For those who have never experienced it, MoviePass was a classic example of something that is too good to be true. In its early incarnation, customers paid $10 a month for a card that could be redeemed for one movie ticket per day, with tickets purchased in bulk from MoviePass itself. Considering the average cost of movie tickets is, you guessed it, around $10, this was a steal. How could MoviePass afford such greatness? Did they have deals with cinemas? Were they waiting to bargain with distributors?
No, they were just losing money. Big sums of money.
If you used your card to secure a ticket that cost MoviePass $16 to buy at the theater, the company lost $6 — and then another $16 every time you buy a ticket after that until early next month, when they would only lose $6 on the first ticket and so on. As part of a last-ditch effort to make up for the losses by increasing the number of customers who were suffering those losses, MoviePass further lowered the price of the service. Sure, they were losing money on every ticket sold, but they were making up for it in volume!
It’s hard to describe this situation as anything other than a scam – but it’s not clear who was being duped. Cui bono is always the question, and the answer in this case is whatever the Latin for “shrug emoji” is.
One way to think about it was that MoviePass was simply imitating the hottest player in the entertainment industry: Netflix.
Netflix was, for years, a money-losing beast, racking up subscribers while racking up loads of debt, all while offering people a deal that was, frankly, a little too good to be true. For $9.99 a month they could stream hundreds — no, thousands — of movies and TV shows at any time in high definition. The core idea of Netflix was, and remains, that people are looking for a buffet of content, and if you get enough of them to poke their noses into the streaming channel, you’ll eventually be profitable.
The problem with this theory isn’t that it’s wrong—Netflix has a lot of subscribers and a lot of subscription revenue—so much as that it has fundamentally devalued each individual work of art, reducing movies and prestige TV and reality shows to the slush of hashtag content. . Maybe Netflix is just the apotheosis of cable or HBO On Demand or any number of precursors, but what set it apart was its reach (huge) and cost to customers (low).
Of course, MoviePass and Netflix are based on fundamentally different business models. Netflix pays a flat fee for content it produces and licenses from other studios, rather than paying artists for each stream they generate. MoviePass must pay a unit cost for each ticket that its subscribers benefit from.
The MoviePass model doesn’t make sense for MoviePass, but it does make some sense theater owners. These businesses control the price of their tickets and negotiate with distributors and studios what is shown and where. Subscription services can be a reliable way for them to get their butts off the seats, and the people connected to those butts spend money on concessions. In fact, AMC, Regal and the Alamo Drafthouse chain have adopted similar plans offering monthly fees for access to everything in theaters. I myself have an Alamo Season Pass: for $19.99 a month, I can see a movie a day if I feel like it. (Whether there are enough in theaters worth seeing is a separate question.) If MoviePass failed as a business, and is likely to fail again, the company still changed the world of movies.
Perhaps theaters are hoping to serve as a kind of pre-release streaming service: charging patrons a flat fee that gets you big-screen access to everything showing in the theater during the (sadly shrinking) theatrical window, saving you money and trying to subscribe to a dozen different services hoping to catch everything as it appears on your home screen.
But this change could be disastrous for the world of theaters in the long run. By embracing the content model of MoviePass and Netflix, theater owners are quietly suggesting to audiences that the theater auditorium is akin to your living room, with the downside that not only do you have to drive there, but you also pay 20 dollars for popcorn and a soda.
Either what is happening in the cinema is special, or it is not. Theaters, and the larger entertainment industry, can’t have it both ways.