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The rise and fall of MoviePass: how 'Netflix for cinemas' fell apart

Monday - 13/08/2018 09:16
After offering a movie ticket a day for less than $10 a month, the new company has experienced a string of financial setbacks
MoviePass, the discount service for movie tickets, is raising prices by 50 percent and barring viewings of most major releases during the first two weeks. (AP Photo/Darron Cummings, File)
MoviePass, the discount service for movie tickets, is raising prices by 50 percent and barring viewings of most major releases during the first two weeks. (AP Photo/Darron Cummings, File)

Last week, industry trade Deadline broke the news that Bruce Willis had signed on for a key role in the upcoming crime thriller 10 Minutes Gone. The logline – guy loses memory, must piece it back together before getting offed by mob boss –makes it sound like any other high-concept genre piece, but the real headline comes from behind-the-scenes. 10 Minutes Gone is the first production fully undertaken by MoviePass Films, a studio-minded arm of the much-buzzed-about online ticketing service. MoviePass facilitated the distribution of fact-bending heist caper American Animals earlier this summer, and sank some of its own capital into the calamitous mobster biopic Gotti as well as little-seen sorority slasher The Row, but Willis’ latest project marks their debut as a fully independent project.

For a fledgling company founded as recently as 2011, this should be a new benchmark of success, irrefutable proof that MoviePass can throw their influence around and run with the big dogs. It should be the next level that any growing business would shoot for. But as dozens upon dozens of dumbfounded articles have stated in increasingly incredulous terms, MoviePass is not just any growing business. A deal that sounded too good to be true was revealed to be just that, and now a stream of calamitous internal reports along with mixed-up missives to the subscriber base paints a picture closer to the decadent final days of Rome. Nero fiddled as his empire burned; MoviePass will assemble a high-concept Bruce Willis movie.

The concept is simple enough that enterprising types might wonder why they didn’t think of it first. In exchange for a single monthly fee, MoviePass users could go see one movie per day in theaters, free of any point-of-service charge. Subscribers received a debit card in the mail, which would then be “activated” via a smartphone app once they’re in proximity of their chosen theater, and used like any other card while MoviePass would reimburse the full price to the vendor. There were some restrictions; the service couldn’t be used to buy tickets for anything but day-of showings, and because the purchase couldn’t be made until a user arrived at the theater, getting barred from sold-out shows wasn’t all that uncommon. But the numbers were undeniable. MoviePass has cycled through a few different price points, from $50 to $30 to $10, the last of which triggered an explosion of popularity when implemented in August 2017. For city-dwellers subject to $16 ticket prices, hopping aboard the MoviePass train was a no-brainer.

Once the public realized that MoviePass paid for itself if used even once, their numbers shot into the stratosphere. Within four months, the customer base climbed from 400,000 to a clean million. It only took two months for that number to double. The number peaked at three million, at which point both MoviePass’ unsustainable business model and uncontrollable growth started to catch up with them. An odd tweak to their subscription deal in April – only three movies per month, bundled with three free months of bankrupt online music platform iHeartRadio – raised a few red flags, and an overwhelmingly negative reception shuttered the plan. Then, there was the even more inexplicable partnership between MoviePass and student loan refinancer Laurel Road. All of which cued up MoviePass’ announcement that in the month of May 2018 alone, they had incurred a loss of $40m. The wheels were coming off the wagon.

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MoviePass customers were unable to watch Mission: Impossible – Fallout on its opening weekend as a cost-cutting measure. Photograph: David James/AP

For whatever reason, MoviePass executives evidently assumed that most of their subscribers would forget they had signed up and continue paying anyway. Beyond that, they really didn’t count on the 15% of “super-consumers” going out more than three times per month and racking up hundreds in savings. Two bad gambits combined for a fiscal death spiral that sent the MoviePass higher-ups scrambling for a way to get some quick cash. New changes came suddenly and without warning: “surge pricing” tacking anywhere from $2 to $6 onto a “free” ticket, no repeat viewings of the same movie, screenings listed under incorrect times or not listed at all, blackout dates for in-demand titles. (Anyone hoping to waltz their way into a Mission: Impossible – Fallout screening on opening weekend had another thing coming.)

This turbulence culminated in a full “service outage” on 26 July, followed by a revealing New York Times report outlining an operation on the brink of collapse. That week, MoviePass borrowed an emergency $5m to pay for the processing keeping their app afloat, and once the outage hurdle had been cleared, they began scaling back. The latest approach: no more surge pricing, no more blackout titles, no bump in cost, just the limit of three tickets in a month. For all we know, this article may require another update before it even goes to publication.

All the drama has made for a fascinating business school case study, but successful or no, MoviePass has left an indelible mark on the industry. Vox’s thorough analysis of the quagmire reveals a full rewiring of the moviegoing brain by removing the activity’s high stakes. Rising prices at the ticket counter and concession stand have turned a night at the cineplex into something closer to the capital-E Event that it used to be, discouraging curiosity in favor of the sure thing. But MoviePass has done a bit to restore the casual nature of moviegoing, encouraging viewers to check out releases they may have otherwise ignored while freeing up more avid audiences to sit to their heart’s content. A survey from The Hollywood Reporter suggested rising rates of weekday attendance, solo attendance, and blind-buy attendance. After all, there’s nothing to be lost but time.

Movie theater chains already scrambling to stay relevant with boutique snacks and plush recliners while the streaming barbarians gather at the gates had no choice but to adapt. There’s some small psychological comfort to be taken in only paying for something once instead of every time you use it, and what’s worked for the likes of Netflix and Hulu could bear comparable fruit for brick-and-mortar outfits. AMC has pulled back the curtain on the Stubs A-List program (three movies per week, $20 per month) following an initial position of aggressive opposition, and now-vindicated doubts over the long-term viability. Cinemark offers a somewhat less straightforward membership as well (discounts, reserved seating, one free ticket per month). In one-theater towns, it’s a dream come true, but in metro areas offering a wider array of choices, MoviePass’ free compatibility at different movie houses was the key to its draw.

This could all end with MoviePass six feet under, rising to conquer theatrical exhibition itself, or even spinning a seven-film franchise out of whatever 10 Minutes Gone ends up being. For now, what matters is that whether they meant to or not, the MoviePass board provided a valuable good to the cinephile community. MoviePass sales accounted for hundreds of thousandsof admissions for Oscar horses like Lady Bird, The Post, and The Shape of Water, plus over 400,000 for densely conceptual sci-fi whatsit Annihilation – no easy sell. For a few glorious months, movie-lovers successfully bilked millions of venture-capital dollars out of a harebrained start-up. If lower-profile art fare gets a bump in visibility, that’s great, and if a Silicon Valley boondoggle falls apart along the way? At least MoviePass’ death will have meaning.

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