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The Entire Economy Is MoviePass Now

nytimes.com

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Re: The Entire Economy Is MoviePass Now

#221

Post by kgwgk »

xkjkls wrote: post #136
maoistinquisitr wrote: post #131

Earlier quoted context omitted.

Amazon makes weird non-GAAP claims. In terms of GAAP, Amazon had negative free cash flow of $4.2 billion in Q1.

I'm talking on a yearly basis, not a quarterly basis. Due to the seasonal nature of their business, I'm sure the quarterly numbers are more choppy. I think the general point, that they've been able to self-finance this enormous growth (save for some certain real estate purchases or acquisitions), stands.

“Self-finance” may not be the best term to use, given that their asset growth of $90bn (from $40bn in 2013 to $131bn in 2017) is mostly coming from the increase in liabilities (equity has increased less than $20bn, from $10bn to $28bn).

Long-term debt was $3bn in 2013, increasing to $8bn in 2014 and $25bn in 2017. Capital leases have also gradually increased from $2bn in 2013 to $8bn in 2016 and $13bn in 2017.

Re: The Entire Economy Is MoviePass Now

#222

Post by ergothus »

matlock wrote: post #201
cornholio wrote: post #199

Earlier quoted context omitted.

> You can't lose money on every transaction and make it up in volume, as the old joke says. You actually can. It's the oldest trick of the industrial age, mass production and economies of scale. A good rule of thumb is that increasing production of a physical good by a factor of 10 will drop the unit cost by half. For non-tangible goods the effect is even more pronounced. The fist copy of Microsoft Windows might cost…

But what you're saying is that eventually you'll make money on every transaction which just goes along with the comment made before. The joke is really about goods where you can't lower the cost or increase the price enough to make the economics work. > The fist copy of Microsoft Windows might cost 1 billion dollars to produce, while every next copy is essentially free You'd have to split R&D costs by the units sold…

You are of course correct in your math, but the point is that it reverses the equation. Windows doesn't cheaper to make if you plan to sell fewer copies: the production cost is set (Roughly) so you have to target volume.

Then you have the secondary effects of lock in (with software/services) that makes every sale also reduce the cost of a future sale or economies of scale (physical goods) that again make volume more desirable.

This doesn't contradict the adage about having to sell at a per unit profit, but it complicates figuring out what number that is and can lead to some non-intuitive results, which does trash the value of the adage as a simple way of looking at things.

Not saying every company that is selling at a loss to get customers in hopes that they'll mysteriously figure out how to later profit is doing so correctly, but some are. Oversimplification adds little value to these problems.

Re: The Entire Economy Is MoviePass Now

#223

Post by ergothus »

wvenable wrote: post #74
mabbo wrote: post #16

> The king of money-losers, of course, is Amazon, which went years without turning a profit. Instead, it plowed billions of dollars back into its business The key difference with Amazon is that Amazon could choose to be profitable at any time- just raise prices ever so slightly, reducing growth in customer demand, and the stop building out its enormous logistics empire and new businesses. Amazon could have had profit…

I also think there is a key difference between re-investing in the business and simply bribing customers. I'm sure Amazon sold plenty of products at a loss but they also ruthlessly cut costs and found places where they could truly make money. I feel like a lot of startups are simply using investor money to give unreasonably inexpensive products to customers. For software companies, there is often a point where growth…

My Amazonian friends commonly mock or complain about the Amazon "frugality" practices that mean things like no mechanical pencils, just wooden ones.

I believe "frupidity" is the in house nickname for this.

Re: The Entire Economy Is MoviePass Now

#225

Post by nickparker »

hueving wrote: post #204
nickparker wrote: post #115

Earlier quoted context omitted.

Jobs aren't intrinsically good. These startup jobs might be, but it's an insanely complex system you're trying to suss a value judgement out of. If these startups didn't exist, the money going into them would be seeking returns elsewhere. There would probably be jobs involved there too, and the people working those jobs might be doing something better for society than building a short-lived money-losing consumer prod…

These companies losing investor money isn't anything like the broken window fallacy. If I pay a company $0.75 for a $1 widget with a $0.25 VC subsidy, I get the $1 widget and I'm ahead a widget. Nobody had to destroy a widget to make me buy a new one. The underlying widget suppliers still get the full price so the money is flowing into the economy. The VCs are the only ones losing anything. So paying people to clean…

You're right it's not quite the fallacy in that there isn't any destruction going on. It's something adjacent though:

The whole point of markets is that people decide where to spend their money based on the value they can get for it. When 3rd parties subsidize services like Moviepass or Blue Apron, they break the pricing mechanism that's supposed to lead us to efficiently use limited resources eg seats in a movie theater or space on mail trucks.

