RW: MoviePass is Dying and That's Okay

Many of my readers wonder how I see so many new movies over the course of the year. Some assumed I had a deal worked out with a local theater or publication (I wish!), and others I'm sure believed that I paid full price or went to a lot of matinees. 

There are lots of ways to get movies for cheaper these days as theater chains fight for your business. Regal Cinemas has probably the best rewards program that has given me at least 20 free movie tickets across my lifetime, while Alamo Draft House has very cheap ($5.75) first showings on weekends. 

But ultimately the way I've been able to achieve so much movie viewing is MoviePass. 

And I'm happy it's dying. 

You see, MoviePass has actually been around for several years. Unbeknownst to the general public it was introduced in 2011 and I probably started using it sometime in 2015. Initially I thought it was the greatest thing since sliced bread. At one point in 2012 it was even called one of the "25 Most Disruptive Apps" by Business Insider. Now the general public knows about MoviePass because of their heavily publicized price-drop to just $9.95/month. Pay just the single price of a ticket -- even less in most places -- and you can see a movie-a-day! Little did many people know who they were "getting in bed" with. 

My experience with MoviePass has always been a frustrating one because of the insane amount of potential it always held. Even at a $45/month price point; the highest I ever paid for it. Understanding what it was trying to do, it truly could have revolutionized the movie industry and been the next Netflix, Uber, etc. But the company was and is stubborn. Some may argue that it already has revolutionized the industry with the introduction of AMC A-List, Sinemia, and the pending Alamo Season Pass (no word on what Regal is kicking up). There's also the argument that it's gotten a lot of people to see the "smaller" films -- probably the single most positive legacy it'll leave behind. In that regard, I'd agree that MoviePass started a trend others can't ignore, but I also think MoviePass had the potential to be the one that took it all the way. But alas, stubbornness. And dumb business decisions.

Probably not all that inaccurate

Traveling back to my first interactions with MoviePass, I was one of their most avid proponents. They were a small company back then (20K subscribers in December 2016) and despite some app quirks and really odd rules, I was excited for this new idea. Many people may be familiar with MoviePass Terms & Conditions because they change almost weekly these days and back then, while they weren't as frequent, MoviePass struggled to listen to the consumer (something you'll see is a common theme). Here are just a few examples of MoviePass making "improvements" to their app. These are all before the price drop. 

• 24 Hour Clock: this clock used to prevent you from seeing a film within 24 hours of one another. Arguably one that is more harmful to a film critic than the average consumer, this became the bane of my existence during my early months of MoviePass. Several times I argued with MoviePass representatives that this was effectively destroying their "movie-a-day" promise they advertised. If I saw a film on Friday night, it wasn't until Saturday night that I could go again, which often meant Sunday morning. Eager to help MoviePass become better, this was one I passionately advocated for. It was eventually removed (certainly by no doing of my own)
• Picture Verification: sometimes feeling like I was dealing with the police, MoviePass implemented one of their most damaging strategies ever when they asked consumers to take pictures of their tickets. Cumbersome, sometimes impossible to upload, and just awkward to do in a theater, the ticket verification process felt like your app policing you, rather than benefiting you. This process came and went several times -- each just as frustrating as before -- and is currently eliminated. For now.
• 1x Viewing: this particular rule I took less instance with, but it still went against their selling point and ultimately it leads me to ask, "Who the hell at MoviePass cares if I watch a movie a 2nd or 3rd time?". It was an odd rule that eventually went away, and is now back again for whatever reason -- likely to prevent 30+ viewings of Infinity War.

Meanwhile, here's a list of requests that not only myself, but many forums and company Facebook pages advocated for. Looking back now, these were free, crowd-sourced ideas handed to MoviePass on a silver platter which they seemingly chose to decline or not pursue. What's even more interesting is when someone says, "Yeah but maybe they did look into it and they just weren't possible" that I can do each of the below things with my Sinemia membership. 

• Advanced Ticket Purchasing: if I had to pick the single greatest feature that MoviePass never implemented -- the "game changer" if you will -- it would be this one. I also whole heatedly believe that this isn't unique to just me, the critic. Say you want to go see the newest Marvel film, those of which are more than often sold-out on opening night/weekend these days. With MoviePass you are (still!) forced to go to the theater same day and pick out your ticket. Here in Denver, and most of the state of Colorado, assigned seating is the norm, not the exception. Over the years I quickly learned that with my MoviePass I would be lucky to A) see some movies on opening day and B) sit next to my friends. Of course I discovered some "workarounds" but that's ultimately what led me to get banned from MoviePass for a brief time last year.
• Premium Formats/Partial Payments: again, something that exists in my Sinemia app is the ability to see premium format films, including RPX and IMAX. With MoviePass it blew my mind that there wasn't a feature to include your credit card information on the app, purchase an IMAX ticket, have MoviePass cover the usual $12.50, and your credit card cover the additional $5-6 dollars. Even if MoviePass had crafted a lesser ticket compensation for premium formats...say "We'll cover $10, you cover the rest", it would have been huge. Instead, "workarounds" had to be introduced anytime I wanted to see something on a bigger screen or didn't have a plain 2D format available to me.

