Moviepass Changed User Passwords So They Couldn't Use The Flopping Service

from the giant-mess dept

Originally, the Moviepass business model seemed like a semi-sensible idea, though we were quick to wonder if it would ever actually make a profit. Under the model, users paid $30 (eventually $10) a month in exchange for unlimited movie tickets at participating theaters, provided they signed up for a full year of service. There were of course caveats: you could only buy a ticket per day, and could only buy one ticket per movie. It also prohibited users from viewing 3D, IMAX, or XD films. Still, the proposal was widely heralded by some as a savior for the traditional, brick and mortar, sticky floor movie industry.

While it looked like the effort was going well, that appears to have been a ruse. A four month investigation by Business Insider (warning possible paywall) is well worth a read, documenting how the effort was bleeding money due to many of the issues Mike asked questions about back in 2012. The outfit went to great lengths to mislead investors that the effort was going well when it was really losing millions of dollars after blowing a fortune on trying to build technology that could easily and quickly geo-match users with theaters in their neighborhoods.

A 2017 price drop to $10 per month resulted in all kinds of breezy press coverage, but all but ensured the project would never make money. In reality, the outfit was struggling so much it couldn't even keep pace with the demand for membership cards:

"The company was overwhelmed by its overnight success and couldn't keep up with demand. A quarter-million new subscribers were signing up every month, and MoviePass customer-service lines were flooded with complaints from people who had been waiting weeks for their cards. MoviePass had lowballed the number of cards it would need after the price drop. It got to a point where the vendor making the MoviePass cards didn't have enough plastic and had to call on its competitors to fulfill all the card orders."

But way more interesting perhaps is some of the super sketchy practices the company engaged in to try and keep up the illusion of success. Like arbitrarily changing user passwords so they couldn't actually use the service they paid for:

"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."

Users on Reddit thought the errors were just another glitch. In reality, they were just being blocked from using a service they'd paid for by an imploding company that was losing at least $40 million every month by the end of July 2018. It's all another lovely example of executive incompetence, and the giant chasm that often exists between the illusion of success and actual success, especially for companies that prioritize splashy parties and marketing over fundamentals like basic customer service.

Filed Under: movies, passwords, subscription pricing
Companies: moviepass


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  • icon
    Anonymous Anonymous Coward (profile), 19 Aug 2019 @ 1:47pm

    We dug the hole, but got no dirt

    Why isn't the question...why? If they were losing that much money, there seems to be little opportunity to make the payoff. If they were skimming off the monthly fees, and adding that to their $40 million a month of losses, the actual money to purchase tickets had to come from someplace. Were investors still pouring money in? Ponzi doesn't even seem to work.

    reply to this | link to this | view in chronology ]

    • identicon
      SirWired, 20 Aug 2019 @ 2:20am

      Re: We dug the hole, but got no dirt

      They sold billions and billions of additional shares. To the point where an investor who dumped in $1M when Ted Farnsworth was appointed CEO, you'd have about enough now to buy a bottle of come from a reasonably-priced vending machine, because the shares have been so impressively diluted.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 20 Aug 2019 @ 7:31am

      Re: We dug the hole, but got no dirt

      They were cargo-culting venture capitalist monopolism of taking a large loss leader to establish an unchallenged position and then make the money back later with their secure position.

      Aside from the "getting paid even if they fail" scam aspect some sort of poorly considered law fiscal shenanigans where every dollar lost to investors that way earns greater than a dollar in tax benefits to investors.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Aug 2019 @ 1:56pm

    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.

    Wait... so the company still had to pay the theaters for every visit? If they were able to "pay it forward" then the only place anyone would lose out was when a showing was at capacity and those who couldn't get in didn't see sometime else/something else.

    If they actually had to pay the theaters for each visit, there was no way this scheme could ever make a profit, and their biggest customers would also be their biggest enemies. There'd be no incentive to use the service, and no incentive for them to fulfill their contract obligations.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Aug 2019 @ 2:24pm

      Re:

      Wikipedia says:

      Subscribers to MoviePass are issued a branded prepaid debit card. Using the MoviePass mobile app, users check-in at a supported cinema, and select a film and showtime occurring within the next 30 minutes; the card is automatically loaded with the amount of money needed to purchase a single ticket from the cinema for that film. The user then purchases their ticket as usual, using their MoviePass card as their payment method.

