
MoviePass Worked Out Great - airstrike
https://www.bloomberg.com/opinion/articles/2019-08-07/moviepass-worked-out-great
======
sjcsjc
I really like this writer's style. This Dickens reference is hilarious:

 _Annual income twenty pounds, annual expenditure twenty pounds ought and six,
result misery. Annual income twenty pounds, annual expenditure three hundred
million pounds, result unicorn._

~~~
PhasmaFelis
It seems like 90% of startups have the business plan "step 1: get as many
users as possible at any cost, step 3: profit." Hardly anyone talks about it
or seems to think it's weird. I don't get it.

~~~
Bartweiss
My favorite summary of this entire pattern is that VCs would happily fund a
company which sold dollar bills for $0.90, figuring they could get users now
and raise prices later. (After all, they already raised the price from $0.70
and nobody complained!)

~~~
kccqzy
The VCs are banking on that startup playing obnoxious and privacy-invading ads
to customers while they purchase their dollar bill with $0.90.

~~~
tjoff
What about the other missing $0.06?

Oh, I get it, they sell antidepressants for the society they ruined.

------
dhruvrrp
Moviepass worked great when it handed you $2 of VC money for every dollar, but
I appreciate the fact that it did end up disrupting the market as it died.

Most of the big chain now offer Moviepass-esque premium services. AMC now
charges like what, $12 a month for 2-3 movies / week? That's how much
individual tickets cost in the bay, so as long as a person watches even a
single movie a month they're breaking even!

~~~
slg
> I appreciate the fact that it did end up disrupting the market as it died.

It might be too early to say that for sure. The AMC service was created when
MoviePass was still a player and was very much a response to them. I believe
AMC also only committed to that pricing for a single year and we just recently
passed that 1 year anniversary. Now that MoviePass is functionally dead, there
is little stopping AMC from raising prices to the extent that basically kills
this model for the average consumer. We might soon find ourselves back in a
market similar to the early days of MoviePass when one of these unlimited
subscriptions costs $30-50 and is only viable for an incredibly small group of
moviegoers.

~~~
gamblor956
Competing movie chains have also introduced monthly plans.

MoviePass proved the demand. They simply lacked the data or leverage to make
their business model work.

AMC and Regal have both. Crucially, they can negotiate with the movie studios
re the payouts for ticket purchases; MoviePass could not. This is probably the
biggest and most important factor behind why AMC/Regal can make these plans
work but MoviePass never could.

~~~
slg
>MoviePass proved the demand.

MoviePass proved there is demand for free money. They didn't prove that this
model could be profitable and therefore sustainable at this price.

~~~
gamblor956
AMC's been at it for a year and is still committed to it. Regal's corporate
parent has been at it for decades and just expanded it to the US (via Regal),
so I assume they have the data to make the numbers work.

Also important to note is that both AMC and Regal subscriptions are twice as
much or more per month as MoviePass was...closer to the original/sustainable
MoviePass pricing (when it was a lot smaller and not very popular).

------
CamelCaseName
>Lowe's happy-go-lucky persona marked a shift from the all-business Spikes,
whom he had replaced in the company hierarchy as CEO. On the rare occasions
Lowe made it into the office, staff would need almost an entire day to get him
up to speed. His general attitude, as one source described, was, 'Well, what
do you think we should do?'

How do people like this make it so far in their careers?

~~~
smacktoward
The writeup says that Lowe was installed as CEO by the company that bought
MoviePass, Helios & Matheson Analytics, and that the shift down to the $10
price point was the brainstorm of H&M's own CEO, Ted Matheson.

Put yourself in Matheson's (presumably quite expensive) shoes for a moment.
You're in the process of acquiring this company, MoviePass, and you have some
Big Ideas™ for it. Who would you want to have sitting in that company's CEO
chair? Not an independent-minded entrepreneur who's full of ideas of their
own, that's for sure. No, what you'd want is a yes-man, an amiable non-entity
who can be counted on to do what you tell them to do while otherwise staying
out of your way and letting you play with your new toy.

It's not uncommon for wealthy people to have a few people like this in their
entourage, people whose job is to fill a chair so as to prevent someone who
could cause the rich guy trouble from filling it instead. It's a job whose
only requirements are that you get along with the Big Guy and are willing to
unquestioningly do anything he tells you to. In other words, it requires all
the business savvy of a block of cheese. But it definitely pays well.

~~~
nafey
This reminds me of Gervais principle. Basically sociopaths use clueless
managers as pawn.

