February 12, 2018
Startup MoviePass, which charges subscribers $10 per month for the option to watch one film per day in a participating theater, said it has passed 2 million subscribers. The company also reported that it was responsible for $128.7 million of the domestic box office for this year’s Oscar nominated films. MoviePass chief executive Mitch Lowe has described the math behind the company’s claim. He also has an explanation for how the company will survive its biggest economic challenge: that it loses money on any customers who sees at least two movies a month.
Deadline Hollywood reports its conversation with Lowe on how he arrived at the figure of $128.7 million in domestic box office. “We bought $110 million worth of tickets since the $9.95 plan was launched in August 2017,” he said. “And the halo effect generated another $146 million in ticket sales totaling $256 million in ticket purchases.”
By halo effect, he refers to MoviePass members who bring in non-member friends or recommend the movie to others. The final figure was derived from the fact that about 50 percent of the purchased tickets were for Oscar-nominated films.
Deadline clarified that 44 percent of the $110 million (which works out to $48.5 million) came from Oscar-nominated films, including those nominated in below-the-line categories. Lowe says that MoviePass members’ accompanying friends spent an additional $146 million at the box office, of which $80.2 million was spent on Oscar-nominated films. Those two figures equal $128.7 million.
MoviePass is now “seeking a share of film tickets and concession revenue from exhibition operators, while selling studios on their movie marketing services and audience data.” Recently, MoviePass, locked in a battle with the world’s biggest exhibitor, AMC, cut ties with some of its busiest U.S. locations.
The big question, says Deadline, is “whether the company can reduce their deficit and buoy their subscriptions as they look to hit 3 million by this summer.” Recode notes that, “MoviePass pays the theaters full price for all of those tickets, which means it loses money whenever users see at least two movies in the theater per month.” Lowe is betting on MoviePass users eventually only watching a single movie per month.
“They start out, they go to a bunch of movies, they slowly edge down,” he said. “But here’s the trick: 89 percent 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.”
Lowe also points out the value of the data it generates about subscribers. “Netflix buys $8 billion of content a year, and believe me, they have to borrow the money to do it,” said Lowe, a founding Netflix executive and former Redbox president. “Or companies like Facebook — it’s free, but they’re monetizing all the advertising and all the data about you. That’s exactly what we are [doing].”
He adds that in the future, MoviePass could “build out an ecosystem around” other businesses including restaurants, bars and ride-hailing services such as Lyft.