      That makes me think the restrictions would have been ineffective. What stops me from lying to Moviepass about what movie I'm seeing to bypass the per-movie limits, or even paying the extra for IMAX/3D and charging the remainder to my card?

      And yes, it's as dumb as it sounds: they had no deals with theaters, no special technology, and were simply transferring cash for each ticket. You give them $10/month, then they pay the full ticket cost (about $10) every time you see a movie. To be fair, money-losing companies are sometimes successful in Silicon Valley. People have speculated it was an attempt to form a monopsony and squeeze some kind of deal from theaters.

      reply to this | link to this | view in chronology ]

      • icon
        James Burkhardt (profile), 19 Aug 2019 @ 2:54pm

        Re: Re:

        You chose your movie on the card, and they filled the exact amount to the card. So if you charged too much, the debit card would deny the transaction.

        You could lie about what movie you went to and what time the film was for if it cost the same amount, but largely the question would be 'Why?'.

        You definitely couldn't charge IMAX/3d/DBOX/whatever, as that amount wouldn't be on the card.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 19 Aug 2019 @ 3:27pm

          Re: Re: Re:

          the guy mean to pay the extra on an actual debit card. $3 or however much to upgrade normal to DBOX etc.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 20 Aug 2019 @ 7:54am

            Re: Re: Re: Re:

            Yeah. Logistically it may be easier with exact cash, because cash registers automatically apply the balance when dealing with a debit card.

            reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 20 Aug 2019 @ 7:56am

          Re: Re: Re:

          You could lie about what movie you went to and what time the film was for if it cost the same amount, but largely the question would be 'Why?'.

          Because of two restrictions:

          • popular new releases were sometimes locked out
          • you couldn't see the same movie twice

          (Also, if the theater's willing to pre-sell tickets days in advance, you could bypass the one-per-day limit.)

          reply to this | link to this | view in chronology ]

    • icon
      Gary (profile), 19 Aug 2019 @ 7:10pm

      Re:

      Wait... so the company still had to pay the theaters for every visit? If they were able to "pay it forward" then the only place anyone would lose out was when a showing was at capacity and those who couldn't get in didn't see sometime else/something else.

      This is the thing. For MoviePass to work they Needed some sort of deal with the theaters. Selling empty seats would have been a brilliant win-win for everyone!

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 19 Aug 2019 @ 7:58pm

        and it was too easy to duplicate

        Regal Unlimited
        AMC Stubs A-List

        as examples. No need for Moviepass as middle-man

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 20 Aug 2019 @ 7:51am

        Re: Re:

        For MoviePass to work they Needed some sort of deal with the theaters. Selling empty seats would have been a brilliant win-win for everyone!

        Except possibly MoviePass. What are they bringing to the table except an easily-copied idea? ...which has now been copied by the theater chains. It's slightly worse for customers to need separate releationships with each chain, but really, how many people rotate between several mainstream theaters? They're all showing the same stuff.

        reply to this | link to this | view in chronology ]

    • icon
      Mike Masnick (profile), 19 Aug 2019 @ 11:59pm

      Re:

      Wait... so the company still had to pay the theaters for every visit?

      Yes, the way they "bootstrapped" this was that MoviePass paid each theater full price for every ticket, though they wanted to make deals with the theaters.

      If they actually had to pay the theaters for each visit, there was no way this scheme could ever make a profit, and their biggest customers would also be their biggest enemies.

