Over the past few months, we've been keeping a close eye on the ongoing struggles that MoviePass has faced as doubts continue to mount over the profitability of the company's revenue strategy. When we first heard about the subscription service last year, it almost seemed to good to be true. And now, the majority of reports seem to indicate that that may indeed be the case.
In his video essay detailing the inadequacies of MoviePass's business model, The Nerdwriter succinctly identifies the company's main problem: The subscription service costs $9.95 a month and the average movie ticket costs $9.16. MoviePass has to pay what you would be paying for the price of admission every time you go and see a movie using the service, which means that if you see more than one movie a month the company takes a loss. If you see two movies they pay double what they gain, three movies, triple, and on and on.
So how many movies does the average MoviePass user actually see? Too many. One and a half to be exact. The company has had too many die-hard cinephiles sign up and not enough casual moviegoers. In order to really succeed in making a profit, the company will need to attract customers that frequent the movies far less often, even with the subscription at their service. It's a tricky goal to reach for a company whose service's greatest benefit is letting its users go out and see movies far more often than they normally would.
The fact is that, while it remains to be seen if MoviePass is a great product for MoviePass, it is one hundred percent, without a doubt, a great product for indie film. People are actually going to see movies again and what's more, they're going to see smaller movies that they previously may not have shelled out $10-$15 for. The subscription service is making audiences braver than they ever have been before, allowing them to take risks on edgier festival favorites like Hereditary and documentaries like RBG and Won't You Be My Neighbor.
Credit: 'RBG' - Magnolia Pictures
The numbers overall aren't good. MoviePass's parent company Helios + Matheson announced that it lost $150.8 million dollars in 2017 as subscriptions to its service started ramping up. Last summer, MoviePass only had 20,000 subscribers; this year that user base lies at 3,000,000—quite a big leap in one year. Projections land subscribers at 5 million by year's end. And while more customers generally means more money, in this case, it's bleeding MoviePass dry. The company is losing an average of 21.7 million dollars per month.
As that number continues to grow, it's just going to mean more revenue loss until MoviePass reaches what is often referred to as "critical size", or the number of subscribers it takes to reach profitability. Nerdwriter estimates that number to be somewhere around 15-20 million subscribers, but it's hard to say whether even MoviePass knows exactly what it really is at this point. In any case, we really hope the service reaches that critical point before it runs out of money, because it has been a boon for both moviegoers and independent filmmakers alike.
Source: The Nerdwriter