The Decline of MoviePass...What Happened?

[Music] what a disaster you know in my videos I usually try to stay positive but I have to say it's not going to be easy with this one it all looks bad on the surface but when you dig deeper and look at different aspects it's still bad here's the letter they put out in short it says that as of September 14th 2019 movie pass is shutting down they say they'd like to bring it back and continue but as of now they're not too sure if they're going to be able to I should point out I'm making this video the week of the announcement so if somehow in a weird turn of events you're watching this in 2025 and movie passes the most successful company out there cut me some slack because right now things are looking bad my guess is that they're gone for good or maybe they'll attempt some kind of a comeback but it's not going to lead anywhere if you're not familiar with movie pass the best way I can describe it is the Netflix of the movie theater it's gone through a lot of changes but the main idea is you pay one monthly fee and see all the movies in the theater that you want they've shaken up the whole industry it's been one of the biggest stories in business over the past two years and probably one of the quickest rise and Falls of all time so what I'd like to do today is talk about what's been going on over these past two years and why it's all gone so bad everyone's been talking about movie paths for the past two years but it actually goes back eight years just wasn't as popular the main guy associated with it during those beginning years was Stacy spikes over that time the service was intended for avid movie Watchers if you find yourself at the movies every weekend maybe look into signing up for movie pass and you'll save some money according to Stacy spikes they would put a lot of research into setting their prices they would depend on the region in the theater for example it's cheaper to see a movie in a small town than it is in a big city based on these factors their prices would range from $13 to $75 a month but typically be around forty to fifty dollars of course they had various changes over those years but that was the idea then in 2016 big things started to happen first off Mike lo was named the new CEO I have a whole video about red box that talks a lot more about him but for now I'll just say that he was a big part of Netflix early on in a big part of red box so based on his history it sounds like someone you would want running your movie watching related business in 2017 something bigger happened when this company Hayley OS and Matheson analytics bought the majority of movie paths they were a bigger company with more resources and they can do more with it as this headline from business wire says they were already the number one movie theater subscription service which didn't mean much they'd around 20,000 subscribers at the time and the reason that put them at number one it was basically a lack of competition as the headline also says they instantly lowered their price to 995 a month which I think we all know is ridiculous you ever come across something with a really low price and think how can they possibly afford to sell it that cheap but then you think they must be making money on it somehow not the case with movie paths Stacey spikes says that the new owners initially gave them the impression that 995 was more of a promotional price that would be used to push them past the 100,000 subscriber mark I think that price point made their service more attractive than they predicted because it only took them two days to pass that mark it's my guess that they altered the plan and stuck with that ridiculous price because they saw how many people they were attracting Stacey spikes and never agreed with the new plan and in January of 2018 a few months after the new owners took over he was fired now the company that owns movie Pass doesn't specifically report their number of subscribers but I compiled this graph together based on various interviews and statements made by representatives that are generally thought to be reliable just looking at this it's so clear just how fast they grew around 3 million people signed up for the service in less than a year 5 percent of all movie tickets were bought through movie paths for a company that was insignificant one year earlier so now we have to take a step back and look at the big picture they have millions of customers but aren't making any money in fact the more customers they gained the more money they were losing let's just spend a minute talking about how bad this was what's a movie ticket cost to make things simple I'll say conservatively $10 so when you use movie paths to see that $10 movie it was essentially movie past buying that ticket from the theater and then giving it to you given those numbers if you saw one dollar movie per month they would break even if you saw more than one they were losing money but if you weren't seeing more than one why would you pay for movie pass you see what I'm saying it just doesn't make sense either you're losing money or movie passes losing money and nobody wins except for the theaters AMC for example they're the largest movie chain their CEO said movie pass paid AMC twelve dollars and two cents per ticket on hundreds of thousands of tickets at a rate of two point seven five times per subscriber now I took the calculator and I multiplied 2.75 times twelve point o2 and I got a number that was considerably larger than nine ninety-five that difference is the amount that movie pass was losing per person at one point they were losing 21 million dollars per month can you imagine losing 700,000 dollars a day obviously they couldn't sustain that so they had to keep raising money and borrowing money sometimes at the last minute movie pass was down last night because it ran out of money that's not a good headline and of course all of this nonsense caused their stock price to go way down it's really unbelievable how fast it sank in October of 2017 it was approaching $40 in less than a year later it was less than a nickel in July of 2018 it went under a dollar and never went back above it so they were in danger of being delisted from the Nasdaq the Nasdaq is generally where you want to be but they require that you're trading for over a dollar so then they try doing this reverse stock split where they would have fewer shares trading but at a higher price really just a cheap way to stay on the exchange and look like you're doing better but it didn't work they were delisted in February of 2019 I'm gonna give my best attempt at profiling all of their changes in pricing and service over the past two years in August of 2017 that's when