4 ms·

"MoviePass is my favorite business because I, the consumer, happily took the clueless executives’ money for my own personal benefit. It was awesome for me, but

"MoviePass is my favorite business because I, the consumer, happily took the clueless executives’ money for my own personal benefit. It was awesome for me, but it sucked for them." It wasn't the money of the executives, it was investor money, and none of these people were clueless. Building market share by massive "deficit spending" is how many companies became huge in the past decades. Of course most of those who attempt it fall by the wayside, but money is cheap these days and those who do not take advantage of that fact will have trouble competing.

ghaff 6y ago
There are other complications with a business like MoviePass which probably become clearer if you assume it's a theater chain itself offering the pass: - Their contracts with the distributor (how much do they pay for a butt in a seat?) - Whether a butt in a seat costs them anything (because they're displacing a full-boat customer) or is even net profitable because - Theaters make a lot of money by selling expensive popcorn and soda that cost them almost nothing - Also, the gym membership factor. i.e. people buy subscriptions and then don't really use them.
- fineIllregister 6y ago
  Regarding the gym membership comparison, one distinction is that many people get gym memberships for aspirational reasons, but don't actually like going to the gym. MoviePass demonstrated that people don't have the same aversion to going to the movies.
  - ghaff 6y ago
    I don't disagree although people may find they don't actually have the time to go out 2 nights a week.
    - psds2 6y ago
      I think the reply was trying to point out that if someone finds out they don't have time to go to the movies two nights a week they will cancel their movie pass. Because the gym is aspirational even if people don't have time one week they are more likely to tell themselves they will have time next week so they keep the gym membership.
BrianOnHN 6y ago
> money is cheap these days For whom?
- colejohnson66 6y ago
  Rich people
- pjc50 6y ago
  Anyone with a good investor storytime and the right faces.
- andrepd 6y ago
  People who are already capital-rich, they can get loans at the drop of a hat. Meanwhile people with low-paying jobs are stuck being priced out of the housing market.
sct202 6y ago
A lot of the later investors were clueless retail investors who didn't understand/notice dilution and reverse splits when they invested in Moviepass's parent Helios and Matheson ($HMNY).
mrfredward 6y ago
Worth noting that the executive get paid at least a comfortable base salary for as long as the cash-burning business keeps its doors open, and if hype creates a pop in the equity price their stock options can be worth a lot, even if the business doesn't turn out. Regardless of whether MoviePass really had a chance at being profitable, or whether the people running it believed it could be profitable, there was money to be made in making it look viable and getting investors. That's a pretty important point that the author needs to understand before calling the execs "clueless."
- ggggtez 6y ago
  Worse than that, there are rumors that he is relaunching a new company using the infamy he earned from crashing MoviePass into the ground. https://www.mediaplaynews.com/moviepass-founder-seeks-to-create-a-virtual-hollywood-with-new-media-company/ https://www.mediaplaynews.com/moviepass-founder-seeks-to-cre...
HPsquared 6y ago
Early history of PayPal is my favourite example of this. They literally gave people $10 for signing up, and a further $10 per referral (who then got $10 each as well). This was an expensive, but effective, way of achieving exponential growth in the early stages - enough to build a "critical mass" of users.
- Breza 6y ago
  I agree with you. I remember the early days of Paypal. It was back when buying something online often meant using a website you'd never heard of and weren't sure you trusted with your credit card number. Getting a few bucks from Paypal helped convince people they weren't a scam and could be your internet payment method.
  - tom_mellior 6y ago
    > It was back when buying something online often meant using a website you'd never heard of and weren't sure you trusted with your credit card number. Unless you do 100% of your online shopping on Amazon, I don't see how this is supposed to be different today. > Getting a few bucks from Paypal helped convince people they weren't a scam Funny. "Get free money" is pretty much a dead giveaway that something is a scam.
- jsight 6y ago
  That is a little different though. That's just like paying your customers directly instead of an advertising agency. PayPal certainly wasn't paying customers for each transaction or anything crazy like that.
bartread 6y ago
> Building market share by massive "deficit spending" is how many companies became huge in the past decades. The author goes on to make exactly this point a handful of paragraphs later. The MoviePass bit is a fun story to suck you in, not the meat of the piece.
- zepto 6y ago
  > The MoviePass bit is a fun story to suck you in, not the meat of the piece. Seems like the author damaged their own credibility with this ruse.
  - ggggtez 6y ago
    Agree. If anything, it made it seem like they don't really understand anything about MoviePass, or why it failed, or even what they were trying to do. It's like opening your example with saying you're going to talk about why this professional sports team lost the big game, and then your article is all about how you need to kick the ball into the goal to score points. It makes it seem like they really don't have a clue what they are talking about.
Sanzig 6y ago
> Building market share by massive "deficit spending" is how many companies became huge in the past decades. Sure, but that's got limits. If you need to sell a product for less than COGS when you start a company, no worries, but you need a plan to flip that ratio around eventually before investors get fed up and stop handing you capital. Maybe when you scale up to mass-production, your production cost per unit drops. Or you steadily creep the price up over time, or push features into a higher paying tier. Or maybe the product is a loss leader, and you make the money up elsewhere (eg: sell hardware at a loss, recoup it in subscriptions). The point is MoviePass did not appear to ever have a hope of succeeding other than "maybe in the future, we can negotiate enough deals with cinemas to drive the cost down." They had other levers that I'm sure they were considering too: limit MoviePass to empty seats/certain showings on quiet nights, increase the price of MoviePass, limit the number of views per month, etc. The trouble is, they sold MoviePass at such a ridiculously low price point ($10/mo) that even if they did all of those things, there's no guarantee they would have been able to boil the frog slowly enough to reach profitability. As the article points out, MoviePass was cheaper than buying just one ticket when it first launched. Somebody who only saw two movies per month already cost the company more than double what they brought in, and there were plenty of people using it weekly. You're creating a huge customer expectation with that - it's going to be a very tough sell to trim that offering to the point where it's profitable and you retain enough customers at the end of the day.
ggggtez 6y ago
The article doesn't appear to know much about the real MoviePass story. In fact, the thing that the author suggests that they should have done was their actual business strategy: ramp up customer growth using other people's money, and then bully movie theaters into a revenue sharing arrangement. The real problem with Movie Pass wasn't that they grew too fast, it was that the the movie industry refused to make the deal. Don't forget that while MoviePass was losing money hand over first, it wasn't just the consumers that were cashing in. The theaters were getting paid for all those seats too. In response to MoviePass, rather than breaking rank and being used as leverage against the other theaters... most chains just invented their own in-house version that would keep you locked into their brand. There are lots of deeper analyses about there. I don't think the execs were clueless. The investors, though. Those people might have been clueless. The theaters were forced to innovate, and did it easier and cheaper than MoviePass could.

