MoviePass users are selected for seeing a lot of movies. If MoviePass makes a business plan that models users as average people, it will lose a lot of money. Conditional on someone wanting to buy MoviePass, MoviePass probably should not want them as a customer.
I’m going to nitpick here and note that the marginal cost to the cinema of allowing in an extra customer is often close to zero, seeing as most films don’t sell out. It may even be positive, if they spend money on popcorn and drinks, and invite their friends who don’t have a pass.
It seems from that article that the failure in the business model was partly that MoviePass was just badly managed, partly that people were abusing the system in various ways by scalping/ selling tickets/ getting hundreds of people using the same service.
I checked my local cinema chain and they started running an ‘Unlimited’ service over a decade ago, and it’s still in use, so I think it remains a valid model.
Correction: I understand the MoviePass model now and the adverse selection argument makes more sense. Cinemas with a subscription model can work even with a high proportion of power users, but that’s because the externalities (popcorn, drinks, inviting friends) accrue to the cinema.
I’m going to nitpick here and note that the marginal cost to the cinema of allowing in an extra customer is often close to zero, seeing as most films don’t sell out. It may even be positive, if they spend money on popcorn and drinks, and invite their friends who don’t have a pass.It seems from that article that the failure in the business model was partly that MoviePass was just badly managed, partly that people were abusing the system in various ways by scalping/ selling tickets/ getting hundreds of people using the same service.I checked my local cinema chain and they started running an ‘Unlimited’ service over a decade ago, and it’s still in use, so I think it remains a valid model.Correction: I understand the MoviePass model now and the adverse selection argument makes more sense. Cinemas with a subscription model can work even with a high proportion of power users, but that’s because the externalities (popcorn, drinks, inviting friends) accrue to the cinema.
MoviePass was paying full price for every ticket.
Ah, thanks, okay, I get it now. That’s a very different proposition! Updated my post.