      The thinking behind this was that there were ancillary opportunities here -- and those weren't necessarily crazy ideas. Among the points they raised was that they could help fill emptier theaters by driving people to certain showings. Or (the most compelling) pitch I heard was that they would have tremendously useful data and could sell some of that data, but more importantly, could help drive movie watchers to certain movies in certain locations at certain times -- all of which could be valuable to theaters and studios. But to pull it off required... a lot more competence.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Aug 2019 @ 2:26pm

    It was a Pipe Dream doomed to fail

    There was no rational way for this company to ever turn a profit. They kept hoping that someone would come in and buy them out and never worried about the impossibility of being viable long term. I never subscribed because honestly, I expected them to fail within the first five months. Idiots keep funding them though so they are still taking money to pretend that their service has a future.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Aug 2019 @ 2:27pm

    So is it safe to assume the company will be completely dead and buried before the fines and lawsuits for fraud start rolling in?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Aug 2019 @ 2:41pm

      Re:

      Who knows? Uber loses billions of dollars a year, and they're still around (evidently just trying to stay alive until self-driving vehicles let them fire all their drivers). Some money-losing companies have little trouble finding investors.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 19 Aug 2019 @ 3:10pm

        Re: Re:

        “Self driving vehicles”

        Need mechanics and people to program things.

        They aren’t going to last even with that something tells me.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 20 Aug 2019 @ 7:59am

          Re: Re: Re:

          Need mechanics and people to program things.

          They just laid off a large group of programmers, and they'll only need mechanics if they own the cars. If they let ordinary people enroll their own self-driving cars, those people will pay for the maintenance (and like current Uber drivers, underestimate the amounts needed).

          reply to this | link to this | view in chronology ]

  • identicon
    bob, 19 Aug 2019 @ 3:39pm

    Moviepass Changed User Passwords So They Couldn't Use The Flopping Service

    Yeah the mer-people were pissed.

    Just wait till the company kills the flipping and flapping services. That's going to be a nightmare.

    reply to this | link to this | view in chronology ]

  • identicon
    Glenn, 19 Aug 2019 @ 4:55pm

    Sticky floors? If only...

    One expects sticky floors, expensive concessions, and even problematic parking at times. One does not expect bugs and rats and worse that get swept under the carpet and behind the curtains.

    If you really love to watch movies--in comfort and even for less money, then you'll subscribe to every movie channel on cable and some movie streaming services.

    Or just save your money--and time--for things of more value.

    reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 19 Aug 2019 @ 7:27pm

    Deliberate malice is not 'incompetence'

    In reality, they were just being blocked from using a service they'd paid for by an imploding company that was losing at least $40 million every month by the end of July 2018. It's all another lovely example of executive incompetence,

    Uh, no. Incompetence would be if they rolled out a new build for the app and it ended up screwing with random user passwords. Deliberately changing the passwords of specific 'heavy users' to prevent them from using the app that they paid for is straight up fraud.

    Had they released a statement that the service was struggling and as a result they were going to have to change the terms to something like 'get a ticket once a week' rather than 'get a ticket once a day' then that would have been once thing, but they weren't even honest enough for that and decided to, as far as I can tell without telling the users, restrict certain members of them from using the service that, and I can't emphasize this enough, they were paying for.

    reply to this | link to this | view in chronology ]

  • icon
    techflaws (profile), 19 Aug 2019 @ 9:40pm

    "With Mitch it was just, 'F--- those guys.'"

    who used their product as intended (and expected by anyone else but the executives).

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 20 Aug 2019 @ 11:24am

    I was paying MoviePass about $45 a month at the time as the price had gone up not long before where I was paying around $35 a month. It was still worth it as I was watching 2-3 movies a week. So it was like a 50% discount. Say $10 a movie. But being to go at any time meant I could go to the more expensive later shows which cost more. So prices are really in the $10-$15 range. Say 10-12 movies a month. You do the math.

    Then they dropped it to the $9.95 a month price, and I was like, hey, great. I didn't change my movie habits. But I had MoviePass for a number of years at the higher price point. Then it dropped down to that $9.95 price and I was like, cool, this is great. Now it's only costing me 1/4 of the cost every month!!! Now sure how they could afford prices like that, but hey, I'll take advantage of it while I could. Personally, I'd be happy if it was $19.95. That would still be a great deal. At $9.95, 1 Ticket could be a bit more in price and now they're already losing money. It never made any sense to me.

    reply to this | link to this | view in chronology ]

  • icon
    Get off my cyber-lawn! (profile), 20 Aug 2019 @ 2:59pm

    I'm no lawyer...

    but ordering employees to change passwords to prevent users from getting their paid for service sounds suspiciously like conspiracy to defraud!

    reply to this | link to this | view in chronology ]


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