More details here: [https://www.ribbonfarm.com/2009/10/07/the-gervais-
principle-...](https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-or-
the-office-according-to-the-office/)

~~~
elliekelly
Great read, thanks for sharing. May I ask how you originally stumbled upon
that?

~~~
exolymph
It's a Hacker News classic, so a lot of the people here have read it, and they
link to it when it's relevant.

------
umeshunni
Here's the story - HMNY ( Helios & Matheson Analytics - the parent company of
MoviePass) is owned by an Indian company that filed for bankruptcy in 2016 and
then re-emerged with MoviePass in the US.

The entire thing is probably a giant money laundering or tax evasion scheme.

[https://www.moneylife.in/article/helios-matheson-
liquidated-...](https://www.moneylife.in/article/helios-matheson-liquidated-
in-india-but-nasdaq-listed-hm-offshoot-thrives/54261.html?fbclid=IwAR0nT-
Jh66CSfJZpMOp-1N9m-59lRUemgk4NHndzpBlNHPUv5BVmmaothkg)

[https://www.insider.com/moviepass-owner-emerged-from-
indian-...](https://www.insider.com/moviepass-owner-emerged-from-indian-
company-accused-of-massive-
fraud-2018-7?fbclid=IwAR3j9bVmfUChrqEadBVDO3F1Xv1_ZXv2fkhmtlhH4-j9DTUpqLYQbE0faoU)

~~~
crazygringo
Considering how all money streams for MoviePass depend on domestic card
transactions which generate 100% auditable records... I'm completely failing
to see how it could possibly result in money laundering or tax evasion.

Can you explain how? I don't see any obvious explanation in the articles you
linked.

~~~
jonknee
It's in vogue to describe a business you don't understand as "money
laundering" even when you don't understand money laundering.

~~~
FrozenTuna
Ok, but what about mattress stores? Are you telling me they _aren 't_ for
money laundering?

~~~
vageli
> Ok, but what about mattress stores? Are you telling me they aren't for money
> laundering?

Margins are insanely high on mattresses. Why the connection to money
laundering?

~~~
velp
It's become a meme, likely due to the clusters of mattress stores that seem to
pop up despite zero customers.

------
wyldfire
> They said Lowe ordered that the passwords of a small percentage of power
> users be changed, preventing them from logging onto the app and ordering
> tickets.

Genius move! Truly diabolical.

~~~
tareqak
I feel that this act is unethical somehow, but I can't place exactly how. I
would presume that the user is still allowed to perform a password reset, but
I see this as a "soft" denial of service. I don't think any of the power users
broke the Terms of Service and MoviePass didn't change these terms until
later.

MoviePass was literally advertising a service it wasn't truly willing or able
to sell at scale. I'm glad I stopped using them once I heard they were
becoming bankrupt.

~~~
paxys
How is it hard to see how this is unethical? You are paying for a service, the
company is deliberately making it hard/impossible for you to actually use that
service.

This would be a very easy class action lawsuit if the company actually had
money to pay for it.

~~~
tareqak
I see now. Even though I’ve was a MoviePass subscriber in the past, I was so
focused on just that paragraph that I forgot that MoviePass is something you
pay for. Your reply reminded me that you are paying for the service, so thanks
for that. Sorry for the trouble.

------
listenallyall
AMC's CEO thought he was so smart and defiant by eliminating what he saw as a
competitor, yet was, in reality, probably the largest individual block
purchaser of AMC movie tickets. Meanwhile in the midst of this bull market,
AMC's stock hit an all-time low just last month, from which it has recovered
slightly (still trading about 65% below 2016). With some tweaking to its
ticket availability, MP could have been these over-extended theater chains'
golden goose -- huge surge in off-peak ticket sales with zero marketing cost
to the theater -- yet they failed to recognize it, instead, actively sought to
crush it.

~~~
throwawaythekey
Major cinema chains in Australia went one step further and would actively
block your payment from going through if they detected you were using a
moviepass like product.

After becoming frustrated with my payments being rejected I reached out to one
of the cinemas. I explained to the likely overworked support worker that they
were essentially both turning down free money and being hostile to me
personally as a customer by refusing my payment method. As I should've known
the support was powerless to do anything but repeat "we are not associated
with product x".

Suffice to say I no longer offer unsolicited advice to theatre chains.

