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--:-- Sean Rameswaram: For the past year, I've been asked the same question over and over by my movie-going friends. Oh my god, do you have MoviePass? MoviePass, it's the way of the future!
--:-- Sean Rameswaram: I do not, but every time someone half convinces me to get it, I feel like I hear a bunch of negative things about it in the news. Especially this week. The show may be over for MoviePass.
--:-- Sean Rameswaram: Just about everybody in the industry says it is an unviable economic model. And to some extent, that's been proven by the fact that they ran out of money last week.
--:-- Sean Rameswaram: Can you stay in business? Oh yeah.
--:-- Sean Rameswaram: Alyssa Wilkinson has MoviePass. I do. She writes about the movies for Vox.
--:-- Alyssa Wilkinson: Movie Pass is basically a subscription service where you pay $9.95 a month, and you at present get access to unlimited movie tickets, one per day in 2D at major chains and at small indie theaters.
--:-- Alyssa Wilkinson: And you basically have an app, and you have a debit card. What you do is go to the theater, pull up the app on your phone, choose the showtime that you want to see the movie at, And that essentially loads money onto the card that you can then use to swipe it in the machine and pick up your ticket.
--:-- Alyssa Wilkinson: MoviePass pays the theater the full price of the ticket. So you have basically paid a subscription fee of $9.95 for a ticket that might have cost you $15 or more if you had gone in with your ordinary bank card.
--:-- Sean Rameswaram: What's the history of this company? How did it get started?
--:-- Alyssa Wilkinson: So they started all the way back in 2011, but most people didn't hear about them till last summer.
--:-- Alyssa Wilkinson: Back in 2011, they released a plan in beta where they said for $50 a month, you can get access to all these theaters. And the theaters freaked out. They didn't want this. They didn't know what it was.
--:-- Alyssa Wilkinson: MoviePass put a halt on it. And eventually they went to this debit card system that still holds now.
--:-- Sean Rameswaram: But the pricing structure has changed a lot over time. It's been anywhere from about $20 to $50, depending on the market you were in.
--:-- Alyssa Wilkinson: And then last summer, that all changed. One movie a day for $9.95 a month. Sounds like a deal of a lifetime, right?
--:-- Sean Rameswaram: You can't go wrong with that. They were acquired by a data analytics firm, Helios and Matheson, and they dropped their price down to $9.95. That is an extreme, extreme difference.
--:-- Sean Rameswaram: I mean, really, in most places, that is less than the cost of one movie ticket.
--:-- Alyssa Wilkinson: What happened when they introduced this $9.95 plan? Suddenly, everybody had heard of MoviePass. Everyone was subscribing, and their subscriber base grew by literally by millions within a couple of months, all the way up to about 3 million users.
--:-- Sean Rameswaram: MoviePass, it's the way of the future! Which was the goal all along, grow the user base in a huge, huge way so that they could sort of throw their weight around in the market.
--:-- Sean Rameswaram: Did that mean that charging people significantly less than the cover of a movie could make sense as a business model?
--:-- Alyssa Wilkinson: Well, that's what they were betting on. They had two things in mind. One was to be able to collect people's data and use it in some way that would become profitable to them.
--:-- Alyssa Wilkinson: So Mitch Lowe, who came to MoviePass from Netflix and now is the CEO at MoviePass, he made some comments at a conference earlier this year about using data about locations that would benefit the customer based on their buying habits, which is pretty common on the Internet.
--:-- Alyssa Wilkinson: Last week, CEO Mitch Lowe said, we watch how you drive from home to the movies. We watch where you go afterwards. We know all about you.
--:-- Sean Rameswaram: The other thing is that they wanted to find ways to convince studios, producers and distributors and theaters to partner with them because they had this large user base that they could move around.
--:-- Alyssa Wilkinson: We want to send them to our partner theaters and our subscribers want to take recommendations.
--:-- Alyssa Wilkinson: They've done different things to show whether or not their base actually changes ticket sales. They have at times blacked out a movie to sort of prove to the studio that actually if MoviePass users can't get the movie through MoviePass, they just won't get it at all.
--:-- Sean Rameswaram: Which movies were they blacking out?
--:-- Alyssa Wilkinson: The big one was Red Sparrow, the Jennifer Lawrence spy thriller earlier this year.
--:-- Alyssa Wilkinson: That's why no one saw that movie?
--:-- Sean Rameswaram: I think so.
