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MoviePass Worked Out Great (bloomberg.com)
372 points by airstrike 71 days ago | hide | past | web | favorite | 272 comments

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.

He's hilarious and has a column in the same style every day! Subscribe and enjoy life a little more every morning:


(no affiliation, just a Matt Levine fan)

Levine's article "Arbitrage Discovered" might be my all-time favorite econ essay. It's about an investment product that let you trade on past stock prices in the present. Levine is usually pretty calm and wonkish, but this arrangement was so breathtakingly self-destructive that he spends the piece writing things like "It's not actually an arbitrage. EXCEPT NO HOLY GOD IT IS THIS IS AMAZING."


Did this ever get resolved? Does George own the company already?

According to the Wikipedia entry he won in court but they are still in court to collect money.


>>By 2015, up to 50 court decisions had been rendered against Aviva France. In September 2014, the French Supreme court, the Cour de Cassation, ruled in favor of the George family, determining that the life insurance contracts, as drafted with the "known price" clause, are legally binding under French law.[18] Nevertheless, George is still in court against Aviva, having won on the principle of the legality of the contracts, he now needs to have his prejudice recognized and valued in a second ongoing battle.<<

It appears he won the court case stating the contract is legal under French last, and now has to fight another one to make them honor it. Courts aren't fast.

That is quite entertaining and borderline incredible, thank you.

Great article. Thank you!

Hear hear!

If you're a techie and want to understand the financial world (particularly big VC and public equities), I highly recommend reading him daily. He breaks super complex things and makes them very easy to read...and SUPER entertaining.

Levine is fantastic.

It feels like finance writing is usually split between content for the general public (understandable, but often vitriolic and devoid of context) and writing for finance types (jargon-filled and usually devoid of ethical considerations). Levine straddles the line beautifully; he uses lay terms to explain the realities of financial instruments, not just silly metaphors, and looks at what should exist in the context of modern finance rather than gut instinct.

Clever and it takes the format of an old quote: "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."

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.

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!)

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

What about the other missing $0.06?

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

But what is the value of the list of customers that sign up to purchase the dollar bills?

It could be like the list of folks who buy stuff on late-night infomercials.

VC exit strategy: sell stock, get list and bail.

But it's often effective.

Big companies like Facebook will pay cash or valuable equity to take those engaged users off your hands in an acquisition.

It's definitely worth remembering that what sounds idiotic in specific cases is often either gambling or a principal-agent problem on a systemic level.

Growth potential and demand elasticity are both hard to predict, so VCs are betting on high growth and trusting that one high-demand win can pay off 100 or 1,000 losses. (The people chasing proven revenue with unknown growth potential are banks, investing in things like expanding existing stores.) Did MoviePass show a <1% chance of succeeding? Probably. <0.1%? I'm not so sure.

As for founders... Often, they're gamblers or extremely self-confident. Less generously, the field attracts a lot of people who are happy to burn someone else's money on a ridiculous narrative, while their actual focus is on getting acquired or elevating their personal reputation. (And heck, there are VCs doing this too. Consistently returning 25% on your fund is nice, but funding Snapchat will get you a job at a fancy Sandhill office, and funding Facebook will get you treated as a rainmaker and even a political player.)

Well, yeah, it's because that's all you hear from incubators, accelerators, investors, etc.

I've been to so, so many startup / entrepreneurship conferences / competitions / workshops and what not the past years, where the main takeaway has been: "Growth is everything, business models can be reshaped later on".

I mean, sure, it's all fun and games for the startups and consumers - they're being bankrolled and subsidized by VC money, but it's a very artificial state. Lots of products start to suck the moment monetization enters the picture.

Everyone constantly talks about it. At least on sites like this.

It stands to reason that once they got a critical mass of users, they would be able to negotiate ticket prices with theaters, a la a distributorship like Wal-Mart, Costco or Amazon.

The trick is holding out long enough to get there, and I think they severely underestimated the general public's free time.

There is nothing weird about it. Profit is not the goal of either the management of the company or the investors. Their goal is either to get acquired or go public and sell their shares as soon as possible.

Matt Levine and Kevin Muir (of https://www.themacrotourist.com/ fame) are two of my favorites. Also, shout to to https://heisenbergreport.com who isn't nearly as well known, but still has the gonzo financial reporting style.

You can't get better than Matt Levine. He probably has the best blog/newsletter on the internet, finance related or not.

I knew it was going to be Levine just from this comment

The Dickens reference is nice, but I think the MoviePass story would be better told by Lewis Carroll.

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!

> 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.

I'm not sure AMC would want to kill off this service. First, having subscribed customers is a much more reliable source of revenue than depending on the next big blockbuster so you can profit off the popcorn. Second, AMC doesn't lose nearly as much money per movie because they make money back on refreshments and there are almost always extra seats in the theaters. Furthermore, what's to stop AMC from saying a person who saw Avengers 3 times from really reporting that they only saw it once? I'm not sure how that whole process works but in theory, AMC could hide how many movies are actually seen in order to limit payment to studios for tickets purchased.

Also, like gym memberships, the utilization is almost certainly nowhere near 100%. I bet they make far more money from people who have the pass but average <1 movie per month than they lose from people who maximize the "free" movies.

> the utilization is almost certainly nowhere near 100%

I read a study a few years back and the average American adult sees 1-2 movies per year in a theater. I dont have the info anymore but I agree wholeheartedly

But AMC will be dealing with adverse selection. People who only see a couple movies a year will not subscribe. Only those who spend more (plus a few who miscalculate) will be subscribing.

>People who only see a couple movies a year will not subscribe.

This is what a lot of people leave out when discussing the gym membership analogy. There is a societal and personal pressure to be in shape and have a gym membership. Many people also don't enjoy the actual process of working out. Therefore people feel guilted into purchasing the service but disincentivized from actually using it.

There is no societal pressure to go to the movies regularly (maybe there is a little pressure to see a handful of blockbusters a year, but not enough to justify the service) and people generally enjoy the experience. So the only incentive to purchase the service is to save money and people have a positive incentive to use the service. That is totally different than the gym membership model.

