system, but they're not enough to bring down the entire enterprise. If the industry could transition from $10/album to $10/month unlimited music subscriptions, from $10 eBooks to $10/month Kindle Unlimited eBook subscriptions, from $10 DVDs (actually, usually more than that) to $10/month Netflix subscriptions, then why can't the industry support a transition from $10 movie tickets to $10/month theater subscriptions?

adjkant 9y ago
For me, I certainly have changed my habits, because if movies are free, I am willing to see a lot more of them. Most movies aren't worth seeing in theatres for the previous price point with the exceptions you more or less listed. The lower one makes it worth it for me. I've seen 13 movies in the past 4 months. I would have seen maybe 5 or less otherwise. At my ticket price (which is actually around $12 a ticket), even without changing my habits, I would have still saved money at 4. I know too many college students like myself thriving off this.
- solatic 9y ago
  I mean, like I said, it's not that exploitation won't occur, it's that the exploitation will be too sporadic to make a meaningful difference in overall cash flow. That MoviePass isn't profitable right now isn't so much because exploitation is more widespread than the MoviePass founders expected, and more because it's still new enough that most subscribers are going through their initial binges before they'll settle into their normative consumption habits. The average American adult goes to some five movies per year [0]. Increasing that to your new rate of consumption of roughly once per week - more than fifty movies per year - would be an order of magnitude. Even if attendance increased only to the break-even point, it would basically double attendance. So either MoviePass has no or little affect on aggregate movie attendance, in which case they make money hand-over-fist for extracting twice the money from aggregate subscribers for the same amount of aggregate product, or MoviePass has a strong positive affect on attendance, in which case there are other avenues for profits, as other people have mentioned - data mining, concessions, etc. [0] https://www.marketingcharts.com/industries/media-and-entertainment-39161 https://www.marketingcharts.com/industries/media-and-enterta...
  - adjkant 9y ago
    I think it's the second, and I doubt the alternative ways to profit is my thing. I think they are banking on one of those paying off. I doubt many people get movie pass and lose money on it frankly. Somewhere around 1-5%. If you are going to only 5 movies a year, and price isn't the issue, you have no reason to buy MoviePass. The majority of the customers are likely those who they will lose money on. I think on average they are losing quite a lot per user, and the data can't be all that useful. If it takes a year to get useful data, and they lose an average of $100 a year per person (a bit under two movies a month per person on average), is each person's data worth that? As far as concessions, big theatres hate MoviePass right now and I don't see them getting a cut of that confessions profits anytime soon. I'm riding the wave of free movies but doubt they last. I think it's far more likely it pressures the industry to change its model but they aren't going to be getting rich off of it without a strong pivot from the current business model.
- ProfessorLayton 9y ago
  I completely agree. I and a few of my friends have Moviepass, and it has become easier to go see something only a few in the group really want to see, or kind of want to see, but not willing to pay $12 for it. Tickets are so expensive I only need to go 1x/mo to break even. I'm also a lot more willing to spend $8 for a tub of popcorn when it "cost me $0" to see the movie (I know). Before Moviepass I was going to the movies about 2x/mo, and now it is up to maybe 3x, depending on whats out there and how busy I am.
  - adjkant 9y ago
    It's amazing to me that time is really the only limiting factor, I imagine for many others. I've gone to 5 movies in the past 20 days because of being off for the holidays.
cvsh 9y ago
>Sure, you get some binge subscribers who exploit the system, but they're not enough to bring down the entire enterprise. Especially for movie theaters, where the marginal cost of additional filmgoers isn't as high. If I watch a second Netflix movie, Netflix has to spend 2x as much on bandwidth to serve it to me. If I theater hop, the theater doesn't really have to spend anything more. The only cost to the theater is the opportunity cost of me not paying to see a movie I otherwise would have paid to see. In other words, as long as the MoviePass subscription cost is higher than the opportunity cost of losing the average moviegoer's ticket revenue, then everyone wins. In fact, the theater probably really, REALLY wins because the more often I'm at the theater, the more often I have a chance to buy concessions.
- DrScump 9y ago
  Netflix has to spend 2x as much on bandwidth Obviously, things can change with Network Neutrality repeal, but: exactly whom are they paying for that incremental uptick in bandwidth usage (i.e. on the margin)?
hn_throwaway_99 9y ago
Your analysis doesn't make sense to me, for a couple reasons: 1. You claim that unlimited subscriptions doesn't change behavior in aggregate, but do you have any evidence for this? Just look at Netflix - it has changed tons of people's behavior to watch more TV on Netflix than other entertainmentt options. 2. Your other examples of music subscriptions, eBooks, Netflix etc. aren't relevant because the economics are totally different. MoviePass is still paying full price for each movie. Spotify certainly isn't paying some sort of "full price" for each song you listen to. It seems like MoviePass would be most attractive to those who are most likely to take advantage of being able to watch tons of movies. I agree with other commenters, I think MoviePass is trying to get mind share and heft so it can then be in a good negotiating position with theaters. That is, if you get a couple of theater chains to come on and agree to better economics with the subscription model, then consumers may start only going to MoviePass-supported theaters, putting MoviePass in a much stronger negotiating position.

