The Narrative Lessons of MoviePass
Some stories just can’t end well.
On our podcast last week, we touched on the story of MoviePass, the app-based subscription service that, at least originally, let moviegoers see one movie a day at the theater for one low monthly fee. To say the service has been experiencing growing pains, of late, would be a generous characterization. If you didn’t listen to the podcast, spoiler alert, I don’t believe they’re going to pull out of their very public tailspin. And it’s not because of their numerous, recent, also very public, customer service missteps.
When you start evaluating the MoviePass through the lens of Narrative-Based Innovation, it becomes clear that had MoviePass taken the time to develop a detailed narrative — walking through the consumer buying process and exploring the purchase setting as well as the emotions and motivations of the process — the story just doesn’t hold water.
The customer as protagonist
In our full process, we would create detailed narratives, naming our protagonist(s), examining their environments, broader day-to-day experiences, nuanced decision-making processes, et al. But for the purposes of this post, I’ll simply outline the basic and obvious inputs and outputs that would go into the story. In the case of MoviePass, it really should suffice.
Whether we choose a casual moviegoer or a diehard theater patron as our protagonist, once we examine consumer habits, it becomes difficult to draft a narrative where MoviePass makes much sense for most consumers.
MoviePass has undergone a number of pricing/service incarnations since its founding in 2011, each apparently losing money. However, the most notoriety came in August of 2017, when MoviePass introduced a plan priced at $9.99 a month, where users could see up to one movie a day. Which, if you don’t stop to examine the real-world use cases, seems like quite a deal. But as we begin to write out the narrative of average users, the economics seem less appealing.
Americans attend, on average, a little over five movies a year at the theater. Unless you assume our protagonist’s consumption rate would double, it’s difficult to craft a successful customer journey narrative that doesn’t require massive leaps in logic. Even at double the average rate, MoviePass is still ultimately a money-losing proposition for most consumers. Not surprisingly, it also proved a money-losing proposition for MoviePass. Why? Allow me to speculate a bit.
In general, I believe markets are rational. Meaning that casual moviegoers did the math on the $9.99 plan and realized it would cost more than simply buying tickets whenever they wanted to see a movie. So, who signed up? Heavy users who are, also good at math, and, in fact, getting more than they pay for in comparison to simply purchasing movie tickets ad hoc, movie by movie, theater by theater. The downside for MoviePass was that they were paying the theater full price for every ticket, which was as high as $15 in major metro areas, regardless of what the user paid.
So, the only purchase stories that made sense to consumers seemed not to offer any possibility of a happy ending for MoviePass. The truth of which we will see laid out below.
Sidebar:
MoviePass — a script that should have never made it out of development
Over the course of the company’s history, it’s fair to say, MoviePass could never get its story straight. It struggled to sign up 20,000 members at its original $30-per-month movie-a-day offering. But the membership quickly ballooned to over a million after MoviePass lowered the fee to just $9.99 per month in December of 2017.
The story MoviePass was spinning amongst the press was that while they were losing money on every ticket, they would eventually make up in selling user data.
But again, that story requires a massive leap in logic. By comparison, at the end of 2017, Facebook was generating roughly