I'm also reminded of the high-pressure, guilt-ridden sales tactics I had to endure when I had to set an appointment just to cancel my recurring 24-Hour Fitness membership in person.

"So, why did you stop taking your health seriously?"

When I stopped teaching fitness classes part time and move to the other side of town (ie metro Atlanta - an hour drive) where the gym wasn’t the meeting spot for my social circle, I started really not like going to the gym and having to squeeze it in with everything else.

I’ve had a treadmill in my house/apartment for years -that I actually used - when we moved I made sure that we had a spare bedroom that I could turn into a gym.

I love working out at home, in front of my TV or listening to a podcast. I can work out anytime, I’m still at home with my family and my wife will work out with me occasionally. She still likes going to the gym and working out with her friends.

We use it as a commitment device. Too often “life happens” and we don’t have date nights or we may just feel like staying at home. But since we pay a combine $46 a month (including tax), we think we might as well go to a movie. We will usually go out to eat and have drinks while we are out.

Not sure that's a bad thing. It probably hinges on the unit economics of their ticket obligation to the studios.

For example, if subscribing induces people who like going to the movies enough to do it at least monthly to go more often--maybe 2 or 5 or 10 or 20 times a month--the main liabilities seem like: subscribers displacing people who buy full-price tickets, turning frequent full-price purchasers into subscribers, and hard-core min/maxers who refuse to buy anything else at the theater.

I'm not sure how the plans work, but the first is probably mostly-fixed by things like not letting pass members reserve seats, and no-pass stipulations for new releases, etc.

There's not much you can do about the third, but I'd guess most people are more likely to get a snack or drink if they aren't explicitly paying for the movie, and even more so if they know they're watching 8 movies a month for $13.

If the profit on those exceeds the studio's cut of ticket sales, and if the majority of subscribers are attending more, they might come out better the higher the average number of subscriber-monthly attendance goes?

Yes you can reserve seats online with the subscription and new releases are eligible.

Movies don’t turn over fast enough to regularly go 12—13 times a month every month - the maximum you can go.

Yes, but AMC and Regal can (and did) negotiate ticket revenue shares with the studios. They also have additional revenue streams like advertising, private events, and especially concessions that are independent of or benefit from increased subscription attendance.

Consider that for a regular movie ticket, the movie probably made more from the concessions (which cost the theater pennies and can get marked up by up to 100x) than they do from the ticket.

AMC did not negotiate with the studios, regarding A-List subscription reimbursement. AMC decided on its own to base reimbursements on an average 8.99. Studios haven't fought back or pulled films yet, but there is no guarantee they won't.


You keep taking things way too literally. There is no way that AMC “decided” to give the studios less than they were contractually obligated to and none of the studios sued. That’s not how business works.

Agreed. Disney is notorious for using its leverage to extract high % gross from theaters big and small, owing to its relatively unbroken streak of successful movies the past few years. There's no way they would have agreed to this without some sort of back-end make-good, especially when Disney's Marvel films draw a higher percent of high-value ticket sales (3D/IMAX/PLF, etc.) that are easily 2-3x the price that AMC says it will pay studios for each Stubs viewing.

Disney is, in fact, in a bit of a bind. The Force Awakens has sold over 100M tickets. Endgame about 95M. (source: ultimatemovierankings.com) AMC represents about half of the total, perhaps a bit less. AList has fewer than 1 million subscribers. Therefore, even though it knows AMC is likely to lowball its reimbursements on the AListers, it is not in Disney's best interest to refuse to release its next blockbuster at AMC theaters, and risk losing even a small percentage of the many, many millions of normal, traditional ticket sales.

It doesn’t matter where the power dynamic lies. No corporation would be crazy enough to unilaterally pay another corporation with deep pockets less than they had agreed on. Do you really think that Disney gives AMC a distribution license without an iron clad agreement with lots of lawyers involved?

Please define "contractually obligated" when no contract exists yet to cover the scenario of patron admissions granted via all-you-can-view subscriptions.

You really think that Disney didn’t have s contract with AMC before the subscription service? Do you think AMC unilaterally changed the agreement?

If you’ve been following the media industry, you would know that there are very strict agreements between producers and distributors about everything.

"AMC informed them (studio executives) of the new service just this week, with little to no advance notice before its public announcement Wednesday."

Virtually every point you've tried to make is contradicted by this WSJ article: https://www.wsj.com/articles/hollywood-studios-fear-amcs-new...

So I signed up for Cinemark with 2 email ids. I get 2 tickets per month and 4 people in the household so need to do only a movie every 2 months. I know Cinemark allows me to close my account AND keep the earned tickets, but I did not want to do that ... dont experiment with such things.

As a result, I am trying to consume all the tickets in one account, still not there, and sitting holding double digit tickets in my other account. Oh I will get out of this ... on to my last ticket in account #1, just need to find one more movie to watch, but this is not how I expected life will work when I signed up.

Many people like me in this world. [ Thanks Disney/Marvel for the burn rate this year]

Debatable. If you go to the movie and the cashier says "it's $11 for the movie, or $12/mo for unlimited movies", i wouldn't be surprised if many people take that deal. That's how restaurants get you with menus & other bundles.

> $11 for the movie, or $12/mo for unlimited movies

I can't decide whether this would be more or less likely to convert (and also, whether it would be more or less profitable) than "$11 for the movie, or $10/mo for unlimited movies."

Obviously you'd think "more likely to convert" because it's cheaper, but maybe actually less likely because the fact that it's cheaper than a movie would give you pause, and make you think "Oh, it's a subscription," and then realise it's $120/year -- probably more than you spend on going to the movies.

It’s 21.95 a month. They also tempt you buy advertising that you can go to customer service after you leave the movie and apply your ticket price to the first month’s subscription price.

We only have to go to three regular movies a month to save money or one IMAX movie and one regular movie a month.

For the Americans: AFAIK, "menu" is what we call a combo.

This has just explained a line in "The Fifth Element" for me.

I've encountered the same thing at a theme park. It was something like $70 for a day pass and $75 for a year pass. It was such a tiny difference we sprung for the year pass, even though it was unlikely that we would go back any time soon.

The difference is that in this case it's $12 for a month subscription, not a year.