adjkant 9y ago

For me, I certainly have changed my habits, because if movies are free, I am willing to see a lot more of them. Most movies aren't worth seeing in theatres for the previous price point with the exceptions you more or less listed. The lower one makes it worth it for me. I've seen 13 movies in the past 4 months. I would have seen maybe 5 or less otherwise. At my ticket price (which is actually around $12 a ticket), even without changing my habits, I would have still saved money at 4. I know too many college students like myself thriving off this.

solatic 9y ago
I mean, like I said, it's not that exploitation won't occur, it's that the exploitation will be too sporadic to make a meaningful difference in overall cash flow. That MoviePass isn't profitable right now isn't so much because exploitation is more widespread than the MoviePass founders expected, and more because it's still new enough that most subscribers are going through their initial binges before they'll settle into their normative consumption habits. The average American adult goes to some five movies per year [0]. Increasing that to your new rate of consumption of roughly once per week - more than fifty movies per year - would be an order of magnitude. Even if attendance increased only to the break-even point, it would basically double attendance. So either MoviePass has no or little affect on aggregate movie attendance, in which case they make money hand-over-fist for extracting twice the money from aggregate subscribers for the same amount of aggregate product, or MoviePass has a strong positive affect on attendance, in which case there are other avenues for profits, as other people have mentioned - data mining, concessions, etc. [0] https://www.marketingcharts.com/industries/media-and-entertainment-39161 https://www.marketingcharts.com/industries/media-and-enterta...
- adjkant 9y ago
  I think it's the second, and I doubt the alternative ways to profit is my thing. I think they are banking on one of those paying off. I doubt many people get movie pass and lose money on it frankly. Somewhere around 1-5%. If you are going to only 5 movies a year, and price isn't the issue, you have no reason to buy MoviePass. The majority of the customers are likely those who they will lose money on. I think on average they are losing quite a lot per user, and the data can't be all that useful. If it takes a year to get useful data, and they lose an average of $100 a year per person (a bit under two movies a month per person on average), is each person's data worth that? As far as concessions, big theatres hate MoviePass right now and I don't see them getting a cut of that confessions profits anytime soon. I'm riding the wave of free movies but doubt they last. I think it's far more likely it pressures the industry to change its model but they aren't going to be getting rich off of it without a strong pivot from the current business model.
ProfessorLayton 9y ago
I completely agree. I and a few of my friends have Moviepass, and it has become easier to go see something only a few in the group really want to see, or kind of want to see, but not willing to pay $12 for it. Tickets are so expensive I only need to go 1x/mo to break even. I'm also a lot more willing to spend $8 for a tub of popcorn when it "cost me $0" to see the movie (I know). Before Moviepass I was going to the movies about 2x/mo, and now it is up to maybe 3x, depending on whats out there and how busy I am.
- adjkant 9y ago
  It's amazing to me that time is really the only limiting factor, I imagine for many others. I've gone to 5 movies in the past 20 days because of being off for the holidays.

cvsh 9y ago

>Sure, you get some binge subscribers who exploit the system, but they're not enough to bring down the entire enterprise. Especially for movie theaters, where the marginal cost of additional filmgoers isn't as high. If I watch a second Netflix movie, Netflix has to spend 2x as much on bandwidth to serve it to me. If I theater hop, the theater doesn't really have to spend anything more. The only cost to the theater is the opportunity cost of me not paying to see a movie I otherwise would have paid to see. In other words, as long as the MoviePass subscription cost is higher than the opportunity cost of losing the average moviegoer's ticket revenue, then everyone wins. In fact, the theater probably really, REALLY wins because the more often I'm at the theater, the more often I have a chance to buy concessions.

DrScump 9y ago
Netflix has to spend 2x as much on bandwidth Obviously, things can change with Network Neutrality repeal, but: exactly whom are they paying for that incremental uptick in bandwidth usage (i.e. on the margin)?

hn_throwaway_99 9y ago

Your analysis doesn't make sense to me, for a couple reasons: 1. You claim that unlimited subscriptions doesn't change behavior in aggregate, but do you have any evidence for this? Just look at Netflix - it has changed tons of people's behavior to watch more TV on Netflix than other entertainmentt options. 2. Your other examples of music subscriptions, eBooks, Netflix etc. aren't relevant because the economics are totally different. MoviePass is still paying full price for each movie. Spotify certainly isn't paying some sort of "full price" for each song you listen to. It seems like MoviePass would be most attractive to those who are most likely to take advantage of being able to watch tons of movies. I agree with other commenters, I think MoviePass is trying to get mind share and heft so it can then be in a good negotiating position with theaters. That is, if you get a couple of theater chains to come on and agree to better economics with the subscription model, then consumers may start only going to MoviePass-supported theaters, putting MoviePass in a much stronger negotiating position.