MoviePass: Who Needs Permission?

Posted on October 2, 2012 by Chris Dorr

MoviePass, the movie subscription service, today announced a new feature that will vastly increase their subscriber base.  A detailed description of this new feature can be found here. Following is my short summary.

MoviePass offers a monthly subscription plan priced from $25 to $40 based on the movie ticket prices in your area. So, for example, New York City is more expensive than Omaha. This allows you to attend one movie a day during the month. So a maximum of 30 to 31 movies for $25 to $40. A great deal for avid moviegoers.

They have added a MoviePass debit card for each subscriber that works at any movie theater that takes credit cards.  When you go to the theater you use the MoviePass application on your smart phone (available on the Apple application store and soon to be available on Android) to find the movie you want to see at that location and select it. This loads the card with the right amount needed for the ticket.

Once selected, you slide the card into the credit card machine and out pops your ticket.  Because you have a prepaid subscription, you do not pay for the ticket-MoviePass does.

The Hollywood Reporter covered the release of this new feature by looking for any theater owners that might have given permission to MoviePass.  To their astonishment they found none.  Thinking this a bit peculiar they just moved on.  You could read between the lines and see that The Hollywood Reporter thought this would soon fail.  After all, don’t the exhibitors have to agree to this?  Actually-no.

You see, here The Hollywood Reporter missed the key point.  When it comes to successful innovation in this new connected world the best thing a new company can do is find solutions that do not require permission. The inherent nature of the distributed network we call the Internet is that anyone can get on and no one can say no. This “no permission structure” has created huge companies like Facebook and Twitter, as well as many others big and small.

However, if you live in the world of a centralized network (the world of mass media, i.e. the world of Hollywood) you have to ask permission at every turn. Your whole world is a series of permissions.  This sea (a cesspool perhaps?) of permissions is what has caused Hollywood innovation to lag behind the Internet world. One could even say that innovation as we know it today does not even exist in Hollywood.

So the brilliance of the Movie Pass move is undetected by general Hollywood observers because it can not fathom a world where someone could sell tickets to a movie without the theater “giving permission”-i.e. getting a cut. Yet that is what Movie Pass has created.  The movie theater gets it full ticket price but it does not get what Movie Pass will now possess and which is very valuable in today’s world.

What will Movie Pass have and why is it valuable?

1.  MoviePass gets direct contact with the customer, with an email address and a physical address.

2. MoviePass knows what movies each subscriber sees, at what theater, at what time and on what day-and this crosses all theaters, not just one chain or location.

3. Through its location aware application Movie Pass has the opportunity to allow each subscriber to opt in to other services.  Want to find a restaurant in the area?  Coupons for local entertainment options?  Want to find other movies similar to the movie you just saw and liked? What are other people on MoviePass recommending? The list of these layered services is endless and each is valuable.

Movie Pass gets to know its (and the theater’s) customers.  The movie theater gets paid and flies blind.

It will take time for theaters to figure this out because they have not traditionally been in the “know your customer” business.  They have always flown a little blind.  But when movie  theaters discover what MoviePass is finding out about their own customers, the tables will turn-now the theaters will ask MoviePass for permission.

And innovation will be afoot, even in Hollywood.

 

About Chris Dorr

I consult with companies on digital media strategy and business development. Clients include Samsung, MTV Networks, Tribeca Film Festival, Shaw Media and Canadian Film Center. I created the Future of Film blog for Tribeca. I have worked in the movie business for Disney Studios, Universal Pictures, Scott Free and in the digital media business for Intertainer, Sony and Nokia. Contact me at [email protected] or follow me at @chrisdorr
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  • Steve Wax

    So the main difference between Movie Pass and a credit card — to the consumer is it costs you a fee and they track your movie habits? What’s the benefit to the consumer again? 

    • chrisdorr

       The big difference is that it is a subscription service.  You pay a flat monthly fee that allows to go to at least one movie per day at any theater that takes credit cards. So on any any given month you can see up to 30 or 31 movies per month for a flat fee of  from 29 to 39 dollars depending on where you live. If you go to a minimum of 4-5 movies per month, you are saving money.

  • Rpace2

    yea, Unless you don’t have a smart phone because of not wanting that extra monthly data charge. THEN, it’s $30 moviepass, $50 data charge to total $80 for all the movies you can see a month! woo hoo. Any
    idea of what it might have been like to be a loyal paying beta tester
    for about 9 months in a supposedly secure 1 year contract, to get all
    these emails saying we are gonna love all these great enhancements that
    are coming…and then get an email saying you will be down for a day and
    we should all be excited about all the new things we can expect when
    you come back up…..only to wake up the next morning to an email saying
    you are being unceremoniously dumped in spite of the contract because
    you don’t have a smart phone? any great company customer support kind of
    empathy showing there?

    • chrisdorr

       I can not claim to understand the experience you have had over the past several months.  I have read that you can access the new program via a computer at home in order to book the ticket.  But I would guess that is a transitional plan until more smartphone apps are available.  I wish you good luck as this moves into the next phase.

      • Rpace2

         thanks chris. I appreciate that. however, I’ve heard from the customer service in a few different formats that that is not the case. if you didn’t have a smart phone they simply send you a notice that they were letting you go. and in spite of the contract they obviously felt they didn’t have to worry about keeping up their end of it with the change over.

        • That’s correct. To get out of my contract I lied and said I have a Blackberry and they simply cancelled my service. Their way of doing business is sketchy at best.

  • The changes made me drop my service. With my preference being a very popular venue (the Alamo Drafthouse) and the need to be actually on site to get a ticket is a hassel since shows (even for films out for several weeks) routinely sell out. Combine that with the Drafthouse’s moved to all-reserved seating makes MoviePass completely useless. I’ve been with MoviePass for a year and their previous book/print/go to box office system had frequent issues. I have no faith that this app/credit card system will work well at all.