The number of wide release movies shown during a given year is barely enough to make AMC lose money - especially after you consider concession sells. I have an AMC subscription and we might see 5 or 6 movies in a good month. Most of the time it’s 3.

I think you're underestimating how many will miscalculate.

Case in point: timeshares.

Honestly, I could see "sure I'll subscribe for $20/mo, I would like to see more movies", then never going, and thinking you'll use it next month so why cancel now.

Bad analogy. Going to movies is actually fun and people don't make up excuses not to do it.

AMC has the before and after data to know which model is more profitable.

There's no point in speculating when AMC can just decide what's in its best interests based on the facts that it has.

AMC stock has declined by about 1/3 since starting A-List, recently hitting an all-time low. The market would seem to disagree that AMC is making smart decisions. Sometimes a company and its CEO makes decisions in spite of the data, due to pride, momentum, false beliefs, inability to use the data correctly, dozens of other reasons. Further, the actual "after" data is pretty thin, given the program's limited history.

The stock market is also rewarding Uber and it doesn’t have a clear road to profitability at all. The market is a horrible proxy for the soundness of a business plan.

For new, speculative, disrupters, perhaps. For old, mature, well-understood industries? Your statement is false. The market had every right to punish AMC (a real company BTW, not a "business plan"), which earned just $1 for every $54 in revenue in 2018, and which also nearly doubled revenue over 2015, with less than a 10% increase in net income to show for it.

Yes you’re right the market is totally rational..

AMC could also try fine-tuning the price point to extract maximum value.

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.

It's also existed in the UK[1] (and France and other EU countries IIRC) since the 90s, which I suspect also proves the business model is viable (at least in some territories, and I don't see why in principle it couldn't transfer to the US).

[1] https://www.cineworld.co.uk/static/en/uk/unlimited (unlimited 2D movies for ~£20/month)

>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.

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).

> MoviePass proved the demand.

Well yea, they lowered the price of the supply - OF COURSE there's more demand.

But they lowered the price of the supply at cost to themselves. I believe the idea was that once they had enough market share they're be able to negotiate ticket prices and actually turn a profit.


But yeah, there's a demand for unlimited movies @10$/mo when single movie tickets cost 12$+ :P

AMC and Regal both have enough market share (as the two largest US movie chains) that they actually could negotiate pricing and revenue share with the movie studios before launching their respective programs...

IOW, they're doing this starting in the black, or already close to it.

MoviePass was purely additive to theater chains. It increased demand for tickets, it marketed itself, and most importantly, the theaters GOT PAID for every MP admission.

In contrast, A-List is mostly cannibalistic. Via self-selection, the most common subscribers are people who were most likely to actually purchase multiple AMC movie tickets each month, that now pay less overall. A-List members take up seats in sold-out, opening-weekend showings (including higher-priced IMAX and 3D) that could otherwise be sold individually. And AMC has to market and administer the program, which also costs money.

A-List members are now guaranteed to choose their local AMC to see films as opposed to the competing Cinemark or Regal cinema down the street. It brings in that sweet sweet popcorn and corn syrup money.

I signed up for a chain's movie club due to the value, and I now exclusively go there. Before I signed up I'd switch it up.

Movie theaters do not make money off of ticket sales, but concessions.

I imagine that AMC worked out a subscription-sharing model with the studios, where the subscription fee is split across the movies attended. As long as people show up to movies, a percentage are buying concessions and AMC is making money.

"Movie theaters do not make money off of ticket sales, but concessions."

Both ticket sales and concession sales have positive gross margins, and contribute to the bottom line.

If you artificially separate a cinema business into two pieces, making the 'ticket sales' business responsible for 90% of the overheads (rent etc.), and the concessions part responsible for 10%, then it would appear that the 'ticket sales' business does not make money.

But, in reality, the tickets sales revenue is required in order to run the business, not just to draw in customers for the 'concessions' business, but also to help pay for rent.

No, they negotiated that every movie seen is priced at $8.99 regardless of the format.

Here is a complete write up of the financials.


Your own link says AMC chose that price point and asks whether studios will go along. There was no negotiation.

Are you purposefully being pedantic? What word would you use when two parties make an agreement when either can say no?

Last time I went to AMC they were selling a $14 pretzel.

My understanding, from asking my manager when I worked at a movie theater in high school well over twenty years ago, is that the vast majority of profits on movies that have recently come out are from concession (snack bar) sales. Something like 85-90% of the ticket price goes to the distributor in the first few weeks, and that percentage drops over time (until you have the rare movies that last much longer than others in the theater and are almost all profit for the theater by that point). The thing is, while I'm sure that calculation for how much is owed per ticket is not entirely simple, I'm not sure it's necessarily set as a specific dollar amount. I suspect it's a minimum but also a percentage of ticket price, so they can capitalize on theaters in more expensive locations (or that provide premium experiences).

So, even if AMC assumes 3 movies are seen a month on average across those card holders, it might be that they can conceivably break even with the distributors at that price. If that's the case, it's a major net win as those people are not only likely to spend money at the concession stand, they are probably going to spend more, since they don't feel like it's already been an expensive endeavor to go to the movies (not only is it much cheaper, it's also time shifted away from the time you might want to get snacks for the movie, so you feel like you're there for free basically).

In the end, there's a lot of interesting ways movie theaters might be able to leverage these memberships to their advantage. That said, I imagine the distributors will probably push for slightly different payment contracts if that becomes the norm.

> 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.

At which point, someone "rediscovers" MoviePass 2.0 (probably with some artificial twist to let everyone know that THIS IS NOT MOVIEPASS), an obliging VC materializes to huck a couple more unicorns on the fire, and it's deja vu all over again. I mean, nothing in this article suggested that the practice is going away any time soon...

There was a previous article going around about how Disney was forcing theaters to keep their movies up for longer theatrical runs. This coupled with the absolute dominance of Disney (aka Marvel, Star Wars, Pixar, Fox and of course Disney) means that the A-List all you can eat might be a smart move as they'll have trouble filling seats late in the run and can still make it up on concessions.

For my local movie theater, AMC's subscription is $24/month. Doesn't seem bad if you see three movies per month (it says three per week with no blackouts). Considering that I see maybe 5-6 movies/year in the theater, it's not actually worth it at all.

