The MoviePass subscription-based ticket service sounds too good to be true — for $9.95 per month users can attend up to one movie a day at most theaters across the nation.
The company, headquartered in New York, isn’t new but its $9.95 price point is. Since dropping the price in August, the company has grown from around 20,000 subscribers to more than 1.5 million subscribers.
Even CEO Mitch Lowe was surprised at the growth.
“I expected … maybe thousands a day, not 75,000 a day in our first couple days,” he told OPB’s “Think Out Loud” host Dave Miller.
At first glance, the business model appears simple — MoviePass sends users a company Mastercard, which works in conjunction with a MoviePass app. Once a subscriber is within 100 yards of a Mastercard-accepting theater, they can select the film they would like to see and check in on the app. Their ticket remains available for 30 minutes.
From there, the transaction at the box office remains more or less the same.
“You hand them the card just like you would your own credit card, the trick is we pay the bill,” Lowe said.
But how can MoviePass afford to pay that bill? The average movie ticket costs about $9, often more in larger cities. So, users who attend more than one movie in a month end up costing the company money. But Lowe suggests that their target audience isn’t breaking the bank.
“Our primary customers are the people, especially young people, who typically go to five films a year, and after they join MoviePass they go to about 12 films a year,” Lowe said.
In the long-run, the company plans to partner with film studios to help market their films. Lowe said the big studios are “getting it” and see value in the vision.
According to Lowe, MoviePass currently buys “1 in every 35 tickets every day in the United States.”
But when the company promotes a film through the app, Lowe said that number rises to 1 in 10 tickets sold that day. Lowe said the company is still working on deals with the major studios.
While consumers might be celebrating the affordable service, some Portland theaters aren’t convinced the model is sustainable. Living Room Theaters CEO Steve Herring said MoviePass has not done a good job working with theaters and fears the low-price subscription model could have lasting repercussions.
“We are concerned that by decreasing the perceived value of the content that people are going to see, that long-term it could have a very negative effect on theaters, especially if MoviePass can’t make their business work,” Herring said.
Herring thinks that MoviePass is effectively “price dumping” — a kind of predatory pricing in which a company offers a product or service at a loss in order to gain rapid market share.
Industry insiders also question the long-term viability of the business model, even with the plan to work with studios. Paul Bond, the West Coast Business Editor for The Hollywood Reporter said the business doesn’t make a whole lot of sense.
“Every time you market a movie to one of your subscribers and they actually go, they actually cost you another $10,” Bond said.
But Mitch Lowe has faced skeptics before. He was a member of early executive teams for other industry disruptors Netflix and Redbox.
Now, he plans to turn the movie industry on its head once more.
To hear more from “Think Out Loud’s” conversation about MoviePass, click the play button at the top of the article.