--:-- Alyssa Wilkinson: And then at one point, they've been in a dispute with AMC theaters for a long time. They actually had MoviePass stop working at 10 of the major AMC theaters in the country, including ones in New York, D.C. and L.A.
--:-- Sean Rameswaram: And again, the idea was they would collect some data and maybe AMC would see that actually MoviePass is a good thing and they should promote them or partner with them.
--:-- Alyssa Wilkinson: They also had some partnerships over kind of the prestige movie season Oscar season at the end of the year with movies like Lady Bird and I Tonya.
--:-- Sean Rameswaram: What does that partnership mean? Like, are those movies promoted on the app in some way that's more prominent or something?
--:-- Alyssa Wilkinson: Yeah, promoted in the app and promoted in emails that they send.
--:-- Sean Rameswaram: The theater still gets paid the cost of the ticket. That's good for the studio. That's good for the producers.
--:-- Alyssa Wilkinson: The people it's not potentially good for is MoviePass. Right.
--:-- Sean Rameswaram: So how has their business continued to change since they made this $9.95 a month deal?
--:-- Alyssa Wilkinson: Over the past year, they've had all kinds of different things they've tried in order to keep growing their customer base.
--:-- Alyssa Wilkinson: They partnered with Costco last December. They offered an annual plan that you could buy, and they've changed the price on that several times.
--:-- Alyssa Wilkinson: They partnered with iHeartRadio.
--:-- Sean Rameswaram: People wondered, oh no, is MoviePass going under? MoviePass said, no, no, no, we're not going under.
--:-- Alyssa Wilkinson: They went back to their $9.95 per month plan.
--:-- Sean Rameswaram: Then a couple weeks ago, they needed an emergency infusion of $5 million in cash, which should have been staved off by something they had just announced called peak pricing, which was a lot like Uber for movie tickets, where if a movie was in demand, they would charge you a little more.
--:-- Sean Rameswaram: Then movies just started disappearing from the app.
--:-- Alyssa Wilkinson: People discovered they couldn't go see Mission Impossible Fallout because it was grayed out of the app.
--:-- Sean Rameswaram: And it turned out this is because MoviePass was just losing money.
--:-- Alyssa Wilkinson: Everyone was very upset about this, who went to the theater expecting to use their MoviePass and couldn't.
--:-- Sean Rameswaram: Yikes.
--:-- Sean Rameswaram: I've personally heard anecdotally from people who said, oh yeah, we just called and canceled immediately.
--:-- Alyssa Wilkinson: Then they announced that it was going to be $15 a month and that people wouldn't be able to see blockbusters in the first two weeks of release.
--:-- Sean Rameswaram: Then they backtracked on that and said, actually, it's still going to be $9.95 a month.
--:-- Alyssa Wilkinson: We're not going to have peak pricing anymore. You can see any movie anytime you want, but you can only see three per month.
--:-- Sean Rameswaram: That plan kicks in, they say, on August 15th.
--:-- Sean Rameswaram: We will see what happens on August 15th.
--:-- Sean Rameswaram: It sounds like they have no idea what they're doing.
--:-- Alyssa Wilkinson: I mean, I don't think they would say that, but it seems like they're just trying everything possible to keep their subscriber base large so that they can attract partnerships and sponsorships and also so that they can attract venture capital, which is what they're going to need to keep going.
--:-- Sean Rameswaram: You mentioned that there were some cancellations after people couldn't see Mission Impossible and that prices were going up and whatnot.
--:-- Alyssa Wilkinson: But are people hanging with MoviePass through all of this tumult?
--:-- Alyssa Wilkinson: Yeah, a lot of people are kind of waiting to see what happens at this point.
--:-- Sean Rameswaram: The thing is, at $9.95, I'm still getting a bargain, even if I only see one movie a month, especially in a place like New York.
--:-- Sean Rameswaram: But the average ticket price nationwide is just over $9 right now.
--:-- Alyssa Wilkinson: And so for most people, it's still a bargain, even if it only works a little bit.
--:-- Sean Rameswaram: It kind of reminds me of T-Mobile. It's like, yeah, I take my money, work half the time, I'm down.
--:-- Alyssa Wilkinson: Yeah, that's right.
--:-- Sean Rameswaram: I mean, I think if they continue to kind of flail and change their business model every three days, eventually they're going to see a bleeding of their subscriber base.
