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What MoviePass Got Right

The movie app is near-dead, but its industry impacts live on

Jonathan Kim
Aug 19, 2018 · 13 min read
Photo: Felix Mooneeram/Unsplash

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Despite what MoviePass has defiantly declared in recent public statements, the floundering $10-per-month theater subscription service is dead. Technically, it is on life support (#MoviePassDeathwatch is a thing on Twitter), and the company recently imposed a cap of just three movies a month (and only certain films and showtimes) to slow the rate at which it’s burning through cash. But MoviePass as we knew it — and as it was originally sold to us — is gone. The newest offer is nothing to sniff at, and might be an attractive deal for some. But I’ve lost faith in a company imposing a continuous stream of user-unfriendly limitations, outages, and extra charges as it struggles desperately to find a path to profitability.

Plenty has and will be written about what MoviePass did wrong during its brief life, including its unnecessarily adversarial relationship with theaters and apparently never having a viable business model. However, there were a few key things that MoviePass got right, the effects of which are already appearing at other theater chains. Because of this, I believe that MoviePass will be seen as more than just another failed company that burned bright and flamed out fast by offering something it couldn’t afford. Instead, I think MoviePass may someday be compared to Napster. Though the free music-sharing/pirating service eventually died, it led to legal digital music services like Apple’s iTunes Store, and streaming services like Spotify and Apple Music, all of which ultimately saved the music industry. With time, MoviePass may be seen as a company that, while fatally flawed, kept movie theaters alive in the face of Netflix, which is threatening to do to theaters what Amazon did to retail.

Let’s take a look at the problems MoviePass attempted to solve, what the company got right, and how its legacy may live on through other companies.

Movie tickets are too damn expensive

The greatest appeal of MoviePass has always been its price, especially since the company lowered it from $50 per month to an unbelievable (and ill-advised) $10 per month. Especially in an expensive city like mine, a single full-price movie ticket can easily run $12-$15 — and I’m glad that MoviePass tried to do something about that. MoviePass was like Robin Hood, taking money from investors and venture capitalists and giving it to movie lovers.

Before MoviePass, my trips to the movie theater had become a lot less frequent as the price of tickets increased, home theaters improved, and streaming services like Netflix, Hulu, Amazon Prime, and HBO Go proliferated. As movie tickets become more expensive (the nationwide average price in 2017 was $8.97, up nearly 4 percent from the previous year), going to the theater feels more risky. Seeing a mediocre movie has an added sting — like losing a pricey bet or being swindled — that is hard to shrug off, especially if you are paying for a date, or worse, a family of four. Throw in the cost of parking and snacks, and a weekly movie habit for even a single person can easily approach $100 a month in some cities.

MoviePass made movies affordable again, something the movie and theater industries need to find a way to do to stay competitive with streaming services.

Compare this with the cost of Netflix, where $11 a month for two simultaneous HD streams can provide a family with limitless video content, whether it’s movies, TV shows, or Netflix’s original offerings, all of which can be watched on a large, inexpensive HD flat-screen TV. At that price, the cost of at-home watching essentially dwindles to nothing, and the convenience of being able to watch something at home at any time, with any food or drinks you desire, is nearly impossible to beat. Is one movie, even a good one, worth more than a month of unlimited viewing options?

MoviePass made movies affordable again, something the movie and theater industries need to find a way to do to stay competitive with streaming services. Unfortunately for MoviePass, it made tickets so affordable that it effectively became a death sentence. In fact, shareholders of MoviePass’ parent company, Helios and Matheson, have launched a class-action lawsuit claiming the company lied to them about the service’s potential to ever make a profit. A board member also recently quit, citing concerns over a lack of transparency from corporate management. Helios and Matheson recently reported a quarterly operating loss of $126.6 million, its stock price has declined 99.99 percent since acquiring MoviePass, and its shares are currently selling for less than a nickel.

Movie theaters are in trouble

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Image: White Hutchinson

The number of people going to movie theaters in 2017 dropped to a 25-year low. Beyond increasing ticket prices and the comparatively low cost of streaming entertainment, another important factor is the number of other options vying for our attention.

We live in a new golden age of television, with great TV series popping up seemingly every month from an increasing number of sources — networks, cable channels, websites, streaming services — all of which are taking more risks on talent and content in the race to differentiate themselves from competitors. And if you don’t want to watch a new show, you can revisit and binge every season of the classics, like Friends, Seinfeld, or the Simpsons.

The quality and realism of video games is also off the charts, and networked play lets gamers play endlessly with friends or opponents around the world, or simply watch others play on services like Twitch and YouTube. Speaking of YouTube, the video website and app has largely replaced TV for many young people, with content creators putting out as many videos as their subscribers can watch. Throw in general vegging out on our digital devices — scrolling social media, chatting, reading articles, playing games, falling down rabbit holes, etc. — and it’s obvious why movies in theaters are facing more competition than ever.

