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

money.cnn.com

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

#71

Post by ChuckMcM »

gorbachev wrote: post #55
ChuckMcM wrote: post #24

Earlier quoted context omitted.

Absolutely but once you're in the situation where you are securing high risk debt financing you're employees should already reset the future value of their stock to $0. While I don't know if it is a hard and fast rule, it has been true in my experience over the last 30 years in the bay area that when a company is doing this sort of move to survive it has never left any value in the common stock.

I actually meant the employees of future companies of that CEO. Poorly drafted comment on my part.

Yup, it is always a good idea to research the CEO/Founders of a company you are considering joining to see as much of their history as you can. And if you see that they sold their previous company at firesale prices ('or undisclosed amount, not material to the acquiring company') you know that they missed their execution target that time. So a conversation with them is in order.

I have declined a number of offers over the years when my research into the CEO showed they were not the people who could get a company over the finish line, and have generally been pretty accurate in the eventual fate of those companies. Correlation isn't causation, but the CEO is the biggest win/lose variable in the mix.

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

#72

Post by chillydawg »

alew1 wrote: post #25
noja wrote: post #16

How many movies a month does their average customer watch? Is there a small group of users costing them the most money?

I’ve seen 30 since signing up at the end of November. Not sure how typical that is, but my friends with MoviePass also see a bunch!

Gotta love a bit of wealth redistribution. Let's just hope they don't turn into a horrendous monopoly and force very anti consumer behaviour.

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

#73

Post by ironjunkie »

christianmunoz wrote: post #38

Links from the SEC website about this $5m loan: Promissory Note: https://www.sec.gov/Archives/edgar/data/1040792/000121390018... 8-K Filing: https://www.sec.gov/Archives/edgar/data/1040792/000121390018...

From the Promissory note:

> the principal amount of Six Million and Eight Hundred Thousand Dollars ($6,200,000)

Is this a gross mistake? Or am I missing something ?

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

#74

Post by Shivetya »

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 was under the impression they were trying to have a big enough block of customers to take to the studios and try to get a percentage. As if their service would have sufficient numbers to sway debuts and over all movie numbers.

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

#75

Post by overcast »

clircle wrote: post #31

My wife and I are so frustrated by the movie going experience in the US. In Taiwan, everyone is permitted to bring food and drinks to the theater and that's pretty common. In the US I'm forced to pay an absurd amount of money for awful junk food. No thanks, I want to drink tea while I watch a movie. We always have to smuggle in drinks because the theater just doesn't provide any good options. None of the movies is th…

Do you honestly expect everyone else in the theater to deal with subtitles only for a select few that want it? Secondly, theaters make their money on food, not the movies.

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

#76

Post by bunderbunder »

smofnoopttzzaaa wrote: post #46
gamblor956 wrote: post #43

Earlier quoted context omitted.

Movie theater food is expensive because theaters in the US make almost all of their profits from the food. The movies are just a vehicle to get you to buy the popcorn and soda. On big blockbuster releases, like Star Wars or Mission Impossible, the movie theater may only get 10% of the gross ticket price on opening weekend, with the remainder going to the distributor. Overseas distributors Asia have less leverage beca…

I sometimes fear that, like bookstores and Toys R' Us, if you don't patronize these businesses, they will go away. As a kid I couldn't imagine a world without bookstores, now there aren't any. Same with Toys R' Us. Kids will never have that experience again. Yes, movies are expensive, but would you rather them not be there at all?

In my area, a lot of small, independent book and toy stores have opened up over the past decade or two, and it seems to me like their business has been picking up in the wake of the implosions of Borders and Toys R Us. That works for me, TBH - I have little nostalgia for Toys R Us, but I have very fond memories of the small children's book & toy store my parents used to take me to.

Perhaps the same will happen with theaters? The local AMC cineplex isn't doing much for me; the movies it shows are more-or-less disposable, so I'm just as happy to watch them on a small screen at home while I'm working on a hobby project or whatever. OTOH, an independent theater that I used to live by would show classics, Rocky Horror, limited distribution stuff that's hard to find anywhere, and even old silent films with a live orchestra. Consequently, it felt like an integral part of the community to me.

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

#77

Post by koolba »

kristianc wrote: post #68
tjbarkley wrote: post #44

Earlier quoted context omitted.

They lose a little money on equipment maintenance over time, but it's nothing like going to a movie.

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 likely to churn.

That's not a cost, it's a factor for the overall churn rate and marginal cost for acquiring a new user. It'd limit the max profitability of a gym (i.e. getting to churn = growth equilibrium) but it's not an operational cost.

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

#78

Post by chiefalchemist »

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…

"The data they are gathering cannot be more valuable than the cost of a movie ticket."

When you install the app what does seek to access? Given that most movie theaters are surrounded by food & drink establishments then it would seem they're not too far from becoming a "niche" Groupon. That's got to add some revenue.

Moi? The data is a privacy issue. But I'm a fringe minority. Most ppl see deal and convenience and ignore the risks.

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

#79

Post by maerF0x0 »

jondiggsit wrote: post #14
Waterluvian wrote: post #5

Was the entire play of MoviePass to pay for people's movie tickets until they make it and then jack up the prices + negotiate with cinemas for better deals? What was the "make it" condition? Is this a common strategy? It also loosely reminds me of the dotcom era strategy. It doesn't matter if we're not making any real money, we have a lot of users. Surely that can be converted into money somehow. We're worth billions…

Is this a common strategy? Are you kidding? The entirety of Silicon Valley is predicated upon and funded by this business model. Almost every service provided by a SV startup is subsidized.

Its subsidized in its R&D cost though. Not in the marginal cost of servers/apis ...

I sometimes joke like our first customer cost us $2M but our 2nd was wildly profitable!

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

#80

Post by jessaustin »

code4tee wrote: post #8

Lending $5 million to MoviePass at this point is probably as close as you can get to literally throwing your cash on a burning heap. Must be some term sheet!

You could imagine a big theater chain buying MP in a fire sale. If they pay $6M and the lender gets all of it, that's a pretty good deal for the lender.
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