MoviePass has been around for several years now, but it has only been over the past several months that the subscription streaming service has become a bigger deal. This can mostly be attributed to the fact that MoviePass dropped its prices by quite a lot. Basic packages for the service cost $9.95 a month per person, with specialty deals costing $7.95 or lower. So how is MoviePass planning to make any money? CEO Mitch Lowe recently explained on the Recode Podcast, noting,
Our goal is to get to breakeven with the subscription and the cost of goods. Then we have all these different ways that we make your life better as a customer. We know how to market films to you. You know, the studios are incredibly inefficient the way they market small films. Over the last three weeks, we bought one in every 19 movie tickets in the country, but when we promote a film, we're buying one in 10, so we're lifting. These are for subjective $50 million box office films. The studios are paying us to be a more efficient marketer of films.
So, the company is hoping for multiple revenue streams to get MoviePass into the black. First and foremost, the subscription service needs to have a lot of subscribers, and currently that number is growing every day. The company is projecting it will be over the three million subscriber mark by August of 2018. While some of those subscribers do see a lot of movies each month, a lot of them only see one or even occasionally, none, meaning the company hopes to break even off the money it is paying out for people to see movies. Then, per Mitch Lowe, it seems that other revenue streams include deals with studios to promote movies and make a little extra chunks of change. He noted deals have already been brokered with movies like Lady Bird and the new Maze Runner movie, among others. In addition, previously monetizing consumer data has been bandied about as a potential source of revenue for the company.
In order to break even on subscriptions, CEO Mike Lowe explained that it is all a balance of averages. He told Recode that there are customers with time on their hands who do see a lot of movies each month, but that's not the most common way that people are using MoviePass. Instead, he said,
Here's the trick: 89 percent of American moviegoers only go to four or five movies a year. When they join MoviePass, they double their consumption and go to about 10 a year. That's a little bit less than one a month. They balance out the 11 percent of the population that go 18 times before joining MoviePass and then after go three times a month. It works out. Over time, it actually works out to be about one movie per month per subscriber. Now, some people do go to 10, 15.
So, if you are wondering how the numbers have been working out so far, Lowe's comments do give you some indication of people's movie watching behaviors since joining the MoviePass service. All in all, while MoviePass is not in its infancy, the new price model is and it should be interesting to see how it all shakes out in the coming months and even years, especially considering that the company has a shaky relationship with some major theaters. If the company isn't making money, yet, it will eventually need to, and the service seems to be exploring multiple ways to do that.