they started this ridiculous 995 a month one movie per day then in July of 2018 they introduced peak pricing if a particular showing was in high demand it would no longer be free but instead anywhere from two to six dollars everyone hated this because it seemed like everything was always peak pricing about a month later they got rid of it and brought it down to three movies per month then in March of 2019 and they brought it back to unlimited called it movie pass uncapped but it cost in 1995 a month or 1495 a month if you signed up for the full year but they were also more restrictions if I missed something there forgive me because I've never seen a service changed this much so now we should ask what's the plan here my Chloe has a credible history so what's he thinking the fact that they were losing money it wasn't directly the issue looking at Amazon Netflix uber there's plenty of companies out there that sacrificed in the short term to grow over all that seem to be as mentality through all of this but ideally you would have an end game here are some of their possibilities the obvious one is well getting everyone to sign up and then playing with the service and the pricing in a way where they're making money and hopefully people are still sticking around and I have to say they definitely played with their pricing and services but it doesn't look like people stuck around according to Business Insider they were down to two hundred and twenty five thousand subscribers by April of 2019 so apparently most of those people weren't willing to stick around with them through all of this nonsense another way they could have potentially made money it was by getting the theaters involved see movie pass was getting people into theaters maybe if they were willing to work with movie pass maybe sell tickets to them at a reduced price sort of a bulk ticket purchase deal then potentially they'd be able to somehow make money while continuing that 995 price point but I don't think any of the theaters really went for it AMC definitely did not want any part of it another possibility it was movie pass ventures they started that in 2018 it was a division where they invested in the actual movies the first one was called American animals and then the second one was gotti the idea here was Moby Pass had gathered all this information about which movies people watched so now with these movies that they had a stake in they'd be able to market them to the right people which was all just another failure on multiple levels let's look at Gotti I haven't seen it but I trust it's probably not very good it's a zero percent on Rotten Tomatoes and the critics consensus was forget about it despite it being so bad I guess they sent out these notifications that said audiences loved Gotti but critics think otherwise who do you trust see it today obviously trying to put a huge spin on it because they own part of that movie in the end Gotti made one point six seven million dollars which is very low and forty percent of that came from movie past summarize the situation they own part of this movie that critics hated so they bought 40% of the tickets to their own movie and convinced people to see it through their service and despite all of that it still performed poorly the whole thing was a disaster and based on how they handled this one I don't exactly trust movie past ventures to be very successful in April of 2018 they bought movi phone from Verizon which you may remember best from the 90s where you would call them up and they'd give you the movie showtimes hello welcome to Moviefone today they're more or less the online version of that given people movie and theater information they figured they could use it to gain more subscribers and bring in some advertising revenue in the big picture their issue was never really with gaining subscribers so I don't think this ended up being too significant and then movie past films they bought this film studio in 2018 again I question the overall impact it really had so I think I've made it clear I wouldn't exactly call this a good business plan but it may not have been as bad as it seems it reminds me of those cartoons where they keep pulling the different cords to open the parachute and but none of them are working if they had found a way to better adjust the subscription in a way that people would stick around it could have gone somewhere if they had found a way to get the theaters to work with them could have worked if they had invested in better movies and promoted them better there could have been something there and there's Moviefone and production studio I just feel like there's some combination of all these parts that could somehow I don't know maybe I'm giving them too much credit it's all been tumbling down and nothing they've done has worked they even had this financial scandal where they overstated their revenue last year it just never ends with these guys there's an investigation involving fraud and misleading investors class-action lawsuits filed against them claiming too many restrictions and blackouts more recently they had a database online with all this credit card information that didn't have a password or any type of encryption to come on movie pass has been a complete failure but the one real positive to come out of this is the movie theater subscription model something that was almost non-existent just two years ago it has become a big part of the industry and I think we a movie pass to thank for that now there's nothing quite as good as 995 a month for unlimited movies but there's AMC stubs a list Reagle unlimited mark movie club all a little different but I would argue none would exist without movie pass let me know in the comments did movie pass ever have a chance I just feel like every single thing they tried went horribly wrong in the end it all goes back to that 995 a month you just can't make that work maybe if they change that sooner or in a better way I don't know why but I feel like this could have been one of those things that somehow succeeded against all odds but probably not also were you a movie pass customer and based on your frequency of movie watching how much would you say you've saved from their service and most of you canceled your subscription well before they shut down so in that case what was your breaking point was the AMC deal more attractive or what was it I'd like to hear what you have to say thank you for watching [Music]

Channel: Company Man

Views: 550,696

Rating: 4.9356184 out of 5

Keywords: MoviePass, AMC, Movies, Movie Theater

Id: QvCkp3rfgOU

Length: 12min 0sec (720 seconds)

Published: Wed Sep 18 2019

Reddit Comments

[u/abbazabasback]

Ponzi schemes always run out of money.