Opinion: MoviePass Cuts Off Nose To Spite Its Face

In one fell swoop, MoviePass has managed to undo everything that was great about the service. Yes, it was in dire financial turmoil and in need of change to stay afloat, but changes in such instances normally occur in light of attracting new customers. In contrast, MoviePass seems intent on alienating its current user base and as quickly as it possibly can. Which is a shame as this solid user base was probably the only thing that could have saved MoviePass.

If reports are to be believed, the simple issue with MoviePass was the age-old cash flow problem. It was not particularly lacking in subscribers but what was being paid out the door was more than what was coming in the door. Which is where Peak Pricing came in. After all, it was those initial and costly first-run movies that were fueling the issue, and so in what many would consider to be a normal -- and almost savvy -- move by MoviePass, it launched a surge pricing strategy where those keen on being the first to see the latest Avengers, Spider-Man, or Mission Impossible movie would pay a premium to do so. No big deal. Those who are keen will likely be OK with paying the extra considering the benefits they get with their monthly plan in general. While those less interested in packed theaters and long queues will happily opt for a less prime time screening. All in all, a doable move by MoviePass.

But, then, within a matter of days of launching Peak Pricing the business went into absolute meltdown with Helios and Matheson Analytics Inc. - those behind MoviePass -- seeing its stock price literally falling off a cliff, mounting pressure from rising bills, and an emergency bailout from the U.S. SEC. Again, this was within days of the launch of Peak Pricing. To make the matter worse, and completely as a knee-jerk reaction to what was immediately happening, MoviePass unveiled the new MoviePass. One which no longer lets you see first-run movies during their opening two weeks, one which will introduce “additional tactics to prevent abuse of the MoviePass service” (whatever that means considering this is supposed to be an all-you-can-eat type of service and by definition - one to be abused), and an actual price hike in the monthly subscription price. Just for an extra kick in the teeth, MoviePass will also be continuing with its Peak Pricing model which based on customer comments on social media likely now means pretty much any decent showing of any movie you would want to watch will come at an added cost.

Again, yes, MoviePass was in dire financial turmoil and in need of changes to stay afloat, but what has been done here is essentially a gutting of the service as it was as it was replaced with a service which now charges you more each month, charges you more on a per-movie basis, and stops you from seeing the movies that people go to movie theaters to see in the first place. Now, this very well might be an ignorant viewpoint, but that does not seem like a long-term viable business model. Of course, some might argue that $9.95 was not a viable business model either (and it obviously wasn't), but don’t be misled here as MoviePass only dropped down to $9.95 per month last year. It was originally $15 per month, and seemingly as part of an attention and interest boost, the service slashed its price down to the $10 level. In reality, there was no need to do this, but those in control evidently thought it might be a good way to increase exposure, draw in new customers, and boost business. Looking back, they were right as it evidently boosted business well enough to almost bankrupt Helios and Matheson. Almost one year later to the day, and the price is now set to revert back to its old pricing, but for a lesser product to compensate for the losses. So yes, while $9.95 was not a viable proposition, nor is this move, as it’s one which only and directly affects its customers.

Speaking of which, the customers are arguably where Helios and Matheson missed the biggest play. As in the aftermath of the falling stock price and the service’s multiple blackouts, it was MoviePass customers who were standing up for the service on social media. With many making it clear they felt MoviePass was doing a good thing and offering real value for money. To the point where those same customers were stating they were willing to pay more to keep the business in business. To be clear, not just a little more, but a lot more with some of those same users stating they would happily pay $20 and $25 per month to continue to receive the same service they were already getting. That’s a minimum of double the revenue and almost close to triple the revenue currently being generated. Which highlights how MoviePass no longer understands what its customers want and how to monetize the service in a sustainable way - moviegoers are willing to pay a higher cost when there is value to be had. Up the value, and you can up the cost. But, to up the cost and decrease the value at the same time is not something that will continue to appeal to those who already spend more than they need to on seeing new movies.

The takeaway: MoviePass customers were the very thing that made this service as good as it was, and investing in them would have resulted in a more sustainable business model. Even more so if this investment had occurred a year ago. Instead, MoviePass opted to invest in cheap attention-seeking publicity moves like dropping the price to a sub-operational level in a bid to increase user numbers that would never equate to profit. Now, with the emergence of AMC’s monthly option, MoviePass will find it even harder to maintain the users it currently has, let alone attract new ones. All the landscape really needs now is for Regal Cinemas to follow suit and start up its own Edwards Theatres subscription service and it will be ‘roll credits’ time for MoviePass.

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About the Author
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John Anon

Editor-in-Chief
John has been writing about and reviewing tech products since 2014 after making the transition from writing about and reviewing airlines. With a background in Psychology, John has a particular interest in the science and future of the industry. Besides adopting the Managing Editor role at AH John also covers much of the news surrounding audio and visual tech, including cord-cutting, the state of Pay-TV, and Android TV. Contact him at [email protected]
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