How MoviePass Can Become Profitable Now
By raising the price of their unlimited subscription plan while adding perks, and incorporating a premium subscription plan into their offering, MoviePass could have a much brighter future.
- **EDIT: MoviePass has decided to keep the $10 a month plan, but now moviepassers can only see 3 movies a month**
- *EDIT: Since the publication of this article MoviePass has raised the price of their unlimited subscription to 14.95*
MoviePass, the subscription-based movie ticket service, was forced last week to borrow $5 million after it could not pay its bills, raising even more questions about the company’s ability to remain afloat.
A day after the parent company of MoviePass announced a drastic effort to boost its stock price from a mere 8 cents to $21 by approving a 250-for-1 reverse stock split, the price of the stock immediately tanked to $10.60 a share. This is far from what the peak share cost was back in October 2017 ($39 a share or >$9,700 considering the reverse-stock-split) when the company announced it would be lowering its rates to $9.95 a month.
In regards to profitability, MoviePass takes a similar approach that many of the famed Silicon Valley startups have been taking. Kevin Roose jocularly describes this startup economic trend best in his article “The Entire Economy Is MoviePass Now. Enjoy It While You Can.”
“I’ve got a great idea for a start-up. Want to hear the pitch?
It’s called the 75 Cent Dollar Store. We’re going to sell dollar bills for 75 cents — no service charges, no hidden fees, just crisp $1 bills for the price of three quarters. It’ll be huge.
You’re probably thinking: Wait, won’t your store go out of business? Nope. I’ve got that part figured out, too. The plan is to get tons of people addicted to buying 75-cent dollars so that, in a year or two, we can jack up the price to $1.50 or $2 without losing any customers. Or maybe we’ll get so big that the Treasury Department will start selling us dollar bills at a discount. We could also collect data about our customers and sell it to the highest bidder. Honestly, we’ve got plenty of options.”
MoviePass is at a point where almost no-one believes that their service will persist past 2019. They have to tweak or overhaul their revenue model in order to create a roadmap to profitability that doesn’t rely so heavily on user data collection.
The way I see it MoviePass can do two things to bring in more revenue now.
Price Raise with Perks.
MoviePass raises their unlimited subscription fee to $15–17 a month (from $9.95), and allows subscribers to get 30-50% off on all their purchases at the movie theaters. Everyone knows that food/drink at theaters are comically overpriced which causes the majority of moviegoers to skip the concession stands. MoviePass should allow this tier of users to use their card for drink and food purchases and then present the spend data to merchants like AMC and Loews. My bet is that these merchants would see the food & beverage portion of their revenue pie chart grow because of the surge in purchases. Even if theaters are selling drinks and popcorn for $8 instead of $15, they would actually be making more money because the number of people buying these items would be higher and the margins on these products are still ridiculous. MoviePass could use this data to negotiate deals with these theaters so that they are okay with selling their concession items for 30-50% of their retail price to MoviePass users.
MoviePass creates a more expensive tier option for users which costs ~$30 a month that would allow users to see 3D and Imax movies, a select group of film festival screenings, and bring 1 guest a month for free to the movies.
One of Moviepass’ problems is that there is no tier for people with larger amounts of disposable income. Just like Uber has Uberblack and Netflix has its 4K streaming premium plan, MP needs to have another tier for premium service. This would of course be MoviePass’ most profitable subscription option with the least amount of subscribers, but it is still a way to siphon more money out of the people who are willing to pay without causing churn amongst users in their basic and unlimited plans.
Also, a tier with a much higher customer LTV like this could also benefit from paid marketing that was strictly LTV focused. As long as MoviePass correctly calculates the LTV of these users and uses growth marketing tactics to ensure that the CAC is significantly lower than the LTV, they could artificially inflate their user base while remaining profitable across paid marketing channels.
Don’t count MoviePass out yet! While the company is betting on their proprietary data to save them, there are still things they could do now to improve revenue. I might even recommend buying some stock if you have faith in their growth team.
MoviePass, the subscription-based movie ticket service, was forced last week to borrow $5 million after it reported it…www.nytimes.com