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Helios and Matheson Analytics Inc. did not try to obscure the reasons why on Tuesday. MoviePass has become a burden.
MoviePass drew in millions of subscribers, luring them with a $10 monthly rate. But that proved costly. Because MoviePass typically pays theaters the full cost of tickets—$15 or more in big cities—a single movie can put the service in the red. At one point Helios and Matheson had to take out a $5 million emergency loan to pay its payment processors after missed payments resulted in service outages.
Then, last week, the company acknowledged that it is being investigated by the New York Attorney General on allegations that it misled investors.
Moviepass's mistake was choosing the color red for their cards, instead of black.
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Moviepass to Be Jettisoned by Parent Company
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The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
TOO BAD YOU CAN'T BUY a voodoo globe so that you could make the earth spin
real fast and freak everybody out.
-- Jack Handey, The New Mexican, 1988.
(Score: 2) by FatPhil on Wednesday October 24 2018, @08:33AM (8 children)
One thing isn't clear though - something which should have been addressed way back in the early brainstorming days - which is based on how their business seems to not benefit significantly from the economies of scale. Why did they roll out a service with "millions of subscribers", one that required millions of dollars of emergency loans to support, when they could have just done a small trial on a local scale first, one which would have cost them only hundreds to thousands of dollars to demonstrate the stupidity of?
Were these the same geniasses behind pets.com?
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by c0lo on Wednesday October 24 2018, @08:51AM (4 children)
Probably it could work if they manage to get enough suckers.
As absurdum: if the whole US population were to be subscribers, then it's pretty clear their business would work.
A possible explanation for why they acted this way: a statistician tricked them to think they could reach a critical mass of suckers. It has to be a statistician, probably a brain dead one, these are the kind of professionals that don't concern themselves too much with causation as long as they can detect correlations. (grin)
Alternatively, the guys that pitched the idea in the first place to investors knew very well it's not going to last. But why would this matter, the guys needed money and the investors have them.
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 2) by Bot on Wednesday October 24 2018, @08:59AM (1 child)
I thought the idea was:
something web something
get as many customers as possible no matter matter what
"hey finance, we have a gorillion customers wanna invest"
finance has something new and flashy to use in their bonds
"sorry old lady, brand X did not go as we thought, a pity we invested all on it"
rinse and repeat
Account abandoned.
(Score: 2) by datapharmer on Wednesday October 24 2018, @04:18PM
Hey, it worked for Twitter (so far). “We’re losing money on every unit, but we’ll make it up in volume.” Only difference is unit price - tweets are cheap.
(Score: 2) by All Your Lawn Are Belong To Us on Wednesday October 24 2018, @05:07PM (1 child)
Applies to every business, ever.
This sig for rent.
(Score: 2) by c0lo on Wednesday October 24 2018, @05:24PM
Some businesses don't necessarily rely on pure suckers to survive.
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 2) by richtopia on Wednesday October 24 2018, @03:49PM (2 children)
I suspect they expected to use their large number of subscribers to negotiate with the major theatre operators for steeply discounted rates. Even with giving the seats away for free, the marginal cost of seating one more person is virtually zero and there exists a potential for concession sales.
As history has demonstrated, the theatre companies have not played ball. Why would they? The Moviepass patrons are still getting in at discounted rates but the theatre is receiving full price of the ticket sale. Everyone wins except for Moviepass's venture capitalists.
My prediction is Moviepass will be bought or duplicated by one of the major theatre players, like AMC or Cinemark. The service will have more caveats (parent company only, matinee showings, etc) but the business model will be more sound and the venture might actually turn a profit!
(Score: 2) by requerdanos on Wednesday October 24 2018, @05:21PM
The problem here is the order of steps required.
1. Design enticing-sounding service for which the math just doesn't work.
2. Get huge number of subscribers and commit to giving them unlimited money to buy movie tickets.
3. Go not only broke but millions of dollars in debt.
4. Use large subscriber base as leverage to negotiate with major theater operators for cheaper rates.
This didn't work because step #4, which would have been likely to have prevented #3, comes *after* it in the sequence.
Changing step 2 to merely "large number" or "impressive number" might have slowed the failure of this model, but in the end that's only changing the crash speed and burn rate, not preventing the crash and burn.
When I pointed all of this out in the thread discussing the last "Moviepass is having troubles" story, a staunch defender--I forget who--disputed this strongly and championed moviepass' grand plan as a brilliant one that was deliberately subverted by the cinemas, or some such. Of course a plan that includes that as a likely path isn't a great plan in my opinion, but consider this a disclaimer that at least one enthusiastic person outside moviepass disagrees with this assessment.
(Score: 2) by FatPhil on Wednesday October 24 2018, @10:23PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves