Re:MoviePass keeps plan at $10, but limits subscribers to th...
by LyndsySimon on Monday August 06, 2018 @11:28AM
(#17698447)
Customer acquisition? In some cases it might make financial sense to lose a small amount of money per customer if the cost per acquisition is more than the amount they're losing.
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.
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.