It could be like the webvan/peapod era, which pulled in the big players, but then reality caught up.

That's a pretty good deal for them too. It doesn't cost very much for a butt to be in a seat for 2 hours, but just getting them in the door more often increases the chances of high margin concession purchases. Plus there are always the people that subscribe-and-forget

Any idea how they get the movie distributors to buy into it? The infrastructure cost overhead is small, but as I understand it, most of the cost of a movie ticket ends up going straight to the distributor. I doubt the distributor wants them giving away complimentary tickets without getting something.

I'm not sure how these deals are structured, whether there's a per-viewing cost or a bulk "we rent this movie and show it as many times as we want to whoever we want".

Theaters generally pay the distributor per showtime, not per ticket sold (IIRC). So a distributor makes the same amount for an empty showtime as a full one. Theaters then price tickets to optimize towards fully covering the amount they paid to air the film, making their profits on concessions.

So while you're right that most of the costs of a ticket go to the distributor, that's not related to number of tickets sold, it's that tickets are priced to cover the costs already paid.

If someone knows more about this and has a source confirming, clarifying, or correcting me, please share, as I've been interested in this for a long time.

Reference? I've never heard that before. Sounds highly unlikely. Would be fascinated to see evidence showing otherwise.

What is true is that the studios take a higher percentage of ticket sales during opening week, possibly 55-65% or more in some cases. I believe it depends on the movie. The percentage starts to flatten out back below 50% in the following weeks. So it's true that the theater chains do want to optimize for concession sales, since so few films have legs these days.

EDIT: I originally wrote that the studios sometimes take 90% during opening week. I found an article that purports this to be a very rare if not apocryphal number: https://stephenfollows.com/how-a-cinemas-box-office-income-i...

Your link says it’s called “four walls” when there’s a flat fee for the screening.

Ahhh interesting, nice catch. I guess it's occasionally used.

No they pay per ticket sold. Usually around 40-70% depending on the popularity of the movie and the length of time it’s been in the theatre.

It's two-fold. The theatre pays a guarantee per screening - usually $60, or a certain percentage per sold ticket. Whatever is higher. The typical cost is ~$5.

Interesting. Thanks

>It doesn't cost very much for a butt to be in a seat for 2 hours

I thought that the deal between the movie theaters and the production companies were that they paid a flat rate per head that views the movie, with almost 100% of ticket sales going to the production company, where the theater only makes a profit on concession sales.

Is that no longer the case?

It's always been more complicated than that, but generally 100% of ticket sales only applies to the biggest movies like Endgame or Star Wars.

For other blockbusters, somewhere between 50-75% is the norm, with the range varying based on the chain's size/leverage and the movie's expected performance.

For all other films, the cap is 50% of ticket sales for the first weekend.

With all of the above, the studio gets a smaller % of ticket sales each weekend. Somewhere around 8-12 weeks in, the studio's share drops below 10%, which is why some films will stay in theaters for months if there aren't any new big films to replace them.

I think there’s also a flat rate? Maybe it varies from territory to territory.

These days I believe movie theaters makes a lot of money on advertising as well as concessions. Now that everything is digital advertisements can be changed on a whim and moved around and updated. Many chains (at least in Europe) are now selling premium advertisement spots. Like after the trailers just before the feature film starts.

AMC changes their pricing based on where you live. It's $24/month in California

Still movies are also more expensive there too so it probably works out and they're actually making money off concessions so unlike MoviePass they do benefit some from people using the service more.

This is kind of a stupid question, is it based on the billing address or something? Does your price go up or down if you move?

AMC has 3 or 4 different price tiers based on region, I'm assuming using your billing address. They let you see 3 movies a year at theaters in more expensive regions. I think that's a pretty fair way of doing it—prevents people from signing up with a fake address to save money, but you can still take advantage of the service occasionally if you're traveling.

Regal Cinemas recently started a similar program. There are 3 tiers of membership and every theater in their chain is assigned to a tier. For me, there are no local theaters in the lowest tier and only the newest, nicest theater is in the highest tier.

For Regal, you choose your "home" theater and it's based on that. If you choose the cheapest tier, then you have to pay an additional fee for tickets at theaters in the higher two tiers.

If you pick the most expensive tier, then you don't pay any extra fees for tickets at that tier of theaters or any lower-tier theaters. If you get all your tickets at the theater itself, you pay no fees at all beyond the monthly subscription. (However, 4dx, 3D, and "PLF"/Imax showings are always treated as "higher" tier than your current plan, even on the highest-tier plan, and always incur an extra fee. Per Deadspin, Regal is still trying to decide whether to offer those as part of an unlimited monthly plan.)

If you have a Regal membership, you still get points for purchases at 100:$1, including your monthly subscription payment.

I suppose it depends on the theater location?

It's super odd this is a new thing to the US - UGC in the UK (which has eventually become Cineworld) was already offering an unlimited monthly pass in the late 90's

It's still offered, and at £17.99 (and a 20% discount on food) it's a good price if you watch more than 2 movies a month.

Yeah, I am puzzled that MoviePass supposedly proved this model, when US cinema chains often have ownership of international subsidiaries that were doing it before MoviePass was conceived.

Is 'MoviePass' limited to one cinema chain? AFAIK Cineworld's unlimited pass is only good for films at its own cinemas?

That's true, MoviePass was at any cinema AFAIK.

It's somewhat of a moot point though, my nearest cinema is a Cineworld, and the next 2 closest are as well, I'd have to travel out of my way to go to an Odeon or Showcase.

In the last 2 years there hasn't been a single discussion of MoviePass without someone like you confused and detailing how the UK has had it for years. We get it. We really do.

Sorry! First time I'd seen someone make the point, it also made me wonder why moviepass was even a thing as I assumed movie chains in the US would do the same thing.

It’s at least $23 a month. AMC negotiated with the production companies to book each movie seen as costing $8.99. They then give the studios between 40-70% of that. Movie theaters have always made their money on high margin concessions and more recently alcohol sells. They also make money from ads showing before the movie.

AMC is not losing money from the deal.

