MoviePass business model is a subscription-based all-you-can-eat service for movies. The original idea was that the users would watch as many movies as they wanted, at any movie theater in America, just by paying a mensal fee.
However, Moviepass business model was a struggle since its foundation, back in 2011, and did not survive for long. MoviePass’s last years were a complete mess, that ended at the beginning of 2020, when it shut down permanently, liquidated in bankruptcy.
How MoviePass used to (try to) make money
The idea of MoviePass was to profit from several revenue streams: subscription fees, advertising, user data, and sales by distributors. When Helios & Matheson acquired the company, the focus was on data, which was already their product.
That’s why MoviePass opted for that inexplicable reduction in plans’ price to $9.95: the greater the volume of users, the greater the volume of data for commercialization.
This strong client base would also allow for better agreements with the major chains, increasing the income from concessions, in addition to the possibility of creating their own content – their own studio – which would also share space in the movie theaters of the major players.
But, truth be told, MoviePass actually didn’t find out how to make money! And, when the new big entrants came into the market, that was the last straw.
MoviePass Business Model Canvas
Let’s take a look at the Moviepass business model canvas
- Customer Segments: moviegoers, film enthusiasts, studios, movie theaters, and distributors – the last ones, mainly when it switched the business model to selling data.
- Value Proposition: to watch as many movies as one wanted in the theaters at a fixed monthly fee. Later, when it focused on data, it was an easy and simple source of information about customer preferences.
- Customer Relationship: invite-only launches, FAQs, customer support, and the rating system about movies and theaters, for customers to rate their experiences.
- Channels: mobile app, website, App Store and Play Store, MoviePass card, social media, advertising, etc.
- Key Activities: operations, customer care, platform development, agreements with movie chains and theaters, data collection and analysis, and others.
- Key Resources: the platform, contracts with American movie chains and theaters, customer preferences information and data.
- Key Partners: parent company (Helios & Matheson), MasterCard, movie chains and theaters partnerships, affiliates.
- Cost Structure: tickets with discount, customer service, product development, card fees, legal, administrative, and IT infrastructure, staff, etc.
- Revenue Streams: subscription fees and sale of data.
How MoviePass Used to Work
As said before, MoviePass was founded in 2011, by Stacy Spikes, who became the company’s CEO. His purpose was to modernize the movie industry, by changing spectators’ experience, through a subscription business model that would attract crowds to American theaters.
The initial business model was quite simple: the subscribers would pay mensal fees between $29 and $34, according to their locations, to be entitled to watch a movie (2D) per day of the current month.
Before its bankruptcy, the subscription plans were divided into three options, and their prices depended on the subscriber’s city:
- $10 to $15: selected movies at specific times;
- $15 to $20: any 2D movie anytime;
- $20 to $25: unlimited access and some IMAX, 3D, and similar option included.
When the user subscribed, they would receive a MasterCard, linked to their account and operated via smartphone. When the subscriber was 45 meters away from a movie theater, they could check the sessions available on their cell phone application, load the ticket price on their card and buy it at the ticket office as if using any debit or credit card.
Nevertheless, if the idea seemed promising, its history didn’t prove to be.
MoviePass’s Brief History
The subscription service trial was released in San Francisco city and quickly reached 20,000 users. However, MoviePass hadn’t worked out all the details with the major movie theater chains until the time of launch. For this reason, movie theaters rejected Moviepass’s users, causing significant discomfort right away.
The next year, 2012, a new version of the service was launched, but it kept being ignored by major American movie theater networks, such as AMC. But this rejection didn’t last more than two years. In 2014, due to the drop in the number of regular customers, the networks had to throw in the towel, and embrace Moviepass subscribers as their new audience.
In 2017, a new problem came up. MoviePass altered its subscription business model, aiming at the exponential increase of the audience: the monthly fees fell from $29 to $50 dollars (current price at the time) to only $9.95 as a single plan option. The service experienced growth of one million users in just four months.
However, then, MoviePass lost AMC, again. According to the chain, the new price was unsustainable. In addition, in the year following the price change, the platform began to fail, the sending of cards was delayed, the quality of the service left something to be desired and the service changed too often.
While in a month users would be able to watch a movie per day, in the next one, MoviePass would decide that would change to up only three within the current 30 days. Clients started to leave the subscription service and Helios & Matheson, its parent company in 2017, recorded losses of millions of dollars.
In 2018, MoviePass tried to pivot its business model for content production and witnessed yet another failure in its attempts. And to top it all, MoviePass had to face the entry of major competitors into the market, watching networks such as AMC and Regal launch their own subscription services.
The result: in July 2019, with only 225,000 active users – nothing compared to the former three million – MoviePass reported an indefinite suspension. And two quarters later, it shut down permanently.