~~~
ajdlinux
What kind of MoviePass-like products were operating in AU?

~~~
throwawaythekey
Sinemia. From the start of 2018 until the start of 2019 IIRC.

------
tyre
Somewhat tangential but also maybe not: Matt Levine's "Money Stuff" is a
fantastic newsletter. It's consistently hilarious while explaining a
digestible number of very real events in finance and tech. He regularly muses
about the absurdities and appreciating the bumbling creativity of humans. As
you might expect, he spends a lot more time on the topics that fit into those
interests (i.e. the recurring segment "blockchain blockchain blockchain" about
companies being founded around/pivoting to blockchain with seemingly no reason
to use it vs. a database except for hype.)

Anyway, great writer and I'd encourage folks to subscribe.

Also a great writer, and this _is_ almost entirely tangential, but also maybe
not: Jia Tolentino. "Trick Mirror", her first book of essays, came out
yesterday and the first is an accounting of the internet and our collective
descent into hell, the subsumption of self through social media, the
irreconcilable promise of the web vs. its business model, our magnified sense
of the importance of our own opinions, feeling good about saying things vs.
doing the work (e.g. tweeting about politics vs. organizing; changing our
profile picture to add an overlay for a cause vs. working to solve that issue;
etc.) All of this in <30 pages. Stunning work of prose, somewhat depressing,
and tightly delivered with measured sobriety vs. the performative outrage
we've grown accustomed to (she also covers that.)

~~~
cwal37
Going along with the tangent, if you're into recent essay collections (as
someone who has been very much looking forward to picking up Trick Mirror
myself), you might like Impossible Owls by Brian Phillips which came out last
year. I wouldn't call it as focused as it seems Trick Mirror is, but I get a
similar kind of vibe from their writing sometimes.

~~~
tyre
Thank you for the recommendation! I love essay collections and will pick up a
copy.

I can't say that Trick Mirror is entirely focused, unless you're responding to
my description of her prose which very surely is. The opening essay is on the
internet, another on drugs and losing faith and finding faith and megachurches
and Houston hip-hop, another on our obsession with optimization, another on
the complexity of campus sexual assault, etc. The collection is broad and each
essay is deep. (I feel quite strongly that I would read Jia's writing on
anything—sawdust, pecans, lice, dry cleaners—and that compounds itself when
she writes about topics both so weighty, so broadly applicable, and yet so
personal.)

What I love about the collection is it feels the way Joan Didion's or DFW's
best narrative non-fiction feels. That kind of awe at the writing, that
unfurling of confident and thought-through storytelling, that kind of
blossoming of connections that form the richness of life and intellectual
inquiry. The difference–and for me this is somewhat personal and so perhaps
not universally relatable but feels like it could be–is that, at 30, she is
writing about our time. She's writing about coming of age in and with the
world we live in now.

Didion writing about the sixties and seventies and Wallace about the eighties
and nineties and two thousands are both beautiful and timeless and a
masterclass on what greatness feels like in your hands, but there's something
special about reading someone cogently weave personal experiences about
AngelFire and Twitter and political extremism and Anonymous and the crushing
weight of forever being "seen" and performing on the internet. Something
special because we are living it now.

I feel about Jia—as well as a few other living writers; Caity Weaver's
profiles come to mind—the way I didn't know to feel about other living
legends. That feeling of not appreciating what you have because you think it
will last forever. I think about when Mac Miller was still alive (less than a
year ago) or when Lil Wayne was on top of the world with Tha Carter III or
when Chance the Rapper still made good music or when Obama was president or
when Jon Stewart was on TV or when Jobs was leading Apple. I didn't
consciously stop and appreciate not only the work but to be alive to live it,
and now that those times are gone there's only nostalgia. I'm trying to be
more mindful of witnessing generational talent in the moment and Jia's writing
feels that way to me.

~~~
cwal37
Ha, no worries, wasn't taking a through line in Trick Mirror from what you
wrote, but from the excerpts and reviews I've read elsewhere. I feel similarly
close to her writing, in a specific way that's a bit electrifying when you
initially have the realization of, "Oh! they also wrote that other piece I
_felt_!", something speaking to your brand of existential experience drifting
through now.

As for Brian Phillips, if you wanted to read pieces directly adjacent to some
in the book, a few of the essays were adapted from freely available longform
pieces he had already written. Sea of Crises[0] is very close to the in-book
essay if I remember correctly, while the piece related to Out in the Great
Alone[1] in the book is more of a side story. I'm a bit envious if you haven't
already happened upon those and get to read the duplicative passages for the
first time in the course of the book.

Also, I couldn't help clicking through to your profile given this aside (the
quality and content of which I don't expect here) and I wanted to say that I
appreciate the work you're doing.