This is not true. AMC decided on its own to base reimbursements to studios on an average ticket price of 8.99. There was no negotiation, and no guarantee studios will continue to accept this rate. So far, studios are taking a watch-and-see attitude, hoping the overall quantity increases but currently, a studio exec sums it up by saying "I'm taking a haircut".


So exactly what are you saying different than what I said? AMC couldn’t “decide on their own” without getting the studios to agree with the rate. The studios have all sorts of leverage.

Do you not understand what negotiating is? AMC made up a number, they didn't ask the studios nor have the studios agreed on that number going forward.

If I've hired you to mow my lawn for $50 every week, and then one day I choose to only leave $45 in the envelope, that's not a negotiation.

I don't think you understand what a legal negotiation is.

AMC offered $8.99 (or more) to studios for each A-List ticket. The studios implicitly accepted this offer by agreeing to show films in AMC theaters. That is actually how many negotiations proceed in the business world

It's very possible that some studios did negotiate carve-outs or increased payouts for A-list tickets, which is something that Disney is notorious for doing with its bigger films. Indeed, since movie distribution deals are negotiated with theaters per film (a requirement of an old 1950s era law), it's very likely that at least one studio (i.e., Disney) has negotiated higher shares for A-list tickets.

It's also possible that the distribution schedule and reimbursement formula for every big Disney film released so far was signed prior to the announcement of AList (barely a year old), and those contracts have no concept of film subscriptions, which is where AMC is trying to fill in the blank with a lowball number.

If the studios were happy, they wouldn't signal uncertainty and dissatisfaction to investors by bitching to the Wall Street Journal. That can only negatively affect all parties.

That’s not how things work. Do you really think that AMC would base their entire subscription plan on using a supposed loophole hoping that none of the six big studios would sue them or change their mind?

Uber may try that, but real grown up businesses don’t do things like that.

Stop asking "do you really think," which you've done five(!) times already. It is irrelevant what I think. My comments are backed by reputable sources. If you have facts, post them.

Your comments are only backed by your misinterpretations of the sources. There is a reason that I am asking you to analyze what you read. What you are saying is not how business operates.

Have you personally ever worked at a major corporation where someone decided to unilaterally change the terms with 6 or 7 suppliers. What are the chances that all 7 very litigious studios would have gone along with AMC making that decision and just shrugging?

You said yourself that AMC has very slim profit margins. One lawsuit would wipe their earnings out.

My "misinterpretations", lol. Are there any facts in this post? In any of your posts? Of course not.

Your comments were actually not backed by any sources.

On the other hand, our comments are backed by reputable sources, and in my case also by actual experience dealing with theaters and movie studios, including as an advisor.

AMC offered a number, the studio gave AMC permission to show the movies. How did that happen without an “agreement”?

If a company offers me a salary and I take the job, does that mean we didn’t make an “agreement” that they pay me money and I come to work because I can walk away from the job at anytime?

If you hire me to mow the lawn for $50 and then you only pay me $45, I have every right to come after you for the other $5. If a company told me they were going to pay me $150k a year and I came to work every day and they paid me less at the end of the pay period, you better believe that they will end up in court. They couldn’t just decide to pay me less. Well they could, but they will still be liable.

The studios haven't given any permission, AList is still a small minority of overall ticket sales, studios are obviously hesitant to launch the nuclear option and pull films entirely, especially over what is now a small amount. That doesn't mean they can't or won't going forward, however. Just like you would take the short-changing employer to court, so might the studios. But you'd probably keep working at 140k per year while the lawsuit is pending, because it's better than zero and you'd expect to eventually be made whole.

The studios haven't given any permission

Are you claiming that AMC is showing movies without the studios permission?

AList is still a small minority of overall ticket sales, studios are obviously hesitant to launch the nuclear option and pull films entirely, especially over what is now a small amount.

I’m also hesitant to leave my job and I would hope that my company is hesitant to fire me even though my employment is a small part of their budget. Part of the hesitancy on their side is hopefully that I bring value to the company. The hesitancy on my side is that I have a mortgage due on the 15th of every month. Just because I can walk out of my job tomorrow or they could fire me tomorrow (the nuclear option), doesn’t mean that my employer and I didn’t make an agreement.

On the other hand, are you implying that one day, that the studios are just going to reject AMC’s check, without setting up some type of meeting and coming to different terms - ie negotiate.

That’s the whole concept of a BATNA, that each party decides would they be better off with the deal or without it. Just because the BATNA can change when facts on the ground change and either party can come back to the table to renegotiate their agreement at any time, doesn’t mean their isn’t one. That doesn't mean they can't or won't going forward, however. Just like you would take the short-changing employer to court, so might the studios. But you'd probably keep working at 140k per year while the lawsuit is pending, because it's better than zero and you'd expect to eventually be made whole.

You really think that the studios are letting AMC pay them less than they find acceptable and they are still allowing AMC show their movies? Do you think that the studios are going to come back and sue AMC later because they didn’t get enough money from them?

Quoting the link YOU posted: "If the numbers remain relatively small, it's possible studios won't put up a fight. Ironically, if AMC Stubs A-List is a hit, the studios may actually become a problem."

Read that however you want. I'm done arguing with you, I really am not interested in your employment or mortgage situation.

You really do think that AMC just unilaterally told the companies “we are going to pay you less than we have been paying you” and studios just shrugged and said okay? Have you ever in your life heard a business doing that?

But if you show up, you've agreed to the offer. The studios are still cooperating, thereby implicitly agreeing to the terms. It sounds like you're getting hung up on whether there's a signed contract somewhere.

AMC, and only AMC, has determined the price upon which AList reimbursements are currently being based. The success of the program seems to rely upon this number, yet they have no guarantee, implicitly or explicitly, that studios will continue to accept this rate. So yeah, a signed contract that spells out the terms would make a pretty big difference.

And the studios had the right to walk away if the number is too low.

My employer decided my salary and benefits and came in with an above market offer, that they thought I would more than likely accept. That didn’t mean I was obligated to accept the offer or that we didn’t make an agreement.

I live in an at will state and never once signed a piece of paper saying that I couldn’t walk in tomorrow and say f’ it I quit. Once I do that, we terminate our agreement. That didn’t mean I didn’t have one yesterday.

