How Does MoviePass Make Money?
wired.com
How Does MoviePass Make Money?
1–10 of 81 posts
Re: How Does MoviePass Make Money?
#2Because the marginal cost for a theatre to show a movie is virtually zero.
Re: How Does MoviePass Make Money?
#3I thought their business model was like a gym: hope that most people won't use it. (Source: I have MoviePass and I'm seeing less than 1 movie per month because I'm too busy :-D)
Instead, this article claims it's:
1. Studio of movie $M pays MoviePass $X to market it to subscribers.
2. Subscribers see a movie they otherwise wouldn't pay for. MoviePass eats this cost ($Y).
3. Subscribers' word-of-mouth network effects bring in extra revenue $E that otherwise wouldn't have come in.
4. MoviePass stays alive if $E > $X > $Y.
Re: How Does MoviePass Make Money?
#4Because the marginal cost for a theatre to show a movie is virtually zero.
That has no effect on MoviePass. As per the article, what’s “interesting” (for certain definitions of interesting) is that MoviePass pays the theatres for the full price of the tickets for each user.
Re: How Does MoviePass Make Money?
#5Because the marginal cost for a theatre to show a movie is virtually zero.
That has no effect on MoviePass. As per the article, what’s “interesting” (for certain definitions of interesting) is that MoviePass pays the theatres for the full price of the tickets for each user.
And the theatre companies are complaining about this, which blows my mind. It’s a phenomenally good deal for them at the moment — tons of free revenue they otherwise wouldn’t see at all, courtesy of VC capital. What a bunch of whiners.
Re: How Does MoviePass Make Money?
#6I still remember when movie theaters provided a different experience - and I'm in my late 20's, so it was not that long ago.
Movie theaters became just another living room - people go there chat, comment and eat during the movie just like they were at home. It became such an obnoxious experience, where people are shoved into a room and door is closed.
This goes to say: movie theaters had a lot of distribution costs reduced over the years, and probably even the reform of projectors isn't such a big deal today due to digital distribution.
MoviePass is aiming to give them volume, at a reduced margin - that's how.
Re: How Does MoviePass Make Money?
#7Earlier quoted context omitted.
That has no effect on MoviePass. As per the article, what’s “interesting” (for certain definitions of interesting) is that MoviePass pays the theatres for the full price of the tickets for each user.
And the theatre companies are complaining about this, which blows my mind. It’s a phenomenally good deal for them at the moment — tons of free revenue they otherwise wouldn’t see at all, courtesy of VC capital. What a bunch of whiners.
The article quotes AMC about why they're complaining: they worry that if MoviePass fails, people will sour even more on theaters and that could be their death knell (btw, love the use of harrumphed!):
> The largest theater chain in the US instead described MoviePass as as an existential threat. “That price level is unsustainable and only sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled,” the company harrumphed.
(emphasis added)
Re: How Does MoviePass Make Money?
#8Because the marginal cost for a theatre to show a movie is virtually zero.
The marginal cost to a theater, sure. But, as the 3rd paragraph points out, MoviePass is paying those theaters full price for each ticket. They're losing money hand over fist.
They can't just solve this by squeezing theaters, either. They're already struggling, if not barely surviving. If MoviePass simply tries to strong-arm them into accepting less than full price, without offering some other source of revenue in return, that's a lose-lose strategy for them. If they fail, they lose their ability to supply customers in that market with the service that they signed up for. If they succeed, they risk bankrupting the people who actually supply their customers in that market with the service that they signed up for, and so they still lose it.
Re: How Does MoviePass Make Money?
#9Earlier quoted context omitted.
That has no effect on MoviePass. As per the article, what’s “interesting” (for certain definitions of interesting) is that MoviePass pays the theatres for the full price of the tickets for each user.
And the theatre companies are complaining about this, which blows my mind. It’s a phenomenally good deal for them at the moment — tons of free revenue they otherwise wouldn’t see at all, courtesy of VC capital. What a bunch of whiners.
> It’s a phenomenally good deal for them at the moment
The problem here is in the at the moment. MoviePass trains consumers to see the experience of going to the movies as effectively worth nothing. That is very bad for theaters, because when MoviePass goes away they will be left with a product---with small margins---that consumers see as incredibly expensive.
Re: How Does MoviePass Make Money?
#10Earlier quoted context omitted.
That has no effect on MoviePass. As per the article, what’s “interesting” (for certain definitions of interesting) is that MoviePass pays the theatres for the full price of the tickets for each user.
And the theatre companies are complaining about this, which blows my mind. It’s a phenomenally good deal for them at the moment — tons of free revenue they otherwise wouldn’t see at all, courtesy of VC capital. What a bunch of whiners.
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