The Simple Facts: MoviePass & Business Models

By: Jordan Perry

This is the second installment of The Simple Facts Blog powered by SimpMe.

Let me start this blog off by stressing the importance of a sound, business model! MoviePass, which is a popular service that allows consumers to watch movies for a monthly fee, learned this lesson the hard way.

The company has been in business for a few years and they started off by charging users roughly $50 per month to see unlimited movies. However, the company’s executive team decided that they wanted to change their fee structure with hopes of growing the business at a faster rate. As a result, the company decided that they wanted to charge users $10 per month. So for $10 per month, you could see as many movies as your heart desired.

FUN FACT: IT COSTS $10 FOR A SMALL POPCORN AT YOUR LOCAL THEATER!

P.S. DON’T RESORT TO BEING A MOVIE, FOOD SMUGGLER…

This was literally the deal of the century and MoviePass saw their user base grow from approximately 25,000 users to millions! This is a live look at the whole world rushing to capitalize on this insane deal LOL.

Unfortunately, the company grew so rapidly that they began to lose money because their monthly subscription price was too low. This was a classic case of a business model gone wrong, but the company’s executive team is working to address their shortcomings. The company realized that they will need to adjust their business model if they want to have a chance of surviving within the competitive, business environment.

I think MoviePass is a great idea, but they clearly need to modify their business model. MoviePass tried to use the ol’ Planet Fitness model, which is charge people $10 a month for a gym membership that they will barely use, but it turns out people enjoy the movies more than the gym. Go figure. In a world where movie streaming services like Netflix and Hulu are growing rapidly, there is still a large amount of movie lovers who want to go to the movie theaters. If MoviePass can find a business model that fits their long term goals, I can definitely see them doing well. I guess time will tell.

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