MoviePass: A Netflix For Moviegoers?

Almost two years ago, Mitch Lowe, MoviePass’s CEO was facing a difficult dilemma. In particular, MoviePass was experiencing a downward spiral. Lowe, who happens to be Netflix’s former senior executive, became MoviePass’s CEO in 2016. Between 2016 and 2017, MoviePass had gained a reputation as a pretty solid company. Its popular membership program enabled moviegoers to watch movies in theaters at a low cost. However, in 2018, the service started to decline drastically and led to crushing financial losses. It seems MoviePass’s means of attempting to be the “Netflix of Cinema’’ is what probably led to its downfall. Towards the end of 2018, the company was debating whether or not to implement a new pricing menu as its strategy. Because, considering its situation, what else was the company going to do to prevent itself from facing its downward spiral? Or, perhaps, prevent its downward spiral from getting any worse? It was time for MoviePass to change.

Since its founding in 2011, MoviePass subscribers paid fifty dollars a month and were entitled to receive one movie ticket per day. Of course, this appeared to be an attractive deal for moviegoers. However, MoviePass didn’t gain enough traction in its original test market. Specifically, it was an expected reaction when cinema exhibitors became concerned — they were worried that MoviePass’s subscription might affect the movie theatre industry. Well, since Netflix was a disruptor, then so was MoviePass. And, it seemed as if MoviePass was really aiming to become the “Netflix of Cinema.”

In 2012, MoviePass decided to tone down its subscription price to $30-$34 a month, along with using a prepaid debit card to purchase movie tickets. Fortunately, MoviePass’s revised model led to a rapid growth for the company. Four years later, Mitch Lowe was announced the CEO of MoviePass. Considering the fact Lowe served as Vice President of Business Development and Strategic Alliances at Netflix and President at Redbox, his joining of the company seemed to be a pretty big deal. With his experience and credentials, it came as no surprise that he would attempt to establish MoviePass as a “Netflix for the movie theater” and “make it easier for passionate moviegoers and casual fans to see films the way they’re meant to be seen — in the theater.” Within a year later, data and analytics firm H&M acquired a controlling stake in MoviePass. This acquisition resulted in MoviePass decreasing its monthly subscription fee to $9.95, in which membership went from twenty thousand subscribers to three million in less than a year.

Unfortunately, the more MoviePass grew, the more revenue it lost. In 2018, the company found itself not being able to afford the price for each ticket. As soon as MoviePass began to temporarily run out of money, the company announced that it was going to increase its subscription price to $15 — which, of course, left subscribers feeling disappointed. During that year, almost 60 percent of consumers cancelled their subscriptions. The company pulled off an unsustainable move. That is, they never should have increased the subscription price to $15 — it was inevitable that subscriptions were going to be cancelled.

To look ahead, Mitch Lowe could meticulously evaluate what’s going on with the company and carefully assess each strategic step. For example, he could have asked himself, “Will partnerships make a difference?” or “Will surveying our potential subscribers work?” That way, he and the company will be able to make more feasible and sustainable decisions. In particular, implementing a new pricing strategy can definitely save the company. But, more importantly, how can MoviePass convince consumers that they’ll be getting value out of purchasing a new subscription (and at a potentially better deal than previously)? That’s something to highly consider so not to continuously face an already worsening downward spiral. So, if MoviePass’s strategic objective is to stabilize, optimize, and grow, then it should assess each particular scenario, make a firm and wise decision, and then go ahead with it without hesitation. The company can go along with implementing a new pricing menu, as long as it satisfies the subscribers and doesn’t cause the company to go downhill again.