MoviePass couldn’t afford to pay for movie tickets on Thursday • Hacker News Board

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#231

Post by ghaff » Fri, Jul 27, 2018, 11:53 PM UTC

astrodust wrote: post #172

gamblor956 wrote: post #148

Earlier quoted context omitted.

MoviePass' problem was that their biggest users were stingy as fuck. They would smuggle in their own snack and drink, instead of purchasing from the movie concessions stands. This might not have been much of an issue (since MoviePass pays full price for the tickets), but they tried to make a play for all of a theater's concessions revenue rather than just the revenue traceable to MoviePass customers.

It's the GroupOn problem. You're allowing people to self-select for being cheap, wanting deals. The MoviePass system was probably pitched like a health-club membership with the expectation that nobody would ever use it, or like a streaming service people forgot they were subscribing to, but it seems they've captured a base of enthusiasts taking full advantage of the program.

Or at least selecting for the heavy user/expensive customer. I rarely go to the movies for reasons that have nothing to do with ticket prices. They’d love me as a customer but I’d never sign up.

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#232

Post by SilasX » Fri, Jul 27, 2018, 11:58 PM UTC

koolba wrote: post #77

kristianc wrote: post #68

Earlier quoted context omitted.

I’d imagine even a moderately engaged gym user would lose the gym money on every visit, in staffing costs alone. The marginal cost of each user rises too, as people that are unable to get on machine are more likely to churn. It is however usually outweighed by the huge numbers of people who simply do nothing with their subscription.

> I’d imagine even a moderately engaged gym user would lose the gym money on every visit, in staffing costs alone. A gym user attending a gym doesn't incur significant additional staffing costs. The work required to clean the gym may increase a bit but that'd be nowhere near the price of even the cheapest gym memberships. > The marginal cost of each user rises too, as people that are unable to get on machine are more…

>A gym user attending a gym doesn't incur significant additional staffing costs. The work required to clean the gym may increase a bit but that'd be nowhere near the price of even the cheapest gym memberships.

But that's not the right way to gauge "cost per member-usage". If you get a lot more usages, you will have to pay noticeably more for staff, maintenance, replacement, etc.

For comparison, how would you gauge the actual cost of sending a letter in the mail? Naively, you would say "well, you can't detect the cost of sending it in labor or fuel costs, so it's zero".

But that would be wrong. The right way is to say "how much would it cost to send a million more letters? The cost of one letter should be treated as one millionth of that" because, in the large, your marginal costs will scale that way as letter transmission goes up and down.

So yeah, the gym is, for all relevant purposes, bearing a small cost each time you use the gym.[1] It's just that, for the vast majority of members, all those usages cost them much less than the membership fee.

[1] I've heard figures of $1/visit but can't find at the moment.

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#233

Post by lev99 » Sat, Jul 28, 2018, 12:03 AM UTC

gamblor956 wrote: post #166

lev99 wrote: post #149

Earlier quoted context omitted.

I want movie theaters to close. I think people that do not attend movie theaters also do not mind. If they liked movie theaters they would attend. I have a small apartment with a 70 inch screen in the living room. The three movies a year Hollywood produces I am interested in can be watched from the comfort of my own home in 4k surround sound for $4.99 a few months after they arrive in theaters. I can control the volu…

The only advantage a movie theater has is that it receives movies a few months earlier. If movie theaters close that solves that advantage. Not sure what sort of crappy theaters you have nearby, but the 70 foot screen on my local theater absolutely dwarfs the 70 inch screeen of your TV. Highest-gamut color range, laser projection. Fully tuned Dolby Atmos surround sound speaker system. Reclining, reserved seats. Wine,…

> the 70 foot screen on my local theater absolutely dwarfs the 70 inch screeen of your TV.

Sure, and our sun isn't the brightest star. It's just much closer. Same logic applies.

When you go to the theater you are getting a boxed experience. The seats, the concessions, the atmosphere. Everything is designed with mass appeal in order to move more units. At home I can tune the experience to how I want.

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#234

Post by thatcloudguy » Sat, Jul 28, 2018, 12:04 AM UTC

reaperducer wrote: post #143

legitster wrote: post #20

If I am a traditional 'tech' company - I can afford to lose money when I am investing it in my platform or technology. It's like borrowing money to invest in your assets. For MoviePass, they are losing money and passing it off to theaters - it's like borrowing money to buy more ingredients for a failing restaurant. You can't charge less than the marginal cost, it doesn't make sense! I am trying to wrap my head around…

An emergency loan with no change to the service whatsoever? They are really having a deer in the headlights moment. Reminds me of a startup I worked with once. The goal wasn't to make a viable product. It was to make a big splash and get bought. 10 Start a product/service 20 Make a big hype and get lots of publicity 30 Get bought by some larger company that sees you as a threat/opportunity 40 Founders get big cash pa…

Yeah, that was a popular pattern in the early 90s. Basically take a EE PhD thesis, dress it up and build some early engineering samples, file a patent application then go to Cisco saying "buy us or we'll make this product".