My willingness to work everyday also depends on a lot of factors, there is no guarantee that I won’t go in the office tomorrow and turn in my resignation. Even if I and my employer agree to an at will work condition doesn’t mean we didn’t come to an agreement.

AMC A-List is $21.95/month, not counting NY, CA, CT, MA, NJ. That's the 3-movie-a-week subscription.

Are theaters even breaking even on screenings? From what I understood the economics are based on the value added services AKA the food crap as well as merch for the larger box office hits.

I think the idea behind movie pass was basically the same economics as behind a gym as long as most people don’t take the full advantage of their membership and are tied to a contract they’ll make money if everyone does it’s a different ball game.

The problem with movie pass is that their model is too easy to replicate by the theater chains and cut them off, i really don’t understand why they got VC funding even if they could scale to the point of making a profit this model simply can’t be easily protected against competitors especially when the competitors are part of your service supply chain.

I think at 10$, it was way to cheap to even survive on the gym-economics. I think the plan was to build a huge userbase, and then use that as leverage to:

1. get better prices from theaters to send users there

2. make deals with studios to send users to their movie

3. make deals with nearby stores to send users there

it backfired when all the theaters called the bluff and just started their own membership program, and held out until Moviepass bled out all their VC money.

Theatres are not breaking even, that's why they were all bought by the studios which control now everything: production, marketing, distribution. A typical cartel.

And they use their power to distribute lower quality and conquer foreign markets to disrupt that market also. A theatre is only a small part in that chain.

It is complicated. The share US theaters pay studios changes each week. So studios want films with up front popularity, studios want sleeper hits.

https://www.amctheatres.com/amcstubs/alist says

> Our plan prices are determined by geography and may vary by location.

> Choose any format, including IMAX® and Dolby Cinema.

>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?

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.

They also serve as a fall guy for the real decision maker(s), in case things go south.

> 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.

yeah I've been doing advisory for time

and sometimes that means installing myself as the board or executive in a company I'm advising

or my friends

or my friends have made a partnership to create another venture, but I consult with them, or I try to negotiate being a shareholder in some way etc

we always trade our network because its convenient and we work well together

it didn't start as nepotism, but now we are all just trying to get paid and get clout for more support in the future

I think a lot of people just work with their networks. Its honestly a miracle at all that there are giant corporations that hire basically anyone and pride themselves in doing so.

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-...

That was an entertaining read. Takes me back to a course in IO psychology I took on workplace motivation.

Intriguing as it was in some sense, the "models" that are hypothesized in this field are both hilarious and ridiculous. They are at best ad hoc representations of anecdotal information.

I think the only redeeming portion is relating all of this posturing to some sort of Darwinian understanding of expressed phenotypes with in corporate culture. Instead of reproduction via valued phenotypes. It's task assignment via phenotypes (typically irrespective of gender although that's a different discussion obviously).

The reason these types of classification structures fall apart from my view suggests a form of causality or even a form of determinism I've never been comfortable with. This is shown further with post hoc justification.

All that said I still enjoy reading this kind of stuff, if nothing else then to understand how different people group/classify/model the world around them but group/subgroups.

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

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.

That's an amazing article. Thank you for sharing.

How do you acquire a job like this?

Have been the Big Guy's college roommate. Be the underachieving son of the Big Guy's favorite tennis partner. That sort of thing.

start golfing, try to be richer and whiter

yes higher probability when you have rich white people vouch for you

yes, going where they are helps, be interesting, act like them, do some lines (optional) - if that doesn't come natural because you pride yourself in conforming to a different subculture - then try this perspective:

this same strategy works in every country.

get someone that looks like the power group in those countries. you aren't going to expand your market in China and simultaneously worry about disenfranchised minority groups in China, you're going to go in China guns blazing with a local influencer that's a registered party member.

You aren't going to expand into former Soviet countries, digging for disenfranchised minority groups to be on your billboard just to show how much progress has been made, you are going to go there for sales and support.

It's a mistake to treat America and the rest of the West differently.

After you already are comfortable, you can consider trying to inspire people that look like you or have the same background as you. But before then, its just a distraction when there is a path of less resistance.

Given how obvious that seems to be, how did Lowe come away with a reputation as a savvy businessman?

See also: The Hudsucker Proxy

Sounds like something to do with Russia, US, and the presidency...

I agree in the context of not being in the office when his team needs guidance, this is bad.

But asking "what do you think we should do?" shouldn't be lambasted as an indicator of incompetence. In my experience, leaders who feel like they should have all the answers are the most incompetent ones.

Surely there's an ideal middle ground somewhere between having all of the answers and having none of the answers.

Just my personal opinion, but I think the best leaders set the table to allow those closest to the problem come up with the solution. They frame it in a way to align with the organization's strategic goals, help facilitate collaboration for those solutions to get proposed/worked out, provide the tools and resources to implement them, and give the right people credit. Rarely do I see them actually create the idea, it's more about managing the energy of the organization as cliché as that sounds

You can go very far if you are charming and can communicate well with investors and other high power people. Look at Elizabeth Holmes. Theranos achieved almost nothing besides the ability to talk to investors and board members.

Luck and privilege. Money can buy a lot of second chances.

I feel infuriated by this statement. Did he just not care? The company was burning around him, turning it around should have been his number 1 priority.

Honestly, when you're riding tsunami you only worry about staying on the board. How could he have turned that dumpster fire around?

He could have tried. As a shareholder (stupid, I know) I feel betrayed that he wasn’t even trying.

He was involved in Netflix early on. I'd say that will keep you rolling a long time.

Warren Buffett: "You want to buy a company that can be run by an idiot. Because one eventually will."


go away anti-semite.

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.



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

Donating money to movie theaters is not how money laundering or tax evasion occurs.

What if you donate dirty money, then collect clean money from subscribers?

Losses can be tax deducted to cover partially reported incomes.

Yes, and not giving away the money in the first place is even more profitable. When you hear about these schemes they are generally paper losses (depreciation being a big one). It's not in your interest to hand AMC millions of dollars for a tax deduction.

Well if we are talking tax evasion and money laundering we might as well include conspiracy.

