The MoviePass Mess Has Finally Come To An End

from the dysfunction-junction dept

Moviepass is no more. The company’s all you can eat movie ticket business model never worked as advertised, and a letter to subscribers informed them that the service would be shutting down over the weekend. Users are supposed to be getting refunds without having to ask for them.

MoviePass initially seemed like it might be a plausible idea, though in recent months the company has been exposed for being aggressively terrible at this whole business thing. The service initially let movie buffs pay $30 a month in exchange for unlimited movie tickets at participating theaters, provided they signed up for a full year of service. But it wasn’t long before the company began hemorrhaging cash, something made immeasurably worse when it dropped its price point to $10 a month as part of a last ditch attempt to spur growth.

A bombshell Business Insider expose offered a stunning look at the company’s dysfunction, and executives’ interest in focusing on flashy marketing instead of fundamental business basics. Particularly entertaining was the fact that as things began to fall apart, company CEO Mitch Lowe thought it would be a good idea to arbitrarily change the passwords of heavy users so they couldn’t actually use the service as advertised:

“Lowe dreaded the company’s power users, those high-volume MoviePass customers who were taking advantage of the low monthly price, constantly going to the movies, and effectively cleaning the company out. According to the Motion Picture Association of America, the average moviegoer goes to the movies five times a year. The power users would go to the movies every day.

“Before Mitch came on it was, ‘How do we slow down those users?'” one former employee said. “With Mitch it was just, ‘F— those guys.'”

Per Lowe’s orders, MoviePass began limiting subscriber access ahead of the April release of the highly anticipated “Avengers: Infinity War,” according to multiple former employees. They said Lowe ordered that the passwords of a small percentage of power users be changed, preventing them from logging onto the app and ordering tickets.”

With that kind of “leadership,” it’s probably not too surprising that the effort fell apart. Granted the idea itself wasn’t terrible, and individual movie chains have since adopted it with some fairly decent success, something acknowledged in the goodbye letter to company subscribers:

“We still deeply believe in the need for the MoviePass? service in the marketplace, to maintain affordable access to theaters and provide movie lovers with choices of where to go to the movies. In August 2017, MoviePass? began a transformation of the moviegoing industry by introducing its low monthly price subscription service. Since then, others in the industry have followed our lead. Now, as a result of this transformation, movie lovers throughout the United States have the ability to see movies in theaters using subscription services at prices they can actually afford, albeit with limited choices of theaters using those services.”

SEC filings indicated that the company’s net loss ballooned from $7.4 million in 2016 to $150.8 million in 2017, in no small part thanks to the $10 Hail Mary price hike attempted by the outfit. And while the company says it has formed a new strategic review committee to explore ?strategic and financial alternatives? for the company, that likely means a bargain basement fire sale of the company’s remaining assets in short order. There’s also still that ongoing NY AG probe into allegations that the company misled investors as to the sorry state of the company’s financials.

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Companies: moviepass

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Comments on “The MoviePass Mess Has Finally Come To An End”

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Gary (profile) says:

Bad, or Criminal?

No business plan, failing to move forward, hemorrhaging cash. Kinda normal startup think.
But actually resetting passwords to lock out paying users seems like criminal fraud.

I’d like to think they had a real plan – co-op with the theaters to sell off empty seats cheaply or at a fixed cost. (Win Win!) That wasn’t going to happen with the big movie corporations stonwalling them.

Anonymous Coward says:

Re: Bad, or Criminal?

I’d like to think they had a real plan – co-op with the theaters to sell off empty seats cheaply or at a fixed cost. (Win Win!)

But would the theaters really win? What does Moviepass add that they couldn’t easily do themselves?

Also, aren’t movie tickets usually purchased within an hour of the start time? If so, they’ll have very short notice of the number of empty seats, and can really only offer those to people already near the theater (which means there’s little value to being in the same program with their competitors). If they knew far in advance that too many seats would be empty, they could have canceled the showing or lowered the price.

urza9814 (profile) says:

Re: Re:

I think it’s a bit more complicated than that.

Largely, I think the purpose of movies has changed. It used to be that TV shows were a short 20-40 minute story, where movies let you explore a longer, more complicated plot.