--:-- Alyssa Wilkinson: But at the moment, they've kind of stopped the dam long enough to see if people will stick with them through the end of the year.
--:-- Sean Rameswaram: And the thing is, the movies that come out at the end of the year are the kinds of movies that people with MoviePass want to see anyhow.
--:-- Sean Rameswaram: So they could see an uptick in subscribers if they can look stable, or it could all go to seed.
--:-- Sean Rameswaram: So on top of all this Color blue with subscription prices and blackouts and all this stuff.
--:-- Sean Rameswaram: I read like a couple of days ago that MoviePass is making a movie with Bruce Willis.
--:-- Alyssa Wilkinson: Well, this is really baffling for everybody.
--:-- Alyssa Wilkinson: So they actually announced at Sundance in January that they were going to start distributing movies.
--:-- Alyssa Wilkinson: And they partnered with another distributor to put this movie out that's called American Animals.
--:-- Sean Rameswaram: How can I tell you if I'm in or I'm out without you telling me the first thing about what I might be in or out of?
--:-- Alyssa Wilkinson: This would be something dangerous. Very exciting.
--:-- Sean Rameswaram: I saw it. It's a kind of a slick heist movie, but if you didn't see it, you're not alone.
--:-- Alyssa Wilkinson: I feel like a lot of people didn't see it.
--:-- Sean Rameswaram: It's like Red Sparrow.
--:-- Alyssa Wilkinson: That's right.
--:-- Sean Rameswaram: And then they also distributed the Gotti movie, the John Gotti movie.
--:-- Alyssa Wilkinson: Oh, no.
--:-- Sean Rameswaram: Yeah, which was a bad gamble on their part, I think.
--:-- Alyssa Wilkinson: Mr. Gotti, are you the head of the Gambino Prime family?
--:-- Alyssa Wilkinson: The head of my family.
--:-- Alyssa Wilkinson: Mrs. Gotti, do you know what your husband does for a living?
--:-- Alyssa Wilkinson: He's from God.
--:-- Sean Rameswaram: It had something like a 0% from critics on Rotten Tomatoes.
--:-- Sean Rameswaram: It's pretty bad.
--:-- Alyssa Wilkinson: And they started bragging about their zero percent, right?
--:-- Sean Rameswaram: Yeah.
--:-- Alyssa Wilkinson: Well, at some point, you know, it becomes enough of a joke that you might be able to get people in the theater because it's so bad.
--:-- Sean Rameswaram: And so now, yes, they are producing a movie with Bruce Willis.
--:-- Alyssa Wilkinson: It is unclear why this is happening or whether it really will happen.
--:-- Sean Rameswaram: Again, it's a gamble.
--:-- Alyssa Wilkinson: And MoviePass is all about gambling on new business models.
--:-- Sean Rameswaram: They're kind of the classic disruptor.
--:-- Sean Rameswaram: They're just a consumer product.
--:-- Alyssa Wilkinson: And so people are seeing all of the different phases happen right in front of their eyes.
--:-- Sean Rameswaram: This kind of perfectly plays into a joke I saw repeated time and again at the Bruce Willis roast on Comedy Central a couple weeks ago that Bruce Willis will just literally say yes to anything.
--:-- Sean Rameswaram: How the fuck are you a movie star You like Elmer Fudd if he hunted bad scripts instead of wascally wabbits
--:-- Alyssa Wilkinson: It sure seems that way.
--:-- Sean Rameswaram: It sounds like you betting on MoviePass surviving
--:-- Alyssa Wilkinson: I think so.
--:-- Sean Rameswaram: I think they'll survive till the end of the year.
--:-- Sean Rameswaram: They may have fixed the problem with this three movie a month plan.
--:-- Alyssa Wilkinson: On the other hand, they don't make money off of that.
--:-- Sean Rameswaram: So the only way that they're going to keep making money is if that keeps enough subscribers around.
--:-- Sean Rameswaram: In order for them to get the much bigger fish of the advertising, the partnerships, and the venture capital.
--:-- Alyssa Wilkinson: The most interesting thing about MoviePass isn't its business model. It's how it's changing the way we see movies.
--:-- Sean Rameswaram: That's next on Today Explained.
--:-- Sean Rameswaram: I don't personally have a website, but I have a few favorites I could tell you about.
--:-- Sean Rameswaram: One of them is PetiteTube.com.
--:-- Sean Rameswaram: That's P-E-T-I-T-T-U-B-E dot com.