But it's not a conspiracy, Movie Pass really did pay theaters full price for tickets while charging customers $10 a month. It lost a huge amount of money. No one disputes any of this, it's just someone who doesn't know anything who said "money laundering". They are wrong, it was an obviously bad business, not a money laundering or tax scheme.

I think it is not a for stretch invoking "money laundering" is a knee jerk reaction to seeing crazy business model that doesn't make sense --> something fishy must be going on. While the neighbor of incompetence maybe malice they are rarely home, and if they are even more rarely seen in the house.

I know that when I first learned of movie pass years ago and it was explained to me. It made literally no sense how they'd turn a dollar despite it being explained to me more times than I can count.

I also remember thinking it sounded like some alternative scheme was going on. However I probably acted more paranoid than the rest and decided to pass on getting cheap movie tickets.

Bankrupt companies don't have income they need to cancel out with a loss.

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.

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

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

Mattress Firm's parent company was up to some sketchy stuff. https://www.reuters.com/article/us-steinhoff-intlnl-ceo/stei... The CEO resigned.

> 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?

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

Probably not in this case, but thinly traded share prices could be used to launder money.

Adam 1 buys shares with clean stake.

Adam 2 pumps share price with dirty money.

Adam 1 sells shares, getting stake back, plus clean profit.

Adam 1 short sells shares.

Adam 2 dumps shares, dropping share price.

Adam 1 cashes in on short.

Adam has laundered dirty 2 money into clean 1 money.

Needs a story to work the market a bit. This could work at a business level too.

the money they pay AMC has to come from somewhere right? Cue in illegally obtained money that's now in the system. profit??

> 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.

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.

I mean, ToS aside, it's probably illegal. It's arguably wire fraud, and quite likely breach of contract.

MoviePass made false representations by internet "for obtaining money", and knowingly deprived paying customers of tangible property (i.e. movie tickets and/or monthly payments). Specifically targeting power users makes the financial motive pretty undeniable, and timing it to delay them while a popular movie sold out shows that tangible loss was the intent. Before 2010, it would probably have been honest services fraud to boot - as Scalia opined, everything was honest services fraud - but that's been narrowed to bribes and kickbacks. It wouldn't be a trivial conviction since the company wasn't outright robbing people (e.g. by disabling the accounts altogether) but "plausibly a felony" isn't where most of us like to do business.

More convincingly, it's the sort of thing that could invite class action lawsuits or demands for refunds. The ToS may not have covered this specific action, but fraudulent misrepresentation is still grounds to seek damages in a contract.

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.

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.

There are a few services I have to use that enforce password rotations this way. Scummy? Yes. Effective? Also yes.

I used it daily. I had an issue where I couldn't login. I used the built in mechanism to reset the password and continued to use it fine. I'm not sure effective it was. (in the year I had my membership via their costco offer, I saw 200+ movies)

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.

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.

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

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

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.)

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.

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.

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...

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

You have a great way with words and have completely sold me on picking up Trick Mirrors for my camping trip this weekend.

Do you have like 2-3 other snap recommendations that you wouldn't hesitate to make?

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!

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.

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.

It was made inaccessible. Previously new and speculative companies were pretty accessible. https://en.wikipedia.org/wiki/Curbstone_broker

The Intelligent Investor footnote: "In Graham's times IPOs were considered an undignified exploitation of the naive investor, and big investment banks steered away. How things have changed in the 2000 era."

Well thankfully now there are crowdfunding and ICOs for the hungry amateur investors.

I remember when r/wallstreetbets was going nuts over this stock. Someone actually bought it and made a ton of money, and I suppose that inspired more people to buy in, and lost money on the resulting fallout.

Some things never change.

The Oldest Book Ever Written On Trading Stocks (It’s 330 years old!)


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.

> 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.

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.

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)

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

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

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.

I believe the economic term for this would be "adverse selection".

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?

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.

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

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

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.

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.

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.

That is a completely different line of business, though.

MoviePass did attempt one gym-like move: telling you you couldn't re-register for 9 months if you cancelled. This isn't exactly the under-utilization strategy of a gym, but I think it's plausible they had thought they were going to curb costs a bit from under-utilizers.

Gyms succeed on this because it takes will power to keep going. OTOH a movie is enjoyable and having free movie tickets sitting there that you are not claiming would seem insane.

Very interesting article on the economics of MoviePass [1]

[1] http://aswathdamodaran.blogspot.com/2018/05/user-and-subscri...

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.

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.

Movie theaters make all their profits on concessions. There's no way they would let a 3rd party take control of, or even interfere with, their primary profit stream.

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

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.

The US didn’t need MoviePass for this.

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

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).

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

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


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?

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.

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?" :-)

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.


Could you restate this? It's easy to disagree without simultaneously insulting the intelligence of another commenter.

Great minds think alike? :-D

I'd think that, if they stopped providing value, the movie theaters would just undercut them?

After all, you probably spend more time in the theater than interacting with the moviepass service.

How are the movie theaters supposed to undercut somebody who is deliberately losing money on every transaction, without driving themselves out of business?

This is the new VC-funded business model: you use cash as a kind of anti-gravity machine, letting you do things no competitor would do because they aren't economically rational. The bet is that, if by defying gravity you can reach a monopoly position, you'll end up making back all that cash and more. But as MoviePass demonstrated, once the cash dries up and gravity starts applying to you again, if you haven't reached that monopoly position, the fall is quick and painful.

> This is the new VC-funded business model: you use cash as a kind of anti-gravity machine, letting you do things no competitor would do because they aren't economically rational. The bet is that, if by defying gravity you can reach a monopoly position, you'll end up making back all that cash and more. But as MoviePass demonstrated, once the cash dries up and gravity starts applying to you again, if you haven't reached that monopoly position, the fall is quick and painful.

the next decade will be defined by the failure of these anti-gravity tricks

> How are the movie theaters supposed to undercut somebody who is deliberately losing money on every transaction, without driving themselves out of business?

Patience. Someone deliberately loosing money on every transaction will go out of business very quickly.

(And, apparently this is what happened to Moviepass.)

Remember, Moviepass bought the tickets from the theaters, so it's not like the theaters lost money waiting for Moviepass to go out of business.