Overall box-office grosses only dropped by 2.7 percent in 2017, but that’s because theaters are making more money off fewer viewers by charging more for added features like 3D, IMAX, Dolby Cinema, and food and beverage service delivered right to your seat. Making it possible for more affluent moviegoers to spend more on a premium experience may be an effective short-term strategy, but it exacerbates the high ticket prices I believe are keeping many people away.

To show you how old I am, when I was a kid, my mom used to regularly drop my brother and I off at the movie theater on weekends with $10, enough for two matinee tickets and arcade games while we waited for her to pick us up. Yes, times change and I know we won’t be returning to those good old days, but reasonably priced movie tickets helped my brother and I develop a love for the theatergoing experience, for seeing movies as they were intended on the big screen with great sound and no distractions.

Because of high ticket prices and a plethora of entertainment options, I fear that the number of regular moviegoers is dwindling. Watching a movie at home is becoming the default, with theater outings limited to giant “event” movies like a Star Wars or Avengers film, or a rare breakout phenomenon like Get Out or A Quiet Place. Movie theaters are going the way of live theater, concerts, or professional sports — a relatively small number of affluent season ticket holders and passionate superfans will still go regularly, but the majority will only go once or twice a year, if at all. That’s not the model movie theaters were built on, and it makes the rise in ticket prices seem like a race to the bottom.

By making it cheaper to go to movies, MoviePass encouraged people to take chances on movies they weren’t sure about, as well as see movies they might have otherwise waited to stream at home or rent from Redbox. By taking chances, moviegoers might discover new actors, directors, franchises, etc., leading to more trips to the theater and more word-of-mouth about great movies. If I were a kid today, I could easily imagine my mom buying my brother and me MoviePass subscriptions so we could go see movies a few times a month without it being a drain on our family budget.

All of this could lead to more people falling in love with seeing movies on the big screen, which the movie theater industry needs to survive. I honestly feel that the creators of MoviePass love seeing movies in theaters, know that it’s the optimal way to experience them, and want movie theaters to succeed. Thirty movies a month for $10 and playing hardball with theaters just wasn’t a sustainable way to do it.

Small movies and independent theaters are in trouble

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Photo: Andrew Neel/Unsplash

Raising ticket prices in the face of declining viewership isn’t the only dirty secret behind Hollywood’s not-yet-disastrous revenue drop. Another is the fact that the vast majority of box-office dollars are coming from an increasingly smaller number of megamovies, mostly made by Disney.

As M.G. Siegler points out in his excellent March 2018 post “The Race to Save Hollywood,” Disney and Disney-owned films have been dominating the box office:

In 2016, Disney released four of the top five grossing movies at the U.S. box office, including the top three (and all of the movies that grossed over $400M). In 2017, Disney had three of the top five (and number six was Spider-Man: Homecoming, which for all intents and purposes was a Marvel movie as well), including the top two (and all of the movies that grossed over $500M — only Wonder Woman also eclipsed $400M for Warner Bros).

And it looks like 2018 is shaping up the same way, with Disney films (led by Black Panther, Avengers: Infinity War, and the Incredibles 2) so far comprising five of the seven top films of 2018.

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One company to rule them all. Photo by Kenrick Mills on Unsplash

This dovetails with my earlier points about changes in moviegoing behavior due to increasing ticket prices. Since high prices and cheaper entertainment options are reducing the number of trips people make to the movie theater, those visits will likely be reserved for movies that benefit greatly from being seen on a big screen. That means that the only movies that many will consider worth the ticket price will be visually impressive spectacles, sequels, or films from popular franchises — and Disney arguably controls the most profitable examples of all three with films from the Marvel Cinematic Universe, Star Wars, Pixar, and its own animated films and live-action remakes. And with Disney’s purchase of 21st Century Fox, even more Marvel properties will fall under its control — including the X-Men, Deadpool, and almost certainly the Fantastic Four — which should keep the Marvel Cinematic Universe humming for years to come.

This spells big trouble for independent theaters, as well as any movie that isn’t a big-budget, star-filled, visual extravaganza. If your movie is primarily about people talking to each other, it’s increasingly difficult to justify why viewers should go through the hassle of leaving home and buying expensive tickets for a movie they could enjoy at home on-demand in a few months, or even earlier via digital rental or Redbox. And even if an independent theater does get the next Marvel or Star Wars movie, wouldn’t you rather watch it on a bigger screen with better sound and stadium seating? These days, going to an independent theater feels more like a donation to a good cause or a moral stance than a good way to see a movie.

Sure, services like Netflix and the iTunes Store have made it easier than ever to see small films and documentaries. Netflix and Amazon have also been aggressive with producing their own films or buying them from film festivals. While it’s great that Netflix and Amazon are providing another way for independent filmmakers to get paid for their work, being streamed doesn’t match the visibility, promotional push, or profit potential of a successful theatrical run. And since Netflix doesn’t release viewership figures for any particular film or show, a strong showing on Netflix doesn’t create the kind of buzz a high per-screen average or top 20 chart placement would provide.

