“The whole United States” was far too broad of a market for them to be able to afford to make enough of an impact. They should probably have initially targeted a single metro market.
But they couldn't do it in the market they did target with the deal they had been offering, and targeting the same market with a worse deal may leave them solvent longer but it won't lead them to the kind of dominance they need to force theaters to the table.
The MoviePass customers that most used the service (aka >3 movies a month) were also the ones least likely to buy concessions. Thus, theaters had no incentive to give MoviePass a share of their gross (meaning total) concessions revenue in lieu for increased ticket revenue.
However, if my marginal cost to see the movie is $0, it turns out I was willing to spend $5 or so every so often to get something to munch on during the movie.
While I haven't spent a huge amount on concessions, I've probably spent more on concessions in the 6 months I've had moviepass than in the combined 30+ years preceding it.
There's no need for the middle man.
https://www.nasdaq.com/symbol/amc/financials?query=cash-flow
I would disagree that movie theaters are hardly a monopoly. You usually only have one in a given geographical area. In a major metro you may have more options within a short distance but even then they are usually not walking distance from one another. And even if there are multiple options in same locale they may be same company and still a local monopoly. For example in Chicago, there are 4 movie theaters in downtown area, 3 of them AMC.
That's why I was careful to say "economic profit". On the books numbers are all well and good. But the only indicator I'll take as a sure sign that an industry is profitable in the economic sense is if the number of firms in the market is climbing (i.e. new people are scrambling to get in on whatever benefits they perceive there are to being on the supply side of the market). And movie theaters seem to be more or less in an equilibrium to me.
Perhaps the parent meant a distinct defintion, for a competitive industry.
"We know you're bummed, but you've gotten a great deal from us in the past. We continue to offer a great deal, one that is sustainable enough that we can continue to offer you great deals in the future.
Thank you for your understanding -- go see some great movies!
Love,
MoviePass "
"Why did you offer me a service that was unsustainable in the first place? I just want the keep paying the same for the same product you've sold me for the last x months."
Lots of businesses run on a subscription model, and lots of those change their subscription plans with no grandfathering.
It happens a lot with car insurance companies in the UK. They start you off with a low quote for your first year then when the renewal comes around suddenly the price doubles. Then you phone them up, tell them about how you found another quote for half the price and magically they can halve the renewal quote they gave you just last week.
Love,
MoviePass "
Moviepass probably shouldn't have any right to complain if they lose users, but users should definitely complain because they are being screwed, at least until the new plan becomes the new normal.
I'm pretty sure you can legally ask them to pull out at any time, especially if contract terms have changed. They must have a cancellation procedure (that I'm sure is quick and easy /s).
You can say that about almost every start up discussed on HN
Similarly SpaceX now is being awarded more than 50% of all commercial space launches, but burned money in the beginning.
MoviePass is trying to sell movie tickets for less than they paid for them.
I don't think those are similar at all.
Still, it's not rocket science and probably could have been done much more cheaply (just offering subscription coupons or something).
somehow i doubt it.
Network effect? I'm not sure this would apply to a clothing retailer, but there are lots of services out there that have a marginal cost per customer but can't effectively monetize until they have a sufficiently large customer base and therefore have access to enough data to be marketable.
Exit strategy? A company with x million customers, even if unprofitable and unsustainable in its current state, is worth more than a company with x/n customers that is marginally profitable in many cases.
As for this case in particular... I don't know. I suspect that a case could be made that the money they're losing has them in the media enough that they're basically paying for advertising by being unprofitable. I doubt I would have ever heard of MoviePass if not for them being constantly in the news.
"We lose money on each sale but we'll make it up in volume!"
Our little agency ended up moving into eTour's space in Atlanta (VaHi) when they departed. Nice movie theatre built into the space.
If amazon initially dropped ship books to you that they ordered from Borders for $12 and sold to you for $10, they would have gone bankrupt. Amazon generally made money on each individual order.
Planet Fitness isn't burning money every time you go into their gyms.
MoviePass assets decrease every single time any user makes use of them. AMC A-List can possibly survive, MoviePass can't as is.
MoviePass has to demonstrate a model where the marginal revenue per usage is > 0 or that the total cost of a user is easily managable to be under their monthly subscription cost. I'm not convinced either are possible.
I'm a happier customer because I know what I'm getting and have seen 100+ movies on my costco annual subscription, but have zero expectations for them to survive.
The radical $9.95 model is just under a year old (11 months 22 days). I thought I would mention that because although MoviePass is much older, most folks only learned about it with the acquisition by Helios and Matheson and the subsequent drop in pricing which led to a surge of registrations.
Honestly, they should have just capped the registrations. I think a gym-membership style could have actually worked for them. I was an excited evangelist and early adopter, but I quickly found myself not seeing more than one movie a month if at all. Just like all the gym memberships out there that rely on you signing up and then not coming back regularly.