The past couple of weeks have been a big roller coaster for MoviePass. I got to experience the Thursday July 26 outage when I was going to see a movie with a friend. We were upset but decided to go for happy hour instead which turned out to be great. The next day we found out it was because they had run out of money which indicated that the end was near. MoviePass was able to get their emergency loan and service was restored. On Friday my friends wanted to see Mission Impossible but the option was grayed out however, after refreshing several times, I was able to get a ticket with an outrageous $6 surcharge. This grayed option turned out to be a change in plans where new movies were not going to be offered anymore. This was a breaking moment for me. I had to make a decision to stay or not before I would be charged the next month.
MoviePass is a very interesting business case that is worth looking at. Most of us got to know it last year when they decided to make a too good to be true deal, $10 for all the movies you could watch. However, the company started much more before that in 2011 starting with vouchers and then moving to preloaded debit cards. They tested pricing ($30-$100) and plans (2 – unlimited movies) but had limited traction with consumers (only 20k on December 2016). On August 2017, Helios and Matheson Analytics bought a majority stake and launched the $10 unlimited plan which grew their user base immediately to 400k (2000% increase) and by September to 600k. This growth put a serious strain on resources leading them to be in the situation they are on.
MoviePass did something that is extremely admirable and worth giving thanks. They took on an industry that has been stuck. I used to go to the movies all the time, however it’s inconvenient and expensive. Movie theaters charge a fortune to see a movie, have outrageous concession prices ($7 for a small soda! WTF) and prefer to have hundreds of empty seats rather than having fewer more comfortable ones. MoviePass disrupted the entry fees model and made it easier for all to go to the movies whenever we wanted. Movie theaters have a love hate relationship with this disruption as it did bring more people in who end up buying their expensive concessions. Thanks to MoviePass, AMC who was their most vocal critic are now offering a subscription deal for movies.
So what can we learn from the MoviePass experiment? Disrupting an established industry is difficult and expensive. MoviePass was on a losing battle due to many reasons, including:
- It’s critical for the disruptor to have control of assets (e.g. Uber controls drivers, AirBnB controls hosts, etc.). MoviePass doesn’t have control over assets putting them at a disadvantage from the start. Theaters still control the costs and access.
- Disrupting an industry is a marathon not a race. It’s critical to grow, but control that growth. Offering a too good to be true product is a short-term win, but a losing proposition in the end. It leads to strain in the business and degrades the customer experience.
- There is a limit to user testing. I admire the willingness to test different things. However, if you are changing your product offering you have to be very careful on resetting expectations. You need to know what your users want/need. MoviePass thinks users want to see the long tail movies, but do they? None of my friends want that. We would have been happier to stay if they had just reduced the movies a month to 2 or 3 (we got no time to see more!). Having done a change like that seems better than having an “unlimited” crippled service with few movie choices and outrageous surge charges. Update: 8/6 – MoviePass just announced they will retract from price increase and limit movies to 3.
In the end, it will be very interesting to see how long MoviePass survives. Most of my friends have already canceled and are moving to competitors. I hope they find their right balance but my journey with MoviePass has also come to an end.
Thank you MoviePass and goodbye.
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Check our previous MoviePass article: Would you give up your privacy for unlimited movies?