[0] [https://grantland.com/features/sumo-wrestling-tokyo-japan-
ha...](https://grantland.com/features/sumo-wrestling-tokyo-japan-hakuho-yukio-
mishima-novelist-seppuku/)

[1] [http://www.espn.com/espn/feature/story/_/id/9175394/out-
grea...](http://www.espn.com/espn/feature/story/_/id/9175394/out-great-alone)

------
swanson
I still maintain that $HMNY (the parent company) stock was an interesting and
unique case where the average person could buy shares in, essentially, an
early stage startup that had tremendous consumer interest and growth.

Most of the time you see tech startups they are either in the seed/VC stage
(you can't invest unless you are accredited and have connections) or the IPO
stage (mega-companies that everyone has heard of).

Did it turn out poorly? Yes (Share price went from $35 to $1 for a while and
then down to basically zero). But was it a good process? I think so!

~~~
rossdavidh
There is a school of thought that says that you shouldn't let people without
investment experience, put their money into early-stage tech startups run by
people they know nothing about, precisely because they are less likely to
understand that the great majority of startups fail. It's an elitist school of
thought, for sure, but I have to say there is some truth to it.

~~~
mikestew
It didn't _used_ to be an elitist school of thought, because a school of
thinking on the subject wasn't needed. There were high enough fences to keep
the riff-raff out (high transaction fees, inaccessible markets for commoners,
et. al.). Thanks to e-Trade, Schwab, and the like, those fences got torn down,
not knowing those fences not only kept people _out_ , but they also kept the
bad things _in_. Bad things like super-duper sketchy penny tech stocks (HMNY).

Elitist? Meh, no more elitist than, say, a climbing permit for Mt. St. Helens
(which is just $15 and fill out a form). Put up even a token barrier, even if
it can easily hopped over.

~~~
projektfu
It was made inaccessible. Previously new and speculative companies were pretty
accessible.
[https://en.wikipedia.org/wiki/Curbstone_broker](https://en.wikipedia.org/wiki/Curbstone_broker)

------
scarejunba
I loved it. VC money in my pocket is always a good thing. MoviePass was a
regular Robin Hood.

------
natvod
This part struck me as well:

> But, no, the main constraint on MoviePass’s growth seems to have been the
> actual production of plastic prepaid credit cards, which it couldn’t print
> fast enough:

Given how much money they were losing, it wasn't possible use digital cards
that could be added to phone wallets? Or am I missing something here?

~~~
phonon
Yes, the primary way to use the service was with a MoviePass credit card. From
the theater's point of view, it was just a regular credit card. MoviePass
eventually wanted to move to direct ticketing, but they made enemies of the
major theater chains do their aggressive and unsustainable business model.

------
jsgo
In some ways, MoviePass always felt really scammy so never went in with it: a
too good to be true proposition (also, it isn't a gym membership: they can't
guilt you into signing up for a year right at New Years. So buoying the users
who didn't leverage the pass yet paid for it vs those who really leveraged it
seemed to be an unattainable dream).

But that being said, when AMC came out with their own version? I went for it
and I'm very pleased. I can take my daughter to see a movie pretty much
whenever (2-3 a month, really. Have to buy her ticket because it is only for
18 and up though. A single movie essentially pays for that month though).
Plus, I seem to get some kind of money voucher thing as this most recent time
I had $60 available somehow and the drinks and popcorn were billed to that.

So maybe MoviePass was trying to play the middleman in a way they couldn't as
they couldn't control the theaters as much as they hoped for their own
survival, but the existence of it maybe clued theaters into a different
revenue stream that could work for them (and customers). So thanks MoviePass.

~~~
gamblor956
If only MoviePass had gone B2B and partnered with theaters to provide the
backend systems for white-label movie subscription plans, they'd still be
around today.

~~~
scarface74
Why would the movie chains need MoviePass? AMC already had its own online
system for payments, reservations, had mobile apps and website and had
handheld system to allow e-tickets. They had the free AMC Stubs program
already where people could register. Adding the subscription plan wasn’t that
heavy of a lift.

I’m sure Regal had something similar.

------
formercoder
Very interesting article on the economics of MoviePass [1]

[1] [http://aswathdamodaran.blogspot.com/2018/05/user-and-
subscri...](http://aswathdamodaran.blogspot.com/2018/05/user-and-subscriber-
businesses-good-bad.html?m=1)

------
tombert
I remember it took almost two months for me to receive my card. Since they
were completely unresponsive via email support, chat, or the phone, I was
starting to worry that it had gotten lost in the mail or something, or worse
that they had never shipped it.

it was getting to a point where I looked at their website, noticed that they
were based in NYC (like me), and thought about applying to a job there purely
as a means to talk to someone, and complain about my card never arriving.

