A few days ago, a scandalous bit of news broke that MoviePass allegedly changed subscriber passwords in an effort to curb power users from accessing the service, thereby saving the company money. It was just the latest blow to the beleaguered movie theater subscription service’s tattered reputation and another chapter in its historic and highly public fall from grace.
MoviePass is now on hold and is not accepting any new subscribers, and should it ultimately stay that way. The site’s landing page promising, “Big Changes are coming” will serve as the epitaph on its tombstone. Even if MoviePass returns in some form, it is clear that the ticket service’s bold vision of unlimited movies for $9.99 a month was inarguably a failed experiment.
But not all failures are the same and in business, as it is in most walks of life, you learn more from the losses than you do from the wins. MoviePass’s successes and its failures are highly instructive, and we are already seeing the lessons learned from the ticket service’s gambit applied in the industry.
Here is what we can learn from MoviePass’s failed experiment.
Movie Tickets Are Too Expensive
Every startup wants to be a disruptor in its given industry these days, but beyond being an incredible difficult task, you can only disrupt an industry if there are areas where that industry is currently stagnant or underserving the consumer in some ways that your model can improve upon. MoviePass was only able to become as disruptive as it was because of the state of the exhibition industry, namely that movie tickets are too expensive.
According to the National Association of Theater Owners, the average ticket price in the United States was $9.11 in 2018. As many of you likely know though, $9.11 for a movie ticket is a steal in more metropolitan parts of the country where tickets can be significantly more. Add in the cost of travel and concessions, and you can see why many consumers stay in and enjoy unlimited entertainment on Netflix instead.
To many consumers, going to the movies simply seems to be too expensive to make a regular occurrence, especially when they are so many other entertainment options. While $10 a month for unlimited movie tickets was obviously too cheap and thus unsustainable, the value proposition was extremely attractive to consumers and that is in direct relation to existing ticket prices.
People Still Value The Theatrical Experience
While the perception around movie tickets is that they are expensive, that doesn’t mean people don’t want to go to the movies. The demise of theatrical exhibition long heralded has never come to pass, but it is known that attendance has been trending down as more entertainment options become available to consumers. To combat this, theaters have incorporated luxury seating and nicer dining options in addition to premium picture and sound formats that can’t be replicated in the home. What MoviePass has shown is that people still value that theatrical experience and seeing first run movies.
MoviePass took off like a rocket ship once it introduced its unlimited $10 a month plan, growing from somewhere around 20,000 subscribers to over three million at its peak. For the $10 a month MoviePass was charging, its subscribers could have signed up for any number of different streaming services to expand their entertainment options. Instead they wanted to go to the movies and deal with all the wonders and warts that experience entails.
Despite the modern frustrations of people being on their phones and the general lack of proper etiquette or anything remotely resembling courteous behavior, three million people wanted to see movies in a theater as much as possible. And they did just that, going to more movies more often and at different times than they otherwise would. That tells us that the theatrical experience for first run movies is still important to consumers.
Audiences Aren’t Only Interested In Blockbusters
This year, perhaps more than ever before, we are hearing the lamentations about how blockbuster franchises, and by extension Disney, are taking bigger slices of the box office pie while smaller, original movies get buried. This could lead to the assumption that something is lacking in original titles, be it marketing or content, or that consumers simply aren’t interested anymore. But that may not be entirely true.
In a poll conducted for THR in 2018, it was found that MoviePass subscribers saw on average six more movies over a six-month period than non-subscribers. They were also more likely to see movies with low Rotten Tomatoes scores and movies they wouldn’t normally watch. Now the kind of moviegoer who signs up for MoviePass may have been naturally more adventurous, and it's tough to say how representative this is of the wider public, but it paints a picture of a willingness among some consumers to go out of the comfortable blockbuster zone when conditions are right.
The problem is that when ticket prices are high and there are other entertainment options available, consumers are less likely to shell out and take a risk on a smaller movie, and will instead save theatrical experiences for true event films. Perhaps other subscription services or the variable pricing that has been proposed by some can save smaller films at the box office.
Movie Theater Subscriptions Are A Good Idea
To paraphrase Bane from The Dark Knight Rises, victory defeated MoviePass. It grew too fast with an unsustainable model, but while MoviePass may die, movie theater subscription services will live on. During MoviePass’s meteoric rise, new services popped up to meet it. While theater-agnostic services like Sinemia and MoviePass are dead and dying, theater-specific services are thriving.
Given the opinions exhibitors expressed about MoviePass while it was growing, you might think that theaters would go back to the way things were before now that MoviePass is seemingly dead, but the result has been quite the opposite. Not only are theatergoing subscription services growing, new services are cropping up. AMC’s Stubs A-List program has reached 900K subscribers at last count, while Cinemark’s Movie Club has hit 800K subscribers. Now Regal Theatres is getting in the game with its own aggressive unlimited plan and Alamo Drafthouse has introduced its Season Pass.
Not every disruptor survives to see the fruits of its labor, but MoviePass was clearly onto something. Theater chains are more than willing to improve on the idea and run with it, while avoiding MoviePass’s mistakes. The subscription economy has worked in other industries and it’s something consumers are familiar with, so despite the fact that MoviePass failed, the movie ticket subscription service it popularized is here to stay.
These aren’t the only lessons we can learn from MoviePass, as it has also made clear how not to conduct business, the importance of transparency and good customer service, and what is and isn’t a smart investment. These lessons and many more will no doubt be elucidated in great detail in academic papers, business classes, tell-all books and, if the universe has any sense of irony, a movie or documentary.
Nevertheless, these are the lessons though that I find most relevant for an industry that is in a state of flux. And for these lessons, you have to be glad that MoviePass existed. Sure it had plenty of faults; it over-promised, under-delivered and allegedly engaged in all manner of unscrupulous behavior, but it also got people to see more movies and changed moviegoing, possibly forever.
That legacy makes the failed experiment of MoviePass, something of a success.
No matter how you buy your movie tickets, check out our 2019 Release Schedule to prepare for all the titles coming to theaters this year.
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