(Bloomberg) -- You might think I’m personally trying to bankrupt MoviePass. In the month since I subscribed, I’ve seen six Oscar-nominated movies on the subscription service’s dime.
(My ranking so far from best to very good: Three Billboards Outside Ebbing, Missouri; Lady Bird; I, Tonya; Darkest Hour; Get Out; Dunkirk; The Post; The Shape of Water; Phantom Thread. By some accounts I’ve saved the best for last. I still need to see Call Me by Your Name, and I’ve heard great things about the Florida Project.)
To date, I’ve paid MoviePass exactly $9.95, which was the monthly subscription fee before last week’s $2 price cut, and I’ve already seen $80 worth of movies. The company gives you a debit card and simply restricts you to one movie per day.
Anecdotally, subsidizing movie tickets seems to be popular with consumers. When I saw Shape of Water in San Francisco, the people buying tickets before and after me both whipped out MoviePass’s distinctive red debit card. The company has more than 2 million subscribers, and I’m not the only one tearing through the Oscar contenders. They represent about half of MoviePass ticket purchases.
Normally, I’d rail about the upside-down unit economics. As I’ve written before, charge someone $1 for something that’s worth $2, and, well, people will take that deal all day. They’ll make it up in volume, they say.
For some context here, MoviePass believes its path to profitability is three-pronged: sell data, take a cut of concessions and use the network to get tickets from theaters at a discount. The company is currently playing hardball with AMC in order to extract a 20 percent cut of sales from concessions and $3 per ticket it buys. Adam Aron, the chief executive officer for AMC Entertainment Holdings Inc., said, “AMC has absolutely no intention, I repeat no intention, of sharing any—I repeat, any, of our admissions revenue or our concessions revenue with MoviePass.”
What the movie theater business may soon realize is that this is a real, exciting attempt at disruption. And it could actually work—if MoviePass doesn’t run out of money in the process.
For me, MoviePass is usually competing with watching Netflix, listening to Audible or playing Overwatch. That may reflect my particular single, millennial lifestyle. But I do think it speaks to movie theaters’ real competitors: increasingly sophisticated TVs and sound systems.
And one important point: When I’m going to the movies Friday nights with my friends, I typically want to buy a reserved seat in advance—something you can’t do with MoviePass. I use the service when I wouldn’t normally have seen a movie, when I just have a Tuesday night free and am debating what to do. It’s increasing trips to the movie theater, not replacing them.
What MoviePass is doing is particularly interesting in light of a pronouncement by—yes, I’m going to turn the conversation to Uber for a minute—Dara Khosrowshahi. At a Goldman Sachs conference this week, the Uber Technologies Inc. CEO said, “Cars are to us what books are to Amazon.” He said he could see Uber running a city’s whole transportation network in five years. He wants a cut of every dollar you spend getting from “point A to point B.”
Uber and Lyft Inc. are getting extra money from me because of MoviePass. The service encourages me to go out more, and that’s good for ride-hailing startups, movie theaters and the San Francisco economy. And maybe MoviePass deserves a piece of all of it.
You can imagine a time when real-world spending is attributed much like online advertising. Advertising networks get credit for actual purchases they drive. Why shouldn’t MoviePass receive a reward for luring people out of their houses? You could see how MoviePass could cobble together a profitable business. Take a cut from Uber, from AMC and from the restaurant next to the theater. Otherwise, consumers might just stay home.
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