How Can MoviePass Be So Cheap?

MoviePass caused major shifts in the movie industry when they lowered their monthly unlimited movie pass from $30/month down to $9.95/month. With a standard movie ticket costing more than $10 in many areas, the biggest question on everybody’s mind was how can it be so cheap?

Pricing vs Consumer Behavior

The first half of the answer to this question is related to the impact that pricing has on consumer behavior when it comes to subscription services. As consumers, it is our natural behavior to maximize the value of any subscription service. If a gym membership costs $300, we would try to go daily. If a gym membership costs $10, going once or twice a month would be satisfactory for the majority of people. This exact same behavior can be applied to MoviePass. MoviePass realized that at a price point of $50/month, their customers tended to watch movies 5-6 times a month. At a price point of $10/month, however, the vast majority of their customers would settle down to going to the movies around once a month. While there may be a few power users who manage to go weekly or even daily, the average of all MoviePass customers should center around one movie per month.

The Value of Data

That said, even if the average MoviePass customer only goes once a month, MoviePass would still be operating at a loss. This leads us to the second half of the answer – data. Your data to be more exact. Along with all the basic demographics data that MoviePass collects such as age and gender is the very valuable real-time data from being able to track where users exactly are when they check-in for a movie and the viewing habits of its users. In fact, the big data company Helios and Matheson bought a controlling stake in MoviePass specifically for this reason. As a highly advanced data analysis company, Helios and Matheson would be able to exploit this treasure trove of data from MoviePass to the fullest. I would not be surprised if MoviePass begins advertising to users nearby restaurants after the movie or popular bars to walk to after the movie. The potential here is huge. Not only is the customer outside of the house, but you can track and predict exactly where they are before and after the movie.

SO WHAT DOES THIS HAVE TO DO WITH YOUR COMPANY?

The most important lesson to learn from MoviePass is to understand how to discover alternate forms of revenue and the true core of your business. To the majority of people, MoviePass is a movie ticket provider. In reality, however, MoviePass is still a software company at its core. The majority of their business is going to rely on their ability to optimize their app and tracking and advertising channels.

In fact, at Closeloop Technologies, we often discover potential new avenues of revenue for our clients as we build their software. Today’s world of constant connectivity means that revenue can come in many different forms.