Keep in mind that all of the above is BEFORE last year's dramatic price drop. MoviePass, before getting a ton of media attention and scrutiny, had the ability to hone their app, improve their service, and make something incredible. With their price drop, they captured a huge market share. And what have they done with it? They've let it wither away as the competition has had ample time to make all of MoviePass's shortcomings their strengths. Sinemia never even sent me a physical card and I still think their app is far better with only 3 films a month. Time can be fickle so we'll see if that's the case in several years, but for now, I'm generally happy and not much frustrates me with them.

Yeah. Pretty much...

This disgruntled rant begs the question: so why is MoviePass dying?

If you're one of the millions who signed up at the $9.95 price point thinking: "This is too good to be true!" that's because it is. Simply put, the obvious answer that most of us knew from the very beginning -- that a $9.95/month price point was unsustainable -- is turning out to be 100% the case. Partly because I'm a nerd and also because I love visuals, I decided to dig into the math and create a "model" of sorts. Obviously this model isn't perfect, and there are a lot of assumptions baked in. For example, it doesn't take into consideration anything outside the actual card-based business of the company. However Helios & Matheson's (owning entity of MoviePass) creates revenue based on MoviePass data is not factored into here, nor are any of the dealings with MoviePass Studios; their attempt at a real movie studio that has found mixed success to say the least. This model is a simple, straight forward way of analyzing the operating side of what MoviePass was doing with their original "Movie-a-Day" promise and understanding that it was a certifiably awful business move straight from the get go. 

In Table 1A you'll see a cross section of various customers for MoviePass based on a few monthly price points, some of which MoviePass has had before (i.e. $45, $10, etc.). Very quickly you understand that if I'm someone who sees more than 2 movies a month -- something I'd like to think is not a hard thing to do for the common subscriber -- MoviePass is already losing money at the $35 price point. For someone like me who's definitely used his MoviePass 5 times within a month, they've lost over $50 from me at their new price point (though I understand I see many more movies than most). Looking over at Table 1B, you'll see a fairly educated assumption of what percentage of their users are seeing a certain quantity of films within a month. This is based on CEO Mitch Lowe's recent statement that 85% of their users see 3 or less films within a month and I'd like to think I was generous with a 10% "No-See" rate which is ultimately the most profitable customer for MoviePass. 

Combining both of these tables and some additional analysis, we get Figure 1 which is a graphical representation of MoviePass' monthly net revenue across various monthly pricing structures. Again, certainly not perfect, but alarming as you begin to see that MoviePass' attempt to get more and more users is likely going to cause them more harm -- which we've seen in recent months -- than good. For some unknown reason they've been quoted several times as alluding to 5 million subscribers being the magic number where the company will turn around. In fact, it's likely they'll be more in the hole (by potentially $80 million/month) if that happens. 

So why go through all this trouble, you ask? I bring this partly as a sobering reality, but also as proof that there will be better options out there. Eventually. Looking at all of these figures, it's clear that a price point in the $20s is a workable model for both consumers and company. Once a platform that actually addresses some of the massive shortcomings of MoviePass launches, it'll earn the right to charge customers that little bit more with giving them roughly the same movie-going opportunities. 

You don't even have to take my word for it. Just take a look at Helios & Matheson's stock which went from trading at $2,400 per share in January to now just $0.02 per share. No, that's not a typo. That's a total plunge and it's largely because of A) how poorly they've been handling MoviePass and B) how much money they're losing on it. Just this year alone MoviePass has done the following, all of which show a company scrambling to survive, while leaving its customers suffering. 

1. "Digs" at AMC via social media often at inopportune times when they're experiencing issues
2. Re-introduction of ticket verification process, then removing it again
3. Surge pricing during popular movies at popular times. Introduced right around the date Infinity War released -- obvious opportunistic timing
4. Getting in hot water for tracking (and somewhat bragging) about how much it knows about its customers' pre and post show happenings based on their location data
5. Switching from any 2D movie, any day of the month to no repeat viewings, only 4 movies a month, and now only 3 movies a month. Still no IMAX, 3D, or RPX option available
6. As an apology of sorts, provided 3 free months of iHeartRadio subscription which literally no one asked for (or probably wanted)
7. Limiting times that people can see certain films
8. Limiting the films that people can see, often only 2-3 films released in recent weeks
9. Reversing cancellations of user's accounts after large system outages (including yours truly)

Many of MoviePass' woes came to a head the opening weekend of Mission: Impossible - Fallout when MoviePass completely ran out of cash, attempted to cover it up as an app tech outage, and left thousands of subscribers high and dry to buy a ticket for one of the summer's most anticipated (and best) films.

Since this complete outage, it seems that subscribers may have turned on MoviePass as many are cancelling their subscriptions, fed up with the constant Terms & Conditions changes and the complete lack of accountability. MoviePass has tried to save face with letters from the CEO and a restructure of their offerings, but it's likely too little too late. I'd even be willing to bet that MoviePass is officially done before 2019 rolls around. 

But MoviePass's death is okay. In fact, it's likely a positive thing for consumers in the long-term. Rather than having a disruptive technology like subscription-based movie-going be run by an ignorant and borderline abusive (to its customers) company, someone else will come along and get it right. I for one am excited on what the next MoviePass may be -- potentially it's Sinemia? -- and I'm glad that a company which has frustrated me so frequently will eventually become extinct.