By subsidizing ticket prices, MoviePass might have been a godsend to independent movies and theaters, putting more butts in seats for smaller movies that don’t need to be experienced on a large screen. MoviePass has also been aggressive about promoting independent movies to its users, even if that might have more to do with the service making it nearly impossible for users to see hot studio releases in their opening weekends. A few weeks ago, MoviePass claimed (without offering proof) that it was responsible for 12 percent of ticket sales for RBG, the documentary about liberal Supreme Court justice Ruth Bader Ginsburg, which at the time totaled about $13.5 million. If true, that means MoviePass contributed more than $1.6 million to the makers of RBG, its distributors, and independent theaters, a significant amount for a movie that only played in about 400 theaters across the country. Unfortunately, this was money that MoviePass’ shareholders would never see — and they’re pissed about it.

The future of movie theater subscriptions

I can remember the precise moment MoviePass died for me, as I tried over two nights to use the app to see Marvel’s Ant-Man and the Wasp. The first time, the app told me I would have to pay a “peak” pricing surcharge for the late screening, despite the app showing that the theater was nearly empty. (MoviePass later told me via Twitter that peak pricing was determined by region, not a specific theater.) The next night, I found a non-peak showtime. But after arriving at the theater and successfully checking in on the app, I discovered that my show was wrongly listed as a regular screening. It was in fact a more expensive IMAX screening not supported by MoviePass. Frustrated and furious, I canceled my subscription on the spot.

But I didn’t just go home or buy a full-price ticket. Instead, because I was in an AMC theater, I signed up for AMC’s Stubs A-List, the theater chain’s recently launched MoviePass competitor which offers three movies a week for $20 a month. In addition to covering premium screenings like IMAX, 3D, and Dolby Cinema, A-List allows you to book tickets in advance, has no peak pricing, is available for any film at an AMC theater (even big films on opening weekends), and allows you to see multiple movies on the same day, or the same movie repeatedly. These are all features MoviePass lacks or only offers at select theaters, though it’s hard to know what MoviePass allows at any given moment these days since it seems to change the rules from week to week, and sometimes even shuts down completely. A-List works great for me since the AMC theater near my house is the main theater I go to for movies on the big screen, and it also provides free validated parking. Yes, $20 is more than $10, but I feel like I get much more for that extra $10. And since I live in an expensive city, seeing just one IMAX movie or two standard screenings a month means I’m already saving money.

With A-List, AMC is hoping that users follow the gym membership model, which is only profitable if a significant percentage of users don’t take full advantage of their membership — and it seems like AMC has a good chance of making that work. The average movie ticket costs $9, so most users would have to see three movies a month to begin saving money, something many people don’t have the time or interest for. AMC is also hoping that subscribers will use any savings — or the perception that their prepaid tickets are “free” — as a reason to buy more concessions, which is where theaters make the bulk of their profits anyway. (A-List also provides a small discount on snacks.) So far, AMC has been delighted with the response to A-List, reporting more than 260,000 subscribers in the seven weeks following the service’s launch. Cinemark, another large theater chain, has gained over 350,000 subscribers for its less ambitious $9-a-month plan.

AMC, as America’s biggest theater chain, has the benefit of economies of scale to even out cheaper theaters with more expensive ones, heavy users with less frequent ones. It also has more data to show that A-List will be profitable in the long run. The service seems to be addressing many of the same problems MoviePass did, which should be good for both AMC and movie fans. I wouldn’t be surprised if more theaters started offering services akin to A-List, adjusted for the number of theaters they have, their location, and the kinds of movies they show. Some individual theaters or small chains currently offer memberships that provide a few perks and small discounts, but they will need to get more aggressive to survive against the cheap, always-available, high-quality competition that is also vying for (and more often winning) our finite attention.

MoviePass is now a parody of itself that could be gone by the time you read this, but it has shown that people will go to movie theaters more if you offer them a better deal.

And perhaps some intrepid company with a better business model and less antagonistic attitude will attempt to replicate MoviePass’ offering of multiple theaters and chains. Hopefully, unlike MoviePass, this future company will also provide a clear set of rules that benefits the company, theaters, studios, and moviegoers alike. Many of the rules MoviePass eventually implemented, like only being able to see a movie once or having to wait a few weeks to see popular movies, weren’t necessarily bad — they just weren’t what was initially promised, leaving customers feeling cheated and betrayed.

Napster failed, but it opened the door for the iTunes Store, which allowed record labels to survive as they raised album prices in the face of declining physical sales and free illegal downloading. It necessitated a reluctant, painful change in the music industry, but the music industry still exists today as a result.

MoviePass is now a parody of itself that could be gone by the time you read this, but it has shown that people will go to movie theaters more if you offer them a better deal. At the same time, subscriptions provide theaters with a regular, predictable revenue stream, much like music streaming services do for that industry. I hope more theaters adopt the subscription strategy before it’s too late, and that history remembers what MoviePass did. It would be a great loss if movie theaters went away, since they are one of the few remaining places in our society where strangers can get together to share a communal experience.

MoviePass is dead. Long live MoviePass.

Written by

Creator of ReThink Reviews, covering the intersection of movies, politics, and current events. Gentleman farmer, tech enthusiast, woodworker. And. More.

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