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A few months ago, I wrote a post entitled Movie Theaters Should Think Like Netflix, where I sketched out what a movie theater subscription program might look like. Many people read it and tweeted to their followers, and over 150 readers wrote comments, all with passion and many with detailed and insightful analysis. Clearly this "focus group" on Tribeca's Future of Film blog wanted to see a service that used a Netflix-like model applied to movie theaters.
So I was very excited when in late June, Wired announced the private beta launch of MoviePass in a post titled All-You-Can-Watch MoviePass brings Netflix Model to Theaters. This seemed to be the answer to our readers’ dreams.
However, as I read more about the service, I began to be more skeptical about its chances for success. While it appeared that a lot of theaters had signed up, the price seemed very high and the rules of the service too difficult to follow.
Then before it had a chance to get going, the AMC theater chain announced that its theaters would not participate. The beta began to unravel, and finally the plug was pulled.
It is not completely clear to me why the beta was stopped, though it appeared from the press reports that no one had really “informed” the theaters that this new subscription service was launching.
If that is true, that seems a little odd—don’t you think? Surely you would let the theaters in on the plan.
As has been pointed out by MoviePass in its press announcements, the movie theater business is in real need of innovation. I could not agree more.
But is MoviePass’s version of innovation really headed in the right direction?
Any subscription program that will succeed over time and provide real value for everyone involved (that is, consumers and theater owners) has to be designed with the following ideas in mind:
Subscription programs for mass entertainment only work if they get a very large number of subscribers. In the language of the Internet: they must scale.
A movie theater subscription only works if it attracts people who do not usually see a lot of movies in addition to regular movie attendees. It must expand the overall audience.
A program designed for “movie buffs” as the MoviePass program appears to do is guaranteed to fail because it does not increase the overall pie.
Price It Right
Because you must scale to a large audience, you have to charge a reasonable price. In my original post, I proposed $10 a month, $120 per year. I am prepared to agree that this might be a little low, but not by much. My guess is a reasonable price lies somewhere between $10 and $25 per month.
MoviePass was planning to charge $50 per month. That is $600 per year! You do not need a focus group to tell you that the audience you will gather at that price will always be very, very small. It will never scale.
Make It Simple
The value proposition must be clear with no fine print exceptions. Something like: “See any movie, any time, any day at any theater you choose.” The MoviePass model does not reach this bar.
Instead, it restricts someone from seeing a movie again, or seeing more than one movie a day. You must purchase individual tickets and they must be purchased only on the day of the show.
Subscription programs must reduce friction between the consumer and the entertainment experience. This program does the opposite.
In fact, it feels like a ticket reselling program, where you hire MoviePass for $50 a month to buy movie tickets on your behalf—with certain conditions that apply. These conditions are then attached to a high subscription price. Again, it limits the potential audience.
The MoviePass plan pushes theaters to the outer edge, when it needs to put them in the center.
To work, a subscription plan must create a closer relationship between the movie theater and its customers. Movie theaters should be able to engage consumers’ interests through use of data collection (knowing what they see), recommendation engines (knowing what they like) and the use of social media layers.
And most importantly, if a subscriber does not go to a movie during a particular month, the theater still must see a big share of the monthly fee. Because that is where subscription plans really make their money—when a significant number of subscribers pay for continual monthly access, but only use the service every other month.
Can MoviePass embrace theaters, make it simple, price it right and think big?
In today’s media environment, movie theaters need rapid business model innovation in order to survive, let alone grow.
So let’s hope so.