
How Does MoviePass Make Money? - dsr12
https://www.wired.com/story/moviepass-second-act/
======
mschuster91
> Helios and Matheson, an analytics company which has a majority stake in
> MoviePass

This here is the juice: Big data. The more customers they have, the better -
they have validated full names, birthdates, addresses and CC numbers (and most
likely also ethnicity) linked with the data when they visited what movie and
even if the customers repeatedly visited a movie.

MoviePass has, effectively, four distinct customers:

a) the moviegoers themselves, where MoviePass makes a profit on everyone
watching less than 1 movie a month

b) the vast amount of adtech/big data/consumer analytics companies for which
this data is a goldmine

c) the movie studios which can (as shown in the article) use MoviePass to
promote movies

d) the cinemas which profit off the customers wanting to eat and drink

They have, of course, monetized a) and begun to discover how to monetize c) -
it will be interesting if they find a way to monetize the data.

~~~
utnick
Is that data that valuable though? Its not that unique, off the top of my head
there are several companies that have similar datasets, Every movie theatre
chain, every online movie booking service, every movie review site

~~~
mschuster91
Yes, because:

\- the theatre chains only have mostly generic datasets (the audience for
movie X is mostly young white males) while MoviePass can do far more detailed
analysis (and, in theory, could pass detailed questionnaires after you watched
a movie, thus gathering more personalized data)

\- online movie booking services (at least in my social bubble) are only used
for movies where people think they don't have a chance to get a ticket without
an early reservation

\- movie review sites only have tiny bits of data about the readers, and the
reviewer dataset is skewed - it only provides data about the people caring
enough to do a review.

~~~
alexwilde
I agree with this mostly. However, the data coming from MoviePass may be
flawed. I'm much more likely to see a movie I would never normally pay to see
with a MoviePass subscription.

~~~
mschuster91
> I'm much more likely to see a movie I would never normally pay to see with a
> MoviePass subscription.

That is the exact thing that makes the data actually interesting: it removes
the risk factor, aka "do I want to see a movie for $12/person and risk that
it's trash?", from the viewer's decision process.

~~~
shaftway
There's a lot more interesting data to mine there.

I'm a _lot_ more willing to walk out of a movie I didn't pay for. There's not
really a way to capture this data right now, but the MoviePass system requires
you to have an app on your phone, and check in shortly before the movie, at
the theater.

If I was them I'd be looking at putting audio fingerprinting on the phone to
determine whether people leave before the movie ends.

~~~
bfuller
the app requires a surprising amount of permissions also

------
schizoidboy
I thought their business model was like a gym: hope that most people won't use
it. (Source: I have MoviePass and I'm seeing less than 1 movie per month
because I'm too busy :-D)

Instead, this article claims it's:

1\. Studio of movie $M pays MoviePass $X to market it to subscribers.

2\. Subscribers see a movie they otherwise wouldn't pay for. MoviePass eats
this cost ($Y).

3\. Subscribers' word-of-mouth network effects bring in extra revenue $E that
otherwise wouldn't have come in.

4\. MoviePass stays alive if $E > $X > $Y.

~~~
dublidu
MoviePass can’t use the gym model because most people actually like going to
the movies, it’s not aspirational. MoviePass also has much higher cost per
visit, since they have to pay full price to AMC.

------
praneshp
Heads up from a former customer that just cancelled: I was a huge fan 3 months
ago, but they've been dropping theaters left and right. Around mountain view,
they have gone and dropped both theaters I watch movies in.

In my opinion, this will be a better program if there was a guarantee that
theaters will stay for X months.

------
libertine
I still remember when movie theaters provided a different experience - and I'm
in my late 20's, so it was not that long ago.

Movie theaters became just another living room - people go there chat, comment
and eat during the movie just like they were at home. It became such an
obnoxious experience, where people are shoved into a room and door is closed.

This goes to say: movie theaters had a lot of distribution costs reduced over
the years, and probably even the reform of projectors isn't such a big deal
today due to digital distribution.

MoviePass is aiming to give them volume, at a reduced margin - that's how.

~~~
scarface74
It depends on the theatre. I only go to a regular movie theatre when I'm back
home seeing my parents. I enjoy the theatre experience where you get reclining
seats and you get to reserve your seat beforehand. The next step is the dinner
and movie experience where you get to both enjoy reserved seating and get food
served while you're eating. Those theatres by necessity aren't as crowded and
you have a much better experience. The ticket costs for the movie and dinner
type places are usually cheaper since they can make it up on food.

We also still have a decent drive in in our area where the sound comes through
your fm radio. You can see two new releases there for like $8 a person. You
can bring your own food - usually we do take out.

Movie pass is a no go for popular movies for us because you can't use it to
reserve movies in advance online.

~~~
slfnflctd
> The ticket costs for the movie and dinner type places are usually cheaper
> since they can make it up on food

For some of them, this may be true. However, one I visited in the Midwest put
their 'eat & watch' section in an exclusive balcony above the standard seating
area and was charging almost double per ticket (along with sub-Applebee's food
at Chili's prices). They have apparently been in business for over five years
doing this.

I enjoyed the experience, but I ultimately didn't feel it was worth the extra
cost, and the sound of silverware on ceramic plates & bowls was a bit
distracting. Handheld food and fancy paper/plastic plates and utensils would
be how I'd run that operation.

~~~
scarface74
I have seen both. I went to a theatre in Miami where you had to pay more for
the eat and dine experience and just to be in the lobby.

Where we usually go - Studio Movie Grill - you can usually get a ticket for
$5. The prices of the food and the quality is around AppleBeds like you said.

That's true about the silverware, it's never been distracting but another
place we go - a small place with about a capacity of 70 that has live music
uses paper plates and utensils.

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tacomonstrous
At least in my case, by continuing to charge me monthly even after I canceled
the service. Their customer service is non-existent, so I had to file a
dispute with my credit card company to make it stop.

------
xivzgrev
I don't quite follow the angle of promoting smaller studios' movies. If I am
such a studio, and pay moviepass $100k to push a movie, and then that results
in $1M tickets sold thru MoviePass, and I get $500k (or whatever), didn't
MoviePass just lose $900k? MoviePass is both the marketing channel AND
consumer. The studio has to make a profit and that has to come from somewhere
- MoviePass' profit.

~~~
toast0
Ah, but it their customers watched other movies, they would have lost $1M, so
it's better. If the intent is to get movie attendance data at any cost (as it
seems), getting it at less cost is better.

~~~
xivzgrev
True. How do you know they would've gone to see a movie though?

That's what seems weird about this whole gravy train - the various drivers of
the business clash with each other. More movies per person, more data, but
more margin loss. Fewer movies per person, more margin, less data. More studio
deals, more revenue, less margin.

I think they're exploring various business models and finding where the
sustainable value is. Will be interesting to see!

------
haily
I think most people are missing the point here. MoviePass has many ways to
monetize from begin to end. It currently has more then 1.5 million subscribers
& growing very fast (fastest subscription service growth ever, even faster
then netflix). Most people miss the opportunities MoviePass has. It will
control the demand & distribution of movies through its subscribers. Movie
theater goers have been declining year over year and MoviePass will help
reverse this.

It currently makes money by

a) subscriptions $9.95/month b) $2-3 rebate per ticket contracts with about
1000 theaters (5 new contracts a week are signed) c) 20-30% of concession
revenue with about 1000 theaters (5 new contracts a week are signed) d) Bought
"America Animal" movie rights for North American release at Sundance Festival

------
neuralFatigue
They also now take cuts from ticket prices and upto a 20% cut from
concessions.

