MoviePass is in trouble – again. The company has been around since 2011 but came in to the main public eye sometime in 2017 with its too-good-to-be-true promise of unlimited movie tickets for $9.95 per month.
This business comes at an interesting time. In 2017, domestic box office ticket sales hit a 25 year low. And just this past month, a new theater opened up near me with tickets priced at $19 and some change. Average ticket prices have gone up somewhere around 25-30% in the last 10 years as attendance has fallen.
MoviePass offers customers one free movie per day. The process to get the ticket is entirely too complicated. Customers receive a prepaid debit card in the mail after they subscribe. Then, they can select a movie from select theaters when they are within a certain proximity of the theater. The cost of the ticket is loaded on the debit card and the customer can go the theater and get the ticket.
Critics, investors and theaters have spoken out about the business model. The company has been hemorrhaging money and has had to raise additional capital just to stay afloat. The executive team considered raising the monthly price for their 3 million customers but instead opted to lower the number of movies customers can see from one per day to three per month.
I can’t imagine the 3 million customers will stay for long. Or that the business will survive without major changes.
As a fan of the cinema, I considered subscribing to the service. I decided against it for a number of reasons and chose to watch the company’s story unfold from afar.
Here are a few lessons we can learn from MoviePass.
1. Build easy to use products.
The process for customers to use the service is cumbersome. A customer can’t just buy a ticket on their phone and go on with their life. They have to take 3 additional steps – including a geo-located one – just to use the service.
Customers would be better served with an easy flow and simple steps. A simple solution is an elegant solution.
When you are designing products and features for customers, focus on usability. Not just from a design standpoint but from a process flow standpoint. This may sound like it is common sense. But obviously, it is not taken seriously everywhere.
2. Don’t alienate your suppliers.
MoviePass faced tough criticism from major theater chains like AMC during their pilot program in San Francisco as well as after the nation-wide launch. Theaters wan’t more than just ticket sales – they want to know why you are purchasing and to build a longer-term customer relationship so they can provide better experiences, ancillary sales and promotional items based on relevant data.
MoviePass cannot exist without major theater chains. Alienating and competing with your suppliers is not a good business model.
Look at the end to end value chain and supply chain for your products. Who are your partners, suppliers, vendors and impacted organizations? Competition is healthy and encouraged. But where are you alienating key partners that you cannot replace elsewhere?
3. Save the best for last.
Anytime a company raises prices or lowers value is not a good sign for customers. Had MoviePass started with one movie per week for $9.95 per month would have been an amazing deal. If they gradually increased the number of movies, customers would have received more value the longer they were with MoviePass.
Unlimited sounds better as a marketing ploy, but if its not scalable it is really just a lie.
When planning a long-term roadmap for a product, are you increasing value to your customers, keeping the same value or (gasp) reducing value for your customers? One of these is correct. One is tolerable. One is a cardinal sin.