From an outsider's perspective, MoviePass appears to be some sort of mystical phenomenon. For less than $10 per month, viewers can watch potentially hundreds of movies a year. Given the average ticket costs $9, how in the world does MoviePass make money? Netflix has a long-term strategy that seems to make sense, and Amazon saves money by turning their warehouses into the ninth circle of hell, but how does MoviePass work?
MoviePass seems to know their current strategy isn't entirely viable in the long run. They're working on several different ways to turn their company around and make it profitable. If they figure it out, it'll be a huge win for movie-enthusiasts. If they don't, we may have to start paying real money to watch movies like the olden days. There may come a time when we all have to mentally and emotionally prepare for the possibility of a MoviePass bankruptcy.
$10 A Month Gets You A Movie A Day
For those not in the know, MoviePass currently charges subscribers just $9.95 a month to see nearly unlimited movies. Viewers are limited to just one film a day (and you're never allowed to see the same movie twice), and not every showing is always available. Additionally, you're mostly only able to buy tickets physically in-theater, which means you're more likely to have a newer movie sell out on you, because you can't pre-purchase tickets from home.
Overall, these restrictions aren't particularly prohibitive, but even that slight inconvenience will occasionally be the difference between heading out to see a movie, or re-watching The Office on Netflix for the 18th time.
Back in 2011, MoviePass Used To Cost $50
Although it may only cost $9.95 a month now, back in 2011, MoviePass was a much more sensible $50 a month. At that rate, it would typically require users to see at least five films a month to make any money on the subscription. At that point, MoviePass was likely able to even things out over the course of a year.
During the summer, a subscriber may watch ten movies in a month thanks to the glut of high-profile blockbusters, but maybe they'd slow back down during the winter months when studios tend to release more independent films (or the terrible films they don't know what to do with). To hit $600 a year at the average $9 a ticket price, subscribers would have to see a minimum of 67 films in theaters. Even the most ardent film buff would have a hard time keeping up with that schedule.
Even as the price dropped, it never did so all at once. There has been a gradual slope down, so hopefully MoviePass can continue to keep up.
MoviePass Pays Full Price For Tickets
With a few exceptions, MoviePass basically pays full price for every single ticket their subscribers purchase. Though they've been trying to partner with larger retail chains like AMC and Regal, it just hasn't happened yet. As far as most theaters are concerned, MoviePass is basically your rich friend who seems totally willing to purchase your movie tickets for you.
AMC doesn't care if it's your name or MoviePass on the card, as long as they get their money, they're okay with it. As you might imagine, this in and of itself isn't a great deal for MoviePass in the long run.
MoviePass Loses Money Almost Immediately
When it was first introduced, MoviePass could profit from any subscriber who spent less than $600 on movies a year, but now there are people who could potentially wreck MoviePass's business model. For example, one editor over at The Verge took it upon himself to watch 14 movies in just three months. Thanks to MoviePass, it cost him less than $30.
Without the subscription, he estimated it would have cost him nearly $170. That's a lot of money for MoviePass to eat, and while not everybody has the time or energy to watch that many films in theaters, it doesn't take much for customers to profit off their subscription.