    • chrisdorr

       Hi Brian, Thanks for your comments and insight. I think the challenges in this area are enormous. It seems that the new solution is partial at best. I assume that the best solution for MoviePass as well as subscribers would be agreements with companies like the Alamo Drafthouse that would permit people to reserve seats thru MoviePass. I hope that happens as Alamo Drafthouse is opening a theater complex within walking distance of my apartment in Manhattan.  I hear they are a great movie theater chain that really thinks about their customers.

  • Jordan Hudson

    How do they make money on users? Unless I’m seeing more than 4-5 movies
    per month, I’m not likely to renew my subscription.  But if I’m seeing
    that many movies, how is Moviepass making money off me?  Are they taking
    a loss and trying to make up for it with ad revenue and monetizing
    customer data?

    Also, how are they going to satisfy users who book
    movie tickets and reserve seats online? I would need to be able to
    enter actual card data online in order for this to be useful.

    • It’s the gym membership tactic. They want as many people as possible to sign up and as few as possible to use it. When I signed up during the beta I was locked into a 1 year contract. They are hoping lots of people sign up based on the shininess of the word UNLIMITED (which it really isn’t) and that only a small percentage use it. Which shouldn’t be a problem given their myriad restrictions and rules.  

      • Jordan Hudson

        Ah, I didn’t realize they lock you in to a 1-year contract.  In that case, you have to be a pretty avid movie-goer to assume you’ll see 50+ movies per year.  It’s easier to understand the business model with gyms since they still typically have monthly member fees and a more fixed cost structure.  It’s tough to justify a model that inherently requires customers to lose value in order for the unit economics to work.

      • chrisdorr

         Hi Brian,  As they always say,  read the fine print.  It strikes me as a good deal for anyone to goes to a lot of movies, as long as the card system works well.  Time will tell. I thing subscription services in general are great ways to access content if they are effectively priced and can deliver the content you want. I think most content will be delivered this way in the online and offline world in the future.

        • I definitely read it before I personally signed up and as I go to the movies 4 or 5 nights of the week I definitely got my use out of it. I just think I’m not their ideal customer. They made no money off of me. They are counting on others not reading the fine print.

          • chrisdorr

             So the other subs who use it less subsidize your movie going habit!  Sounds good to me.

    • chrisdorr

       Hi Jordan, All legitimate questions.  I can only speculate how they will make or not make money. As a potential subscriber, I don’t really care as long as the service provides me with what I want at a cost that works for me.  It seems to me that is the only thing that matters.

  • Gary M

    The numbers show that an increasingly people want buy movie tickets in advance to assure getting into hot new films. 

    According to members of the Art House Convergence they have never been contacted even though they are listed on MoviePass and some do not have credit card machines.  Sadly the customer will be pissed off at the exhibitor just like they were in last year’s failed test in San Francisco.

    Many indie theaters offer their own discount card that allows two admissions at a given show.

    Your explanation about how MoviePass hopes to make money is the only one I can find on the net that makes sense. But for the consumer it means moviegoing habits are property of MP (just like Amazon, Netlflicks, etc collect info about what we do) and we become the target for directed ads.

    TESTED says it is a bad deal http://www.tested.com/forums/general-discussion/449326-moviepass-is-a-bad-deal/

    • chrisdorr

      Hi Gary M,  Thanks for your comments. In an ideal world, a movie subscription service should involve the theaters in its design and execution. Movie Pass has not done this because it is nearly impossible for them to do so in a comprehensive way throughout the country. I think movie theaters will begin to partner with Movie Pass if it begins to get traction and gets a large customer base.  The data base of customer information will just get more and more valuable as more people join Movie Pass.  We just don’t know if this will happen or how fast it might happen. Assuming it does, MP will gain leverage in partnership discussions with movie theaters and chains. It is highly likely that when those first partnerships are struck that the MP service will be further modified. How, I can only guess.  I think the tactical instincts of MP are fundamentally correct given the present situation.  I think it is in the theaters best interests to immediately approach MP and make a deal quickly. Otherwise they will not play any role in shaping what could be become a very compelling service for consumers. Even if MP fails, there will be others who will try to compete with similar services that will disrupt the movie theater business. The subscription model will spread throughout all entertainment offerings, on and off line-music, news, movies, television-all with have competing subscription plans.

  • reckus

    I’ve had the service for 5 days. Their mapping data is off and does not use Apple or Google location data for the theater locations, while also imposing a 100yard radius from their location in which you have to stand to be able to purchase a ticket on Apple devices. Their GPS location for my theater is 8 miles away from the box office, in a bad neighborhood.

    I asked to talk to a manager about how they would handle the days that had been purchased in which I couldn’t use the product. They replied that a manager would call me back that night, which did not happen. The next day I was dealt with in a snarky fashion and told there was no way to talk to a manager or billing, that it was to complicated to explain, and that I should just email them. Later that night I was told I had a ticket number, and there was going to be an escalation. I was then contacted on Facebook and told I would be called.

    Two days after that, I was informed that no call was likely to come, but asked to email their help desk.

    Since I received my card, I have been completely unable to use it, and the phones have started going to voice mail, after 8-10 minutes of music.

    summing it all up, this is pretty outrageous. I don’t really care about tech being buggy. I care about how weird and awkward this all is, it reminds me of dealing with discount eCommerce companies before Amazon was a thing.

    • chrisdorr

       Hi Reckus,  This does sound pretty outrageous.  Thanks for letting me (and others) know about your experience. Hope it gets resolved soon. Let us know what happens next.

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  • Dave

    Very astute analysis.