But these days people binge watch TV shows, and the shows definitely seem to be adjusting to that. Longer, more complex plots spanning the entire series (or multiple) without the need for the constant "Remember this from last episode??" reminder breaks. Often complex dramas are skipping the "Previously on…" setups entirely, using that time for a longer episode, and assuming that you’ll remember what happened last time because you literally just watched it. Granted, there’s always been simpler shows and more complex shows, but on average I think they’re getting far more involved. The crazy philosophical ideas used to be mostly in movies, but now it’s all on TV.

And in response it seems that movies are getting simpler. Every year another Avengers and another Star Wars, same story as last year — much like TV used to be the same basic story as last week.

But the budgets haven’t changed to match. Movies still have bigger effects budgets and higher cost stars. So they’re charging high prices to recover those costs, while not putting out any content that’s really driving people in.

The price is high, but it’s not like it’s totally insane compared to other ways of spending a night out. My girlfriend keeps talking about wanting to go see a movie, and I’ve got no problem paying for it, but every time we look at what’s playing we can’t find anything that either one of us really want to see. I’ll pay $20 a seat for a GOOD story, no problem. But if I’m going to see the fifth sequel of something I’ve never seen and I’m pretty much just going for the explosions and effects…I can get the same thing sitting at home watching the first Iron Man on my projector. I don’t care about these characters. I don’t care about this plot. So what the heck am I paying for?

Arioch (profile) says:

Just give me a minute to work this out.
They come up with a plan that allows dedicated movie goers to pay a fixed $30 a month to do what they always wanted to do, which was to watch movies in one of their venues and they start complaining?
What were they going to do.. announce that there are too many movie fans in this cinema, so we will not be screening this movie?

PaulT (profile) says:

Re: Re:

"What were they going to do.. announce that there are too many movie fans in this cinema, so we will not be screening this movie?"

What you have to remember is that this wasn’t the cinemas, this was a separate company that had deals with the cinemas. At $30/month, in some markets that’s only 2 movies/month before they start losing money compared to standard prices. Studios already take 55-75% (or more sometimes) of the ticket price, which is why concessions are stupidly expensive, cinemas make no money from the actual ticket. So, I presume, Moviepass would have to make up the shortfall for customers who went in cheap but did not make up the difference in concessions ( and nobody going to the cinema every day is going to spend full price on drink & popcorn).

It’s not that cinemas wouldn’t play the movie, it’s that they wouldn’t subsidise a special deal for their least profitable customers.

Anonymous Coward says:

I was on board with MoviePass when they first started up, I think in 2011. I was paying $35 a month to start and it had gone up to about $45 a month, and then it just dropped to the $9.95 a month. It was cheap and great at first when that happened, but got worse and worse.

I just signed up to REGAL’S Unlimited Movies. Cost is anywhere from $18-$23.50 a month depending on where you live. It’s costing me $21 a month. It only works at REGAL theaters unlike MoviePass that worked at basically any theater, so it’s like AMC’s service in that regard. I have one close by. The great thing though over MoviePass is that it’s UNLIMITED!!!! That means you can see more than 1 movie a day. You can see the same movie over and over again if you want. There is a 50 cent convenience charge per movie if you buy your tickets through the app. You can reserve up to 3 tickets at a time. If you buy your ticket that day at the theater, you don’t have to pay the 50 cent fee.

If you bring a date or friend, etc, you can buy more than 1 ticket, but the other tickets will be at normal price. You also get 10% off for any food drink you buy other than Alcohol. I’m sure I’m missing a few things. You download the Regal app and sign up through that. It’ll want to take your picture, and use that to know it’s YOU using that ticket. It shows your picture next to the QR code. Oh, if you want to see a 3D or IMAX movie, there’s a small upcharge, but you can at least do it. That was yet something else you couldn’t do with MoviePass. You also still get and can use your points you get spending movie on tickets and food and drinks. Every $1 you get 100 points I think. Which gets you free stuff.

I don’t have an AMC theater anywhere near me. But I do have the Regal Edwards Theater down a few blocks from me at the Mall. So this works out great. So maybe I can go back to watching a lot of movies once again.

bob says:

that fire sale is going to be hot!!!

And while the company says it has formed a new strategic review committee to explore “strategic and financial alternatives” for the company, that likely means a bargain basement fire sale of the company’s remaining assets in short order

Is that going to include a real fire for the insurance payout? Because at this point being in so much debt I wouldn’t believe they have any assets left.

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