Doesn’t the fact that MoviePass failed show that the economy is naturally filtering out those bad ideas?

But that's Levine's point, that there is a sense in which MoviePass didn't fail. Oh sure, it went out of business, but the fact that it flamed out spectacularly isn't hurting the careers of anybody who was involved with it. In fact it probably enhanced their careers, since being associated with a splashy, heavily-covered story turned them into a weird sort of business celebrity.

Anyone who can start a local pizzeria and make it consistently profitable is a better businessperson than any of the people associated with MoviePass are. But our culture rewards bigness, whether in success or in failure, much more lavishly than smallness, so the MoviePass alums find the doors of the VC world flung open to them, even though the only thing they're known for is failing.

The only guy who’s cited by Matt as being career-enhanced by MoviePass is the guy who started the company, not the guy who came up with the much-too-low 10 Dollar subscription later on.

Many people worry too much about things that don't hurt/help them. This pops up a lot in politics as well, with people arguing for/against things that would not change their life at all. I think it's just human nature to pick a side and adopt that side's strong opinions. People like to argue, and arguing for/against the interests of popular billion dollar multi-national companies is an exceedingly risk-free argument to engage in.

In the case of MoviePass, the only concern I'd have is if they closed shop suddenly after I've already paid for a month of service. But if they stayed open long enough, it doesn't matter. I might have lost $5 but I saved $50 over the course of my membership.

Why worry about crime when you’re not the victim? Because not constantly screwing each other over whenever possible is the fundamental basis for society. When somebody is pulling an obvious con, it’s reasonable to be concerned even when you’re not the target.

I worry about crime when it impacts the victims. I worry less about crime when there are no victims or when the victim does not feel the impact.

A person getting mugged on the street and then not being able to pay his rent is worth worrying about. A billionaire being scammed out of $100,000 is not. The users of MoviePass being scammed would be terrible. The VCs being scammed is the cost of doing business.

>I worry about crime when it impacts the victims. I worry less about crime when there are no victims or when the victim does not feel the impact.

MP has consistently lied to their customers about movie availability and made it extremely difficult/impossible to cancel subscriptions. They are also a publically traded company with no viable business model.

There are victims.

Even if there weren’t, it looked like there were because “help me screw this rich guy” is a really common scam tactic.

Unfortunately, it does concern you because public pension funds are investing in venture capital funds. If the pension funds lose money, you are going to be on the hook to make up the difference as a taxpayer.

In that case, everything impacts me and every argument I engage in should be a life or death argument.

In reality, it's not worth my time to argue if my taxes go up 25c per year or only go up 10c per year. Just writing this short comment has cost me more in dollars-per-hour than the difference in public pension fund taxes would.

Their are plenty of cities with massive unfunded pension liabilities that are causing services to be cut, less policemen hired, less firefighters, larger classroom sizes, and/or much higher property taxes.

And I'm sure there are more complex factors that go into that than MoviePass going out of business?

I'm not against arguing about things I can't control (check my comment history or just ask dang) but it's purely entertainment. If you or I want to affect change in that regard, MoviePass or even the VCs who fund it is the exact opposite of where that argument needs to start.

And I'm pretty sure the VC model takes failures into account.

I’m sure they thought the same thing in 1999...

Interesting direction to take it, but I was thinking more like, HNers seem almost offended when someone's business model doesn't work how they think it should. If their runway isn't coming out of your bank account you really shouldn't care.

If you view VC investments as a zero sum game then you could be justified in being upset that someone is wasting money that could be financing your company instead. I haven't heard anyone make that argument, however.

I got burned because I paid for a year but they made their service intentionally unusable before I "made money" on the deal. But I new the risk going in, so that is one me.

But I a lot of people paid for a year and then got 1-2 months service before being cut off. That's basically a scam unless you claim VC immunity.

>If someone is selling dollar bills for 75 cents, who cares what their motive is, or if it's sustainable or whatever?

People who don't want to encourage fraud, e.g. con-men telling people about some great opportunity to invest in, and then living off of their dollars, while selling the rest for 75 cents to buy time and appear as "successful"?

Matt Levine cares because he thinks it's interesting, and his readers would enjoy his take on it.

And being a reader I definitely thought it was an enjoyable read.

> who cares what their motive is, or if it's sustainable or whatever?

Broadly speaking, when average Joe investors get burned, the public tends to pick up the tab. Whether through public prosecution, unemployment benefits, or the other consequences of a nuked nest egg. MoviePass didn’t get to those levels, but there is a rational reason to be wary of things that look like fraud in our system.

A bunch of movie industry types were worried that MoviePass was "devaluing" their product, but I agree consumers should just be laughing all the way to the bank (or the theatre, in this case).

That isn’t a false premise though - look at what a few tech companies trying to undercut one another did to the music industry. Not that artists were making the money before Spotify, but there was a lot more money in the system then than there is now.

There was a lot more risk and costs too, hence limited supply, hence higher prices. You can't shift the supply curve to the right and expect prices to not move.

I don't know about Spotify's free-tier economics, but personally, I spend a lot more money on music, thanks to a-la-carte subscription services, then I ever did prior to it.

If the artists negotiated taking 0.01% of the revenues from it, with the subscription services taking 30%, and the record label taking the other 69.99%, that's not exactly my problem. I don't pick which record label said artists sign with.

Before music moved online and to subscriptions, I was buying 2-3 CDs a month on average. That's $45/mo in 1990s money. Today I subscribe to Spotify for $10/mo and buy maybe 2-3 CDs (or their equivalent in one-off songs) a year.

Maybe they make it up on volume but I'm certainly getting a better deal now than I ever did back in the day.

I don’t care about any one in particular.

I am concerned about the significant scale at which this is happening.

1) MoviePass claimed they would make up the difference by selling data. The press repeated this over and over again, as if the "selling $1 for $0.50" could be solved.

2) When companies like Uber can go public, after years of economic analysis saying they can never be profitable, and companies like MoviePass get positive press, it shows that either something is broken, or there is an opportunity chasm opening for those in the know.

That's happening right now with scooter services, ridesharing, and food delivery.

it was just an obvious emperor's new clothes sort of situation.

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