Sadly, I chickened on that plan, but I really wish I had gone through with it;
I would have loved to see how awesome their office was if they were totally OK
hemorrhaging money with no real strategy on making it back.

------
aerovistae
I don't know why it didn't occur to them to do a pass for movie snacks
instead. Probably with a mild discount they could reap a decent profit there
if the movie theaters could be negotiated into reducing their extravagant
prices in return for increased sales.

~~~
vcanales
Movie theaters wouldn't allow it. Snacks are expensive because movies are not
really that profitable for them.

~~~
huac
movies are profitable for some of the parties in the chain, but the theaters
specifically must pay so much in licensing fees that they don't make much on a
given ticket.

------
Scoundreller
The US didn’t need MoviePass for this.

Movie theatre subscriptions have been a thing in France for a very long time.

~~~
adventured
They've been a thing in the US for a long time as well. I remember them in the
early 1990s when I was a teenager, so I assume they probably existed for
decades before that. I don't know why MoviePass was perceived as a good idea,
other than the notion of centralizing the service into one bigger company and
away from individual theater chains (which could then give an entity like
MoviePass leverage to suck more value out of the movie theaters as a whole;
another middleman parasite that adds very little real value).

------
ErikAugust
The joke is: “We will lose some on every unit, but we will make it up on
volume!”

------
adventured
Outline for the Business Insider story referenced in the article that covers
the MoviePass history in greater detail:

[https://outline.com/ZPqaXs](https://outline.com/ZPqaXs)

------
KibbutzDalia
The biggest problem was only “cherry pickers” bought the service. People who
were already spending $10 a month or more in movie tickets. For it to work it
needed to be a “breakage” play, like gym memberships.

Also theaters started getting non-movie-goers back in occasionally they may
have been perceived as more valuable “conversions” and Moviephone admissions
would have been discounted.

~~~
bpicolo
> People who were already spending $10 a month or more in movie tickets

I don't think that's the case. I know a ton of people who went from seeing
movies almost never to seeing them several times a month. They had the
opposite problem of a gym - having a moviepass membership available actively
changed people's moviegoing behavior on a wide scale.

Gyms also don't pay a per-visit overhead cost for a given member.

This is more or less why AMC can successfully offer A-List.

~~~
paxys
You both are saying the same thing. They needed people who paid the monthly
fee but never went, but instead got people who went a _lot_. And gyms
definitely do pay a per-visit overhead since space is a fixed and precious
resource, especially in urban areas.

~~~
shawabawa3
There's no marginal cost (effectively) on a single gym visit.

If 100 people use moviepass, moviepass loses 100*$X

If 100 people use a gym membership. The gym loses $0. And maybe a few people
cancel because it's too crowded (or better yet, don't cancel but stop coming)

~~~
paxys
> And maybe a few people cancel because it's too crowded

Wouldn't you consider that a per-visit cost?

~~~
hacym
No, why would you? Attaching a cost to someone unable to visit the gym due to
"overcrowding" wouldn't make business sense since you're unable to determine
if that is actually the case or if they weren't coming for another reason.

A customer with a gym pays a monthly rate... That rate is paid even if they
use it. The running cost of the gym remains the same whether or not someone
comes to the gym.

This comparison, then, doesn't make sense. MoviePass is paying directly each
time a customer uses the service. While both services are better off with
people simply giving their money for something they don't use, only MoviePass
actually LOSES money if people are using the service. The gym, on the other
hand, doesn't.

------
diminoten
So running an early stage startup is basically performance art, with an
intended audience of VCs?

------
draw_down
It was always unclear to me why anyone who wasn't an investor or stakeholder
should have cared that MoviePass spent/wasted a bunch of investors' money. If
someone is selling dollar bills for 75 cents, who cares what their motive is,
or if it's sustainable or whatever?

~~~
smacktoward
I think it wasn't so much about MoviePass _per se_ as it was about the idea
that MoviePass symbolized something broken in the modern economy -- that what
it rewards isn't productive entrepreneurship that creates value by making life
better for people, but rather burning tons of cash to wedge yourself into a
position from which you can then extract rents from other people. The
valorization of unnecessary middlemen.

~~~
mikestew
From an HN comment from today that I've added to my favorites: _" It feels as
though much of tech has gone from helping people accomplish their goals
efficiently to a business model of extracting rents while providing no or
little value."_

I quote it because your comment made me think, "where have I recently heard
that before?" :-)

~~~
ryandrake
The world has become this raging river of dumb money, and it’s a lot easier to
simply find the biggest cup you can find and dip it in, than it is to actually
create something of value and sell it to actual people.

