Netflix Co-Founder’s Crazy Plan: Pay $10 a Month, Go to the Movies All You Want

As movie theaters struggle with tepid sales, Mitch Lowe has an extreme proposal for how to get more people into seats: Let them come to all the showings they want for about the price of a single ticket each month.

Lowe, an early Netflix Inc. executive who now runs a startup called MoviePass, plans to drop the price of the company’s movie ticket subscriptions on Tuesday to $9.95. The fee will let customers get into one showing every day at any theater in the U.S. that accepts debit cards. MoviePass will pay theaters the full price of each ticket used by subscribers, excluding 3D or Imax screens.

Crazy idea for sure. No idea how they would really make money off of this considering if someone were to go to the movies twice in a month they’d already be losing money. Like the concept, but I do think it’ll take more than this for people to start going back to the movies.

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According to Variety, ~250mm people went to the movies once per year in the US and Canada combined for 2015-2016. That's basically just 1 ticket * 250mm, and let's say the US / Canada average movie ticket price is $15. Imagine if you could get even 50mm people to sign up for the plan - that's $10 * 12 * 50mm. Not so crazy anymore, I think. Add the money they'll make from people buying popcorn, soda etc. every time they go to the theater versus the one time they go per year and I think it could indeed be a lucrative opportunity. And how many people will sign up and never go?

This is a ridiculously simplified example, but I think it illustrates what he's trying to prove: the low-cost subscription market can be far more lucrative than hoping to convince people to pay $15 for a blockbuster that will, in all likelihood, suck.

in it 2 win it
 

This assumes that people don't change their movie going behavior under the subscription model, which they certainly will. Additionally, the ones who will subscribe are likely the ones who attend the movies very often anyway. Then you go on to assume these people will purchase popcorn and soda on a consistent basis. Your scenario doesn't seem realistic.

p.s. actually I read the OP further and the company doesn't seem to receive any revenue from concessions...

Array
 

You say "certainly will" but clearly someone with better information doesn't agree with you, else they wouldn't be lowering the price this far, and the same goes for "likely the ones who attend the movies very often anyway" - you have no information to prove that. In fact, you're making more assumptions than I am since my point is that all things remaining as they are, they're opening up a form of recurring revenue and increasing exposure to their concession stands. I'm not sure why you would forecast everything to backfire.

in it 2 win it
 

Unfortunately the one piece of the puzzle your simplified math leaves out is what price MoviePass is paying for those tickets. As it has been described, they are responsible for paying the theaters for each ticket that is used by their subscribers. With that said, it is assumed they will be offered the tickets at a subsidized price, but it is hard to imagine that it is less than half of the average ticket price (~$9), which would imply that this business will lose money.

 

The biz would definitely lose money. They are admitting that and saying the real money is getting data on their members' viewing patterns.

p.s. AMC is, for some reason, considering suing them to not allow this to happen.

Array
 

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