When I first heard about MoviePass, I thought it was a brilliant idea. You would pay $10/month to see unlimited movies in any theater (maximum one per day). Great for the movie-loving consumer. The seats would have to be purchased "day of" -- meaning that MoviePass couldn't be used to grab advance seats at highly awaited premieres, which would clearly fill up beforehand.

I assumed that they had made deals with theaters all across the US to basically reimburse them very little for seats which would have gone empty.

The genius in what I assumed was the arrangement was that movie theaters have empty seats in the vast majority of their showings, and sometimes the theaters are almost entirely empty. This would benefit the theaters, as the cost of filling those empty seats is almost zero, so even a small percentage payment of the ticket price would be worth it. Furthermore, the theater would also make money on the (very overpriced) concessions sold to these customers.

So this finally would bridge the gap between the theaters whining, "Why are there 3 people seeing this movie at 3pm on Wednesday?" and the consumers whining, "I don't want to pay $12 per ticket to see a movie first-run. If I could see the movie in a decent theater for far cheaper, I would totally go."

But that's not really how MoviePass works.

In reality, MoviePass supposedly reimburses the movie theaters for the full cost of the ticket! (I write "supposedly", because it's possible they struck some deals with certain theaters to pay less.)

So if you're paying them $10/month, and you're going to $150 worth of movies in that month, isn't MoviePass taking a huge haircut?

In fact, even one ticket per month ($12 in many markets) would cause MoviePass to lose money on that customer.

How could they possibly be profitable?

This article from Wired claims that MoviePass' real revenue sources include movie-habit datamining, promoting lesser-known independent films, and splitting concession stand purchases.

Yes, splitting concession stand purchases. MoviePass has approached theaters around the country and demanded that they split the profits from the concession stands, according to the percentage of people who purchased their tickets with MoviePass. So if 5% of the tickets were purchased with MoviePass at a theater, then the theater is supposed to cough up 2.5% of the concession stand profits of the day to MoviePass.

Not surprisingly, some of the bigger theater chains balked at this, especially AMC. This caused MoviePass to turn off certain big-city AMC theaters from its service in the spring, hoping to pressure AMC into submission, only to quietly turn it back on again when AMC finally came to some undisclosed terms with them.

The theaters have no choice but to accept MoviePass because it functions as a normal debit card (which only works at movie theaters).

Also of concern: The terms of service of MoviePass are extremely obnoxious.

MoviePass is worried that several people will share an account, and this paranoia has led to a highly restrictive, obnoxious terms of service, including the odd term that your account will be suspended if you don't use the latest version of their app (lol).

In the meantime, AMC opened up their own internal version of MoviePass. While AMC's version only allows three movies per week, only works at their theaters, and costs twice as much as MoviePass, it does allow people to book tickets well in advance, and also gives them discounts on concessions.


So how is MoviePass doing?

Their stock, which was $39 in October, closed at 18 cents yesterday.



Here is a laughable interview with their CEO, who seems quite delusional: https://money.cnn.com/2018/07/12/med...ock/index.html