If a company losing money is providing more value to the customer than it costs to operate, they don't need to be losing money and they should raise prices. Otherwise, you're arguing these companies have a beneficial externality of some kind, and society at large gains in the transaction even though the company is burning more value than the customer gains from its product. I don't think that's the case for Moviepass or Blue Apron.

It's Bastiat's idea of the unseen alternative, except we're talking about LP money channeled through VCs instead of taxpayer money through the government.

I'm not blindly against VC-, cross-business, or any other kind of subsidies. If positive externalities exist they're a good thing. Eg, Amazon was "losing money" or barely breaking even on its physical goods business for a long time, but that money was strengthening our logistics network (both internal to Amazon and in USPS, FedEx, UPS) so they could be profitable later at the same or lower price points. Healthcare probably ought to be a money-losing business because a healthy labor force has huge positive externalities. I just don't think leisure or mild convenience/lifestyle products are positive on the balance.

Re: The Entire Economy Is MoviePass Now

#226

Post by metalliqaz »

mmt wrote: post #119
vinhboy wrote: post #9

> Enjoy It While You Can I love the conclusion of this article. As someone who has participated in the online "deals" community for 10+ years, I have definitely benefitted from many of the opportunities. However, I do spend a considerable amount of time wondering what will happen when this house of cards comes falling down. But you know, I think that for every one person like me taking advantage of these "arbitrage"…

> But you know, I think that for everyone person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going. That seems contrary to what the article is saying, which is that for every person taking advantage, there are zero people paying full price, because it's the investors who are keeping this economy going. As such, it may never end without a…

All it would take for it to end is for investors to stop investing in money-burners.

Re: The Entire Economy Is MoviePass Now

#227

Post by intrasight »

cimmanom wrote: post #207
intrasight wrote: post #191

Earlier quoted context omitted.

This is so true. Less true for me since I have my credit card email me about every transaction, and every time I get one I must decide if I wish to keep that subscription. Here's an idea for a business. Monitor customers credit card transactions for subscriptions, and do bulk negotiation with the service provider to knock down the price based upon how much service the customer is actually using. Take 10% of the savin…

What would the incentive be for the service provider to participate in this? Most of these customers aren't going to cancel anyway.

There are lots of business that are in the business of negotiating better prices. It's arbitrage - assuming that a service provider with list price of $25/mo would still be happy to get $20 as opposed to losing the customer.

Re: The Entire Economy Is MoviePass Now

#228

Post by walshemj »

TylerE wrote: post #79
walshemj wrote: post #75

Earlier quoted context omitted.

Not really could just have tiered prices 6.99 for weekdays before 5:30, 9.99 after - and say 12.99 at the weekends/holidays. For example my local VUE in the UK I can get a ticket on Mondays for less than $6 full price is $16 I suspect that its the paying up front for a year when a substantial majority of its customers wont goto the cinema

I think you are misreading the business model. The MoviePass price is per month . There is NO cost per viewing. You could in theory see up to 31 movies for your single $10 payment.

You have to pay for a year up front + another fee

Re: The Entire Economy Is MoviePass Now

#229

Post by kgwgk »

kgwgk wrote: post #220
maoistinquisitr wrote: post #131

Earlier quoted context omitted.

Amazon makes weird non-GAAP claims. In terms of GAAP, Amazon had negative free cash flow of $4.2 billion in Q1.

Free cash flow is a non-GAAP metric. Amazon provides three different free cash flow calculations (depending on how leases are accounted for). In 2015-2017 the corresponding figures are $26.4bn (7.5+10.5+8.4), $14.8bn (4.9+6.5+3.4) and $5.8bn (2.6+4.7-1.5).

A 2015 commentary on this issue: https://www.ft.com/content/cfb6975d-4503-3fb5-85f4-5c11c142b...

The three different cash flow calculations in 2012-2015 were $4.4bn (0.4+2+2), $1.7bn (-0.1+1.3+0.5) and -$2.4bn (-0.4+0.2-2.2).

As forecasted, the divergence of these metrics has continued.

Re: The Entire Economy Is MoviePass Now

#230

Post by mmt »

metalliqaz wrote: post #226
mmt wrote: post #119

Earlier quoted context omitted.

> But you know, I think that for everyone person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going. That seems contrary to what the article is saying, which is that for every person taking advantage, there are zero people paying full price, because it's the investors who are keeping this economy going. As such, it may never end without a…

All it would take for it to end is for investors to stop investing in money-burners.

Isn't that a tautology, though?

My point is that actual[1] investors have an incentive to pour their money into money-burners because if just one of those initially money-burning is the next Google, Facebook, Amazon, or whatever overwhelming winner-take-all breakout profitable company, they will have more than justified dumping all that cash into the losers.

[1] for lack of a better term. I've never quite understood why it's considered "investing" to buy stock in a company if someone other than the company itself previously owned the stock. That cash isn't going into company coffers. This activity seems more like asset ownership/speculating than asset allocation (which is what I think of when I hear the word "invest").

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