More information here: [https://techcrunch.com/2018/01/26/moviepass-pulls-out-
of-amc...](https://techcrunch.com/2018/01/26/moviepass-pulls-out-of-amcs-top-
theaters-as-negotiations-fail/)

The article makes it sound like Moviepass now has more leverage than the
theatres themselves, which is super interesting.

~~~
jrs95
Based on another article I saw, this doesn’t seem to be the case with AMC.[1]

Basically, all of MoviePass’ subscribers is still a tiny portion of AMC’s
sales, so they’re refusing to share any of their revenue with MoviePass.

[1] [https://www.theverge.com/2018/1/26/16936952/moviepass-amc-
th...](https://www.theverge.com/2018/1/26/16936952/moviepass-amc-theatre-feud-
movie-tickets-deceptive-earnings-statement)

------
Spooky23
A: It almost certainly doesn’t make money.

Since you have to buy the ticket at the theater, they are probably trying to
sell analytics re: influencing selection. Good luck with that.

------
jrochkind1
[http://www.businessinsider.com/how-does-moviepass-make-
money...](http://www.businessinsider.com/how-does-moviepass-make-money-2017-8)

> The same day it announced the $10-a-month plan, MoviePass raised cash by
> selling a majority stake to the data firm Helios and Matheson Analytics
> Inc.. With a new price-point designed to attract as many subscribers as
> possible, MoviePass is hoping to attract a large enough user base so as to
> be able to monetize it.

> “If you get a trailer right now for Spiderman on Facebook, Facebook can’t
> tell if you ever actually go to the movie. We can,” he told Wired. “We can
> tell if you look at 'Spider-Man' and look at 'Wonder Woman' and 'Mission:
> Impossible,' we can tell you exactly what movie you went to out of all three
> trailers.”

> Farnsworth envisions movie studios using MoviePass' valuable data to do
> targeted marketing for their films. Once MoviePass has millions of
> subscribers, its ability fill seats can make the difference between a hit
> movie or a flop, he explained. MoviePass plans to hold an IPO in March, he
> noted.

~~~
cwyers
> “If you get a trailer right now for Spiderman on Facebook, Facebook can’t
> tell if you ever actually go to the movie. We can,” he told Wired. “We can
> tell if you look at 'Spider-Man' and look at 'Wonder Woman' and 'Mission:
> Impossible,' we can tell you exactly what movie you went to out of all three
> trailers.”

Oh bull. So many people tag themselves in Facebook posts when they go to the
movies. Facebook absolutely has enough data to determine this.

~~~
adjkant
Maybe for your friend group, but absolutely not mine (20-25). That market is
huge for advertisers.

Thar said I can't imagine their losses ever being recouped in ads.

~~~
cwyers
Maybe I am mistaken, but I find it hard to believe that if people in that demo
are on Facebook enough to see movie trailers there that they wouldn't then
post about the movie they just saw.

~~~
adjkant
I have about 1000 Facebook friends, most within that age group. About 15
people still post there at all. I know more people using Facebook for college
meme groups than for social interaction.

------
jdlyga
How do so many other companies like this make money? For example, HQ: the live
trivia game show app that gives away a few thousand dollars multiple times per
day. There's no ads, and no in app purchases. Besides burning through VC money
like it's 1998, what's the business model?

~~~
sudhirj
No ads doesn't mean your data isn't being used for ads. It's likely being sold
to orthogonal adtech businesses. i.e. the company collecting the data is
rarely the one using it, it usually just sells it.

~~~
cwyers
And how well does that work out? My experience with ad targeting is that it's
mostly awful. Amazon can track every book I purchase through them, and the ads
for books to buy on my Kindle are awful. Facebook has oodles of information
about me, and if I turn off AdBlock for a moment there, the ads I see are...
diabetes test strips (I do not have diabetes) and something involving Brook
Shields that I bet is a total sham. The only online ads I see where data on
me, and not just inventory, seems to play a major role is retargeting, where I
look at something on Amazon and it's shown to me again in an ad in case I
changed my mind about not buying it. The whole adtech industry is in awful
shape, and the idea that MoviePass can be profitable by being such a periphery
part of the adtech industry is laughable. People will just tell Facebook and
Twitter what movies they've seen for free, there's no reason to subsidize
movie tickets to get that data. This is a case of "let's spend VC money like
water to get enough customers to get a huge valuation and then figure out a
business model."

~~~
supreme_sublime
I'm curious, does Amazon continue to recommend items you either just bought or
are similar to something you recently bought? I get this all the time and it
is annoying. It seems like the recommended stuff is related to my searches and
doesn't get changed by my purchases.

