Tired of staying in and watching movies on your computer all weekend? Well get ready – you will now get to do the same thing (sort of) and call it a social outing, thanks to MoviePass!
MoviePass, commonly known as the “Netflix of Cinema,” plans to reach Latin America in the near future, starting with Argentina, according to its CEO (and one of Netflix’s founders) Mitch Lowe.
But what is MoviePass, you ask? A subscription-based movie ticketing service that costs US $10 a month and allows you to go to the movies (yes, the actual theater, not just stream at home) once a day. You can see a screening at any location that accepts credit cards; upon arrival, you just swipe your MoviePass card and the company covers the cost of the ticket for you. Just for comparison, the tickets in the US cost around US $9, so if you decide to go to the movies more than once a month, the service essentially pays for itself (special screenings like 3D and IMAX aren’t covered).
Lowe, who was in Peru for a conference, stated that Latin America was the next logical step for MoviePass, and gave the example of Netflix, for which the South American expansion was “the most successful in the world, before Asia and Europe.”
how are they even making money, if they lose profit when a client goes to the cinema more than once a month, and if their deficit grows with each new customer?
Originally, the subscription was US $30 a month when it launched. This was quickly switched to US $10 as
people didn’t want to spend US $30 on maybe going to the cinema the model wasn’t actually working. MoviePass’s model mirrors the one of a gym where clients usually come in every day at the beginning, but end up going only once or twice a month after a few weeks. The problem is, going to the cinema is not as demanding as going to the gym, and gyms do not pay an additional US$ 10 every time a user comes to lift some weights.
The app currently pays for one of every 35 movie tickets bought in the United States, counting around two million users. The company plans to reach five million before the end of the year.
Lowe is confident MoviePass will turn profit by 2019, thanks to various partnerships. Despite having promised not to sell his users’ data, Lowe plans to get the cash flowing by selling advertisements to studios. For example, if Disney were to partner with MoviePass, a customer who just went to see “Avengers Infinity War” could receive suggestions in the app to see the next Marvel movie, or to buy the soundtrack. However, odds are that the more ads MoviePass has, the more people will want to follow through and see the movies suggested by the algorithm. Fast forward to customers returning to the theaters and adding to the app’s financial woes.
A vicious cycle which the company plans on avoiding by creating partnerships with cinema brands throughout both the US and new markets, or with restaurants located near the theaters. However, some chains – for example, AMC – declared that they would not want to participate, fearing that if MoviePass fails to succeed, consumers won’t be amenable to returning to the old system of paying full price, when not so long ago they were able to see 30 movies a month for basically the same cost.
“Who even has the time to physically go to a movie theater anymore?” is probably what Mitch Lowe is thinking. If a subscriber spends her time bingeing Netflix from the comfort of her own home, then she probably won’t want to go through all the trouble of organizing a plan, leaving the house, and actually going to the movies.
The problem is, one of the main reasons people don’t go to the movies as much is due to the high cost. If with Amazon Prime Reading you can read an unlimited number of books, even though realistically you are not going to read one a day (and if you do, congratulations), with MoviePass, clients could feasibly maximize their use of the service without much effort.
This is perhaps where Argentina and Latin America come into play: in Argentina, the average cinema ticket costs US $7.50, which creates less deficit for MoviePass than in the United States, and it is one of the most expensive prices in South America. The solution could thus come from here: while the company increases its prices in its own country, it has already modified the format for new subscribers. These will pay for only four movies a month (plus an all-access 3-month iHeartRadio trial) rather than one a day.