--:-- Sean Rameswaram: It's this website that randomly generates YouTube videos that are all under a minute in length.
--:-- Sean Rameswaram: After you watch one, you say whether you enjoyed it or not, and then it serves you up another one.
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--:-- Sean Rameswaram: Netflix showed up and then everyone else wanted to put out their own sort of subscription content model.
--:-- Sean Rameswaram: Is that what's happening with MoviePass? Are people coming up to compete with them?
--:-- Alyssa Wilkinson: Yes, that is happening.
--:-- Alyssa Wilkinson: So there are some third-party companies. One is called Cinema.
--:-- Alyssa Wilkinson: Cinemaia. It's spelled S-I-N-E-M-I-A.
--:-- Alyssa Wilkinson: A third-party competitor that offers, I think, one or two tickets for $7.95 a month.
--:-- Sean Rameswaram: It's a very small but manageable kind of business model.
--:-- Alyssa Wilkinson: And then theaters themselves have kind of thought, oh, maybe this subscription model would work.
--:-- Alyssa Wilkinson: So a lot of indie and art house cinemas have had membership programs for a while, and I've seen an increase in the number of theaters that are instituting their membership programs.
--:-- Sean Rameswaram: And then AMC itself announced a program where you pay $20 a month.
--:-- Sean Rameswaram: You get access to three films a week, which is pretty good, actually.
--:-- Sean Rameswaram: And you can go to them all on the same day if you want.
--:-- Sean Rameswaram: You can go to 3D movies.
--:-- Alyssa Wilkinson: So there are people trying to kind of hack the model and find ways to make it sustainable, partly because they can see that it works to a degree with MoviePass.
--:-- Sean Rameswaram: It creates a kind of customer loyalty that they desperately need.
--:-- Sean Rameswaram: And everyone's trying to figure out, what do we do?
--:-- Sean Rameswaram: Do we serve food? Do we ban phones? Do we, you know, have comfier armchairs? Blankets.
--:-- Sean Rameswaram: Blankets, right?
--:-- Alyssa Wilkinson: 4DX, which is where you can sit in like a rumble chair during an action movie and have water squirted in your face.
--:-- Sean Rameswaram: I have done this.
--:-- Sean Rameswaram: It's really weird.
--:-- Alyssa Wilkinson: Yeah, me too.
--:-- Sean Rameswaram: The business model is sort of broken, basically, and trying to figure out how to compete with other theaters and also get people to come who might otherwise just sit on their couch and wait till the movie comes to Netflix is difficult.
--:-- Sean Rameswaram: One thing, though, that MoviePass has shown is that people actually will go to the movies.
--:-- Sean Rameswaram: If you give them the option, what they don't like is paying $18 for a ticket.
--:-- Sean Rameswaram: I mean, what seems clear here is this is changing the way people see movies.
--:-- Alyssa Wilkinson: People are down to pay these subscription fees and go see way more movies.
--:-- Sean Rameswaram: Yeah, they're absolutely down for it.
--:-- Sean Rameswaram: And subscriptions are kind of the wave of the future, especially for millennials who are in their 20s and 30s, trying to kind of budget for your entertainment, knowing that I'm going to pay 20 bucks a month, but I'm not going to have to pay any more than that.
--:-- Sean Rameswaram: That's good.
--:-- Sean Rameswaram: That frees me up to feel like, oh, and maybe I can buy a beer when I go to the theater, too, or maybe I can get some popcorn.
--:-- Sean Rameswaram: You know, I'm a millennial.
--:-- Sean Rameswaram: I'm in my 30s, and I have subscriptions for coffee beans, and I have magazine subscriptions.
--:-- Sean Rameswaram: And we all have these subscriptions because they're predictable, and they're interesting, and they give us variety, and they feel freeing.
--:-- Sean Rameswaram: There's a study conducted by a payments processor called Vantiv last year in 2017, and it found that more than 70 percent of millennials have a product subscription.
--:-- Sean Rameswaram: And 89% have some kind of service subscription.
--:-- Sean Rameswaram: They say this is some kind of reaction to being bombarded with an abundance of choice.
--:-- Sean Rameswaram: And it way outpaces Gen Xers and boomers.