ghaff 6y ago

There are other complications with a business like MoviePass which probably become clearer if you assume it's a theater chain itself offering the pass: - Their contracts with the distributor (how much do they pay for a butt in a seat?) - Whether a butt in a seat costs them anything (because they're displacing a full-boat customer) or is even net profitable because - Theaters make a lot of money by selling expensive popcorn and soda that cost them almost nothing - Also, the gym membership factor. i.e. people buy subscriptions and then don't really use them.

fineIllregister 6y ago
Regarding the gym membership comparison, one distinction is that many people get gym memberships for aspirational reasons, but don't actually like going to the gym. MoviePass demonstrated that people don't have the same aversion to going to the movies.
- ghaff 6y ago
  I don't disagree although people may find they don't actually have the time to go out 2 nights a week.
  - psds2 6y ago
    I think the reply was trying to point out that if someone finds out they don't have time to go to the movies two nights a week they will cancel their movie pass. Because the gym is aspirational even if people don't have time one week they are more likely to tell themselves they will have time next week so they keep the gym membership.

BrianOnHN 6y ago

> money is cheap these days For whom?

colejohnson66 6y ago
Rich people
pjc50 6y ago
Anyone with a good investor storytime and the right faces.
andrepd 6y ago
People who are already capital-rich, they can get loans at the drop of a hat. Meanwhile people with low-paying jobs are stuck being priced out of the housing market.

sct202 6y ago

A lot of the later investors were clueless retail investors who didn't understand/notice dilution and reverse splits when they invested in Moviepass's parent Helios and Matheson ($HMNY).

mrfredward 6y ago

Worth noting that the executive get paid at least a comfortable base salary for as long as the cash-burning business keeps its doors open, and if hype creates a pop in the equity price their stock options can be worth a lot, even if the business doesn't turn out. Regardless of whether MoviePass really had a chance at being profitable, or whether the people running it believed it could be profitable, there was money to be made in making it look viable and getting investors. That's a pretty important point that the author needs to understand before calling the execs "clueless."

ggggtez 6y ago
Worse than that, there are rumors that he is relaunching a new company using the infamy he earned from crashing MoviePass into the ground. https://www.mediaplaynews.com/moviepass-founder-seeks-to-create-a-virtual-hollywood-with-new-media-company/ https://www.mediaplaynews.com/moviepass-founder-seeks-to-cre...

