> Movie theaters don't make their margins on tickets sales, they make them on concession sales. The model of "lose a small amount on tickets sales, and make it up and then some on concession sales" is fundamentally sound. The ticket loses would get written off as a Cost of User Acquisition for the high profit concession items.
The interesting issue is that the theaters know this, and have already calculated it into ticket prices. This has been the modus operandi for nearly as long as theaters have ever existed. The interesting gall of MoviePass was thinking they had a new angle in a game so much older than them. Movie theaters have already calculated their margins to the knife's edge of marginal costs on tickets versus concession and value add sales, and have done so for nearly a century.
Turns out MoviePass didn't actually have a new angle and tried to do what Movie Theaters were already doing, without the benefit of controlling any direct interest in the revenue from the value adds and concession sales. I don't understand how any of the VCs saw that business plan and considered it a good idea. We've known that marginal costs on theater tickets have been a loss leader for nearly a century or so, it's a very well known fact about the industry that is practically an economics 101 lesson in every textbook.
The theater market is also this consolidated precisely because of this long, calculated economic model. A lot of the poker game of passing individual theaters between chains is almost entirely because of this game of playing knife's edge marginal costs versus added incentives/interesting concessions for sustained customers in the long term, where even entire individual theaters in a chain may be loss leaders for customer loyalty to other theaters elsewhere in a chain.