--:-- Sean Rameswaram: So MoviePass figured something out
--:-- Sean Rameswaram: They just haven't gone about it in a totally sustainable way
--:-- Sean Rameswaram: I think you and I Alyssa are both like on the older end of the spectrum in the millennial cohort
--:-- Sean Rameswaram: But I remember working at my previous job with like a bunch of really young kids
--:-- Sean Rameswaram: And whenever I'd come in on like a Monday and be like, oh, did you guys see this movie?
--:-- Sean Rameswaram: They'd be like, nah, the last movie I saw was Toy Story 3.
--:-- Sean Rameswaram: They're like all proud of it, that they never went to movies.
--:-- Sean Rameswaram: Has that changed now with MoviePass and all these other subscription models?
--:-- Alyssa Wilkinson: Yeah, it very much has changed.
--:-- Alyssa Wilkinson: I've talked to a lot of people anecdotally who went to see a movie because they had movie pass.
--:-- Alyssa Wilkinson: The studies bear that out.
--:-- Sean Rameswaram: I also teach college students, and I used to have a problem where I would go into the classroom and say, has anyone seen X movie?
--:-- Sean Rameswaram: And they wouldn't have seen it.
--:-- Alyssa Wilkinson: But now they've all seen it because they all have movie pass.
--:-- Sean Rameswaram: And to be clear, you teach college kids about movies.
--:-- Alyssa Wilkinson: I do teach college kids about movies.
--:-- Sean Rameswaram: And they haven't seen any movies.
--:-- Alyssa Wilkinson: That's right.
--:-- Sean Rameswaram: But this must mean also that people are seeing more bad movies, right?
--:-- Alyssa Wilkinson: I do think people are seeing more bad movies, but I think they're also seeing more good movies in the theaters, which is really great for the people who make good movies.
--:-- Sean Rameswaram: The kind of films that don't always get seen are sort of the arthouse films or the indie films that might not have big name stars on them.
--:-- Alyssa Wilkinson: You can think of a film like Eighth Grade, for instance, as a really good example of a movie that people might not have gone and seen because they don't know the star and it seems kind of like you could just rent it.
--:-- Alyssa Wilkinson: But now I have MoviePass. I can just go see it and that benefits the film.
--:-- Sean Rameswaram: And it also helps theaters to make money off of those films and that encourages them to carry them in the future.
--:-- Sean Rameswaram: It sounds like this might be good for everyone except MoviePass.
--:-- Sean Rameswaram: Theaters are getting paid. More movies are being seen.
--:-- Alyssa Wilkinson: And this company can't get its shit together.
--:-- Sean Rameswaram: Yeah, basically.
--:-- Sean Rameswaram: I mean, the theaters are a little worried that if MoviePass goes away, people won't be willing to go back to paying the full price of tickets.
--:-- Sean Rameswaram: But the reality is that maybe they shouldn't.
--:-- Sean Rameswaram: I mean, for a lot of people, what they get in the theater is a subpar experience with someone talking or playing on their phone in front of them.
--:-- Sean Rameswaram: There are no ushers to kind of help keep order.
--:-- Sean Rameswaram: That's why a lot of people stay home.
--:-- Sean Rameswaram: And maybe the $18 or the $15, whatever you're paying, is really not worth what you're getting.
--:-- Sean Rameswaram: Yeah.
--:-- Sean Rameswaram: So that argument is understandable, but might need some tempering.
--:-- Sean Rameswaram: So what movie are you going to go see this weekend, Alyssa?
--:-- Alyssa Wilkinson: Oh, I've seen everything.
--:-- Sean Rameswaram: No, I'm seeing The Meg tonight, the big shark movie.
--:-- Sean Rameswaram: Oh, who's Jason Statham?
--:-- Alyssa Wilkinson: Yes, Jason Statham, as far as I can tell, fights a shark and also a bigger shark.
--:-- Sean Rameswaram: I'm not really clear, but yes, I will be reviewing that film.
--:-- Sean Rameswaram: Bruce Willis must be so pissed that he didn't get the call for that one.
--:-- Sean Rameswaram: Yeah, I mean, Bruce Willis is a prime candidate to fight a large shark.
--:-- Sean Rameswaram: I guess another MoviePass movie soon after that.
--:-- Sean Rameswaram: Well, we'll see if MoviePass still exists tomorrow.
--:-- Sean Rameswaram: Yeah.
--:-- Sean Rameswaram: Alyssa Wilkinson is a film critic at Vox.
--:-- Sean Rameswaram: I'm Sean Rameswaram from This Is Today Explained.
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