HPsquared 6y ago

Early history of PayPal is my favourite example of this. They literally gave people $10 for signing up, and a further $10 per referral (who then got $10 each as well). This was an expensive, but effective, way of achieving exponential growth in the early stages - enough to build a "critical mass" of users.

Breza 6y ago
I agree with you. I remember the early days of Paypal. It was back when buying something online often meant using a website you'd never heard of and weren't sure you trusted with your credit card number. Getting a few bucks from Paypal helped convince people they weren't a scam and could be your internet payment method.
- tom_mellior 6y ago
  > It was back when buying something online often meant using a website you'd never heard of and weren't sure you trusted with your credit card number. Unless you do 100% of your online shopping on Amazon, I don't see how this is supposed to be different today. > Getting a few bucks from Paypal helped convince people they weren't a scam Funny. "Get free money" is pretty much a dead giveaway that something is a scam.
jsight 6y ago
That is a little different though. That's just like paying your customers directly instead of an advertising agency. PayPal certainly wasn't paying customers for each transaction or anything crazy like that.

bartread 6y ago

> Building market share by massive "deficit spending" is how many companies became huge in the past decades. The author goes on to make exactly this point a handful of paragraphs later. The MoviePass bit is a fun story to suck you in, not the meat of the piece.

zepto 6y ago
> The MoviePass bit is a fun story to suck you in, not the meat of the piece. Seems like the author damaged their own credibility with this ruse.
- ggggtez 6y ago
  Agree. If anything, it made it seem like they don't really understand anything about MoviePass, or why it failed, or even what they were trying to do. It's like opening your example with saying you're going to talk about why this professional sports team lost the big game, and then your article is all about how you need to kick the ball into the goal to score points. It makes it seem like they really don't have a clue what they are talking about.

Sanzig 6y ago

> Building market share by massive "deficit spending" is how many companies became huge in the past decades. Sure, but that's got limits. If you need to sell a product for less than COGS when you start a company, no worries, but you need a plan to flip that ratio around eventually before investors get fed up and stop handing you capital. Maybe when you scale up to mass-production, your production cost per unit drops. Or you steadily creep the price up over time, or push features into a higher paying tier. Or maybe the product is a loss leader, and you make the money up elsewhere (eg: sell hardware at a loss, recoup it in subscriptions). The point is MoviePass did not appear to ever have a hope of succeeding other than "maybe in the future, we can negotiate enough deals with cinemas to drive the cost down." They had other levers that I'm sure they were considering too: limit MoviePass to empty seats/certain showings on quiet nights, increase the price of MoviePass, limit the number of views per month, etc. The trouble is, they sold MoviePass at such a ridiculously low price point ($10/mo) that even if they did all of those things, there's no guarantee they would have been able to boil the frog slowly enough to reach profitability. As the article points out, MoviePass was cheaper than buying just one ticket when it first launched. Somebody who only saw two movies per month already cost the company more than double what they brought in, and there were plenty of people using it weekly. You're creating a huge customer expectation with that - it's going to be a very tough sell to trim that offering to the point where it's profitable and you retain enough customers at the end of the day.

ggggtez 6y ago

The article doesn't appear to know much about the real MoviePass story. In fact, the thing that the author suggests that they should have done was their actual business strategy: ramp up customer growth using other people's money, and then bully movie theaters into a revenue sharing arrangement. The real problem with Movie Pass wasn't that they grew too fast, it was that the the movie industry refused to make the deal. Don't forget that while MoviePass was losing money hand over first, it wasn't just the consumers that were cashing in. The theaters were getting paid for all those seats too. In response to MoviePass, rather than breaking rank and being used as leverage against the other theaters... most chains just invented their own in-house version that would keep you locked into their brand. There are lots of deeper analyses about there. I don't think the execs were clueless. The investors, though. Those people might have been clueless. The theaters were forced to innovate, and did it easier and cheaper than MoviePass could.