According to an October 2nd, 2012 post to The Verge, 75,000 customers are getting access today (Oct. 2nd, 2012) to a new service known as MoviePass that (via an iPhone app and a debit card) allows them to buy one movie ticket per day (3D and IMAX showings aren't supported) for a flat fee of $24.99 - $39.99 per month (depending on the market) at any movie theater that takes credit cards.
With the MoviePass app, subscribers go to any theater showing the film they want to see. The customer simply selects a screening from the MoviePass iOS app. The app then unlocks a debit card, which the customer uses to buy a ticket.
The movie theater gets the full price of the ticket.
But the customer only pays a flat monthly fee.
OK. What's the trick?
I can see why the theaters are happy (full price ticket) and the customer is happy (if you see more than three movies a month you're saving money) but...
How will MoviePass make money?
Well... some customers will pay $30 and never see a movie that month.
And, as described by digital business consultant Chris Dorr there is another more sophisticated 3 part answer:
"1. MoviePass gets direct contact with the customer, with an email address and [a snail mail] address.
2. MoviePass knows what movies each subscriber sees, at what theater, at what time and on what day–and this crosses all theaters, not just one chain or location.
3. Through its location aware application Movie Pass has the opportunity to allow each subscriber to opt in to other services. Want to find a restaurant in the area? Coupons for local entertainment options? Want to find other movies similar to the movie you just saw and liked? What are other people on MoviePass recommending? The list of these layered services is endless and each is valuable."
In other words, MoviePass is building a database that they can sell to a great many other marketers...
Unlike other subscription services, like Netflix and Hulu Plus that give subscribers access to online content, the MoviePass app works at real movie theaters - the kind of venues that charge an average of $8+ per ticket.
Apparently MoviePass is betting that the information they will gather (and perhaps the money left on the table by people who subscribe but only end up going to a movie or two a month) will make them profitable. It's a bit like the gamble that Netflix made when they started by shipping physical DVDs. Like Netflix - MoviePass stands to lose money the more the customers use the service. But - in this new digital economy - these kinds of bets sometimes pay off.
And remember, the theaters - which notably aren't in business with MoviePass - should be happy. After all, they're getting full ticket prices.
Will it work?
In a beta test, MoviePass found that movie attendance shot up at some theaters by as much much as 64 percent.
Thanks to UCF Film Business student Tim Reid for the link.
UPDATE: In an Oct. 25th, 2012 blogpost, Ted Hope has written about the paradigm shift that Movie Pass suggests: "There is huge value in community, well beyond ticket sales. As data mining demonstrates, it can generate wealth. MoviePass seems to realize that. I bet MoviePass can be moved to become a real ally of community theaters, as well as movie goers. Ultimately everyone wants to increase theater attendance — and that is the only way that I can think of that the MoviePass business model can work (and if it does, doesn’t everyone win?). Filmgoers will get a better experience, theaters will sell more tickets & concessions, and MoviePass has direct access to the customers. Winwinwin. Yes?"