It worked a little too well.

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#235

Post by lev99 » Sat, Jul 28, 2018, 12:09 AM UTC

btian wrote: post #220

gamblor956 wrote: post #166

Earlier quoted context omitted.

The only advantage a movie theater has is that it receives movies a few months earlier. If movie theaters close that solves that advantage. Not sure what sort of crappy theaters you have nearby, but the 70 foot screen on my local theater absolutely dwarfs the 70 inch screeen of your TV. Highest-gamut color range, laser projection. Fully tuned Dolby Atmos surround sound speaker system. Reclining, reserved seats. Wine,…

And you don't have to travel to the theater. It would be nice if studios can release Blurays at the same time as theaters.

That's a big one if alcohol consumption is involved, like the parent comment mentioned.

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#236

Post by 15155 » Sat, Jul 28, 2018, 12:14 AM UTC

794CD01 wrote: post #137

stevewillows wrote: post #126

Earlier quoted context omitted.

This is sort of like Amazon's tactic with ebooks and such. Lose until your volume is high, then when you've cornered that particular market, negotiate a workable cost per unit. I really hope it works out -- but in all sincerity, I don't see why the theaters themselves aren't just copying this for their chains. MoviePass has already demonstrated the market.

I don't see how it makes sense to copy a strategy that loses money when someone else is already following that strategy and going broke due to all the money they're paying you.

The strategy only loses money because they are paying full-retail price for movie tickets.

AMC's A-List (costs $19.99) does not pay $9-$13 per showing a la MoviePass. They pay the same space/personnel costs per seat they always have. Tickets have never been a theater's largest or most desirable source of revenue.

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#237

Post by 15155 » Sat, Jul 28, 2018, 12:17 AM UTC

lechiffre10 wrote: post #175

legitster wrote: post #20

If I am a traditional 'tech' company - I can afford to lose money when I am investing it in my platform or technology. It's like borrowing money to invest in your assets. For MoviePass, they are losing money and passing it off to theaters - it's like borrowing money to buy more ingredients for a failing restaurant. You can't charge less than the marginal cost, it doesn't make sense! I am trying to wrap my head around…

I listened to a podcast from the CEO about what their ultimate objective would be. The idea is to at one point have MoviePass be sponsored or paid ( or get a cut) of recommending things aside from the movie experience. For example, you'd get a deal with Uber to get to the theater or a list of great restaurants to try close to the cinema. Package an overall experience. I also think the data collected from movies that…

This is a very hand-wavy, Web 1.0-esque monetization model.

Acted-upon, local recommendations aren't worth as much as MoviePass is paying for customer movie tickets.

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#238

Post by dragonwriter » Sat, Jul 28, 2018, 12:24 AM UTC

legitster wrote: post #20

If I am a traditional 'tech' company - I can afford to lose money when I am investing it in my platform or technology. It's like borrowing money to invest in your assets. For MoviePass, they are losing money and passing it off to theaters - it's like borrowing money to buy more ingredients for a failing restaurant. You can't charge less than the marginal cost, it doesn't make sense! I am trying to wrap my head around…

> You can't charge less than the marginal cost, it doesn't make sense!

You can if you are dumping to achieve a monopoly and/or monopsony where you will then have pricing power on one or the other side of the transaction you are in the middle of.

But that's a game you either win completely before you run out of money or die horribly; there's no glidepath to a sustainable but not dominant position. And MoviePass seems very close to the die horribly outcome.

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#239

Post by dayofthedaleks » Sat, Jul 28, 2018, 12:28 AM UTC

scarface74 wrote: post #145

uxp100 wrote: post #134

Earlier quoted context omitted.

I looked at an AMC I've been to. They have 20 movies listed as available to see today. Many only have 2 showings or something, but they have 20 screens, they seem to turnover more than 5 or 6 movies in a month.

I didn’t say they only have 5 or 6 movies showings at once. By turnover, I meant after you catch up on all of the movies they have now, you won’t find 20 new movies next month. Over the course of the year, they won’t have 156 movies in the theatre (52 x 3)

191 films were released by the top 10 US studios in 2015. I bet most 24-plexes screened them all, plus more.

Re: MoviePass couldn’t afford to pay for movie tickets on Thursday

#240

Post by ameliaquining » Sat, Jul 28, 2018, 12:57 AM UTC

sf_rob wrote: post #138

legitster wrote: post #20

If I am a traditional 'tech' company - I can afford to lose money when I am investing it in my platform or technology. It's like borrowing money to invest in your assets. For MoviePass, they are losing money and passing it off to theaters - it's like borrowing money to buy more ingredients for a failing restaurant. You can't charge less than the marginal cost, it doesn't make sense! I am trying to wrap my head around…

>You can't charge less than the marginal cost, it doesn't make sense! The old joke is "Sure we have marginal losses, but we'll make up for it with volume!"

I assumed their plan was to have such great volume that they'd eventually be able to negotiate (larger?) bulk discounts with theater chains and thereby get their marginal profit back above zero.