Startups: Can MoviePass survive?
Silicon Valley has always been “a hotbed of fast-growing yet unprofitable companies,” said Kevin Roose in The New York Times. It took Airbnb a decade to post a profitable year, and Uber and Snap both continue to lose billions of dollars. But “the smell of burning cash” has been spreading beyond California, and right now “the buzziest money-loser” is New York–based MoviePass. The startup offers $9.95 monthly subscriptions that allow members to see one movie per day at theaters. MoviePass pays cinemas full price for every ticket, and with that price averaging $9 nationally and regularly hitting $15 in big cities, going to just two films a month makes it a good deal—and a loss for the company, which is reportedly burning through nearly $22 million a month. Even in an industry renowned for big spending in pursuit of growth, said Jordan Weissmann in Slate.com, MoviePass’ business model appears to consist “of creatively lighting money aflame in order to subsidize the moviegoing habits of some 3 million customers.”
If MoviePass seems “too good to be true,” said Ben Fritz in The Wall Street Journal, that’s because it is. But executives say the core business was always designed to “operate at a loss.” The long-term strategy is to leverage the booming user base—which is on track to reach as many as 6 million people by the end of the year—to sell ads. MoviePass’ trove of customer data could be incredibly valuable, said Eddie Yoon and Erich Joachimsthaler in Harvard Business Review. In the age of Netflix, “going to the movies is less about the movie itself, and more about the total experience.” If MoviePass can figure out what makes some people still want to go regularly to the cinema, the company will be able to help movie studios and theater owners design a more optimized experience—from trailers to movie “extras” to the concession booth.
Perhaps, said Chris Lee in NYMag.com. But after Facebook’s privacy fiasco, tech companies need to be extraordinarily careful about how they use customers’ data. MoviePass alarmed many tech journalists this spring when it divulged that it “not only monitors subscriber locations” but also “tracks users to and from the theater” to see whether they grab a meal or go home. MoviePass has since assured users that it doesn’t share that data with other companies; even so, some people may not consider the tracking a suitable trade-off. Like it or not, MoviePass “is the future—even if it doesn’t survive,” said Alissa Wilkinson in Vox.com. It has shown that “given a subscription model for tickets, people are more likely to go to the theater.” And that suggests “the real need for change might lie with the movie theater business itself.” ■