Hammad Ali

The Issue
In 2018 MoviePass lost 60% of its subscribers, this was because they limited the number of
movies members could watch to 3. The company recorded a loss of 130 million. A lawsuit by
members for blackout was filed. There was another law suits filed by investors suggesting that,
there was no basis that, “movie pass business model can be profitable”.

The Analysis
MoviePass business model was an imitation of Netflix, but not all the components of the original
model were implemented. MoviePass was doing fine with the membership, but their business
model lacked the main component of business, which is profitability. In order to rectify this, they
limited the number of movies members could watch to 3 per month in 2018. The loss of
customers subscription following this decision was devastating. The parent company was on the
brink of being removed from stock market. MoviePass was not able to negotiate a good deal with
AMC Hallmark and Cinemark. Their agreement with AMC and Cinemark was not profitable.
They demand AMC to give them 3$ discount on the ticket and 20% cut on concessions, but it
was refused. This decreased the revenue generation. They should negotiate better deals with
these companies in order to increase company revenue. MoviePass policy was to contribute to
members ticket prices in order to cover the difference of price, they should implement a new
policy where after a specific ticket price member will pay the difference. MoviePass problems
increased, when AMC and Cinemark launched their own membership subscription services.
MoviePass should focus on competing with these subscriptions in order to avoid further loss by
providing better service and value.
Sinemia was an imitation to MoviePass which copied some of the business model. Sinemia
implemented a partial copy of this business model. They had a lot of hidden fees, that did not
bear fruit for them. Simemia had better negotiators and they lunched a service that will help
theatres with payment processing, customer relation, fraud detection and management of IOS or
Android apps for Ticket purchase and seat selection.
MoviePass will need to increase its prices and re-do some negotiations in order to save the
business from drowning. They will also need to be mindful of competition and come up with a
business model that will be successful for long term and not easy to imitate. They also need to be
mindful of what is the requirement of their customers and how can they better fulfil the needs.
Recommendation
MoviePass needs to re-consider its business model and bring some changes on how their service
works. MoviePass needs to work with AMC and Cinemark. New negotiations need to take place
in order to get a better deal for revenue generation. If an agreement is not reached for 3$ per
ticket and 20% concession it can be negotiated down to 2$ and 15% on concession. MoviePass
should introduce the three level of prices but, with the limitation of 5 movies. The new price
menu will be 15$ basic plan for standard movies no upgrades offered, 20$ plan will include all
new releases and customers can get one upgrade to IMAX or 3D movie by paying the difference
of ticket from pocket. The red-carpet plan of 25$ will have 1 IMAX or 3D, but customers can
pay for price difference and watch the other 4 in IMAX or 3D. MoviePass should also modify
their app to match the theater services provided by Sinemia. Additionally, MoviePass should
integrate Uber service in their app for a 5% discount to members and negotiate with uber for 2%
of ride revenue for providing business.