I think the whole online ad industry is broken. I don't know why people keep
pouring money into it. Most people have learned to ignore ads, or they use an
ad blocker. I don't care to see an ad for something I already bought.

I doubt a system like this would actually work, but I'd explicitly tell them
what kind of products I'm looking for if they asked. This passive "we can get
into their mind through searches" doesn't work very well.

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neovive
I wonder how much longer the theater experience will command such a high
premium. Beyond a true IMAX experience, the theater doesn't seem to add much
value for average movies.

One possible pivot for MoviePass would be to partner with Netflix, Amazon,
HBO, or Hulu to run exclusive "members-only" premiers of their content in
theaters. I could see some value in the community aspect of the theater for
some of the more popular streaming shows.

~~~
subpixel
For me, a movie theater is subpar to my apartment. I would much rather watch
new releases on a streaming site than shlep to a theater, fight the desire to
waste money on bad snacks, and sell my viewing history to god knows who.

~~~
gamblor956
I have a big screen 4k HDR TV, a 7.1 Dolby Atmos system, and very comfortable
recliners.

But I would never consider a movie theater a subpar experience to my condo for
any movie worth seeing on the big screen.

Maybe I'm just lucky that I live in Tinseltown and we know how to operate good
theaters here, but every major-chain local theater has laser projectors,
massive sound systems, and reserved reclining seats. The concession stands
offer beer, wine, and cooked foods. Security regularly patrols the theaters
during screenings to make sure that people aren't on their phones or talking.

------
jon-wood
At least in the UK each of the big cinema chains runs there own equivalent to
this, and they push their staff hard to sell passes because the actual seat
costs them a negligible amount of money, and people who “aren’t paying” for
the seat are more likely to buy food and drink.

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ricardobeat
Is what they are doing even legal? Co-opting movie goers into their debit
cards and then using that power to extort the movie theaters for money?

Imagine how much money your bank could make if they started doing this...

~~~
ricardobeat
/s

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dingo_bat
Because the marginal cost for a theatre to show a movie is virtually zero.

~~~
bunderbunder
The marginal cost to a theater, sure. But, as the 3rd paragraph points out,
_MoviePass_ is paying those theaters full price for each ticket. They're
losing money hand over fist.

They can't just solve this by squeezing theaters, either. They're already
struggling, if not barely surviving. If MoviePass simply tries to strong-arm
them into accepting less than full price, without offering some other source
of revenue in return, that's a lose-lose strategy for them. If they fail, they
lose their ability to supply customers in that market with the service that
they signed up for. If they succeed, they risk bankrupting the people who
_actually_ supply their customers in that market with the service that they
signed up for, and so they still lose it.

~~~
txsh
If you believe what MoviePass is saying, they’re not losing money hand over
fist. They claim most people stop going to the movies after the first couple
of months. If someone doesn’t see 12 movies in a year, they aren’t losing
money. They say the average is closer to 4.

~~~
j1vms
> They claim most people stop going to the movies after the first couple of
> months.

Which of course hurts the ads/analytics side of their business. Not going to
any movies means little or no data generation.

~~~
criddell
When the subscription price was higher, they have fewer members and the people
that signed up went to a lot of movies and MoviePass was losing a lot of
money. When the dropped the price, a _lot_ more people signed up and most of
these were casual movie goers.

In every way they are better off with two million subscribers that go to 8
movies a year than a hundred and fifty thousand subscribers that go to 25
movies a year.

~~~
dawnerd
And this is exactly why they pulled out of the top AMC theaters. No surprise
they're also the most expensive ones. The AMC at citywalk in LA is almost 20 a
ticket for a basic 2d showing.

~~~
etcet
It's apparently not the ticket price that they care about. They removed
support for the River East 21 in Chicago, which has 21 screens and shows a lot
of foreign and limited releases. You could probably go there every couple of
days and see a new movie you haven't seen before. Ticket prices there are
actually cheaper than the 600 N. Michigan AMC which they still support. But
that theater only has 9 screens and basically only shows blockbusters.

Likewise, the Webster Regal in Chicago is about $3 more per ticket than
theater they dropped support for. But they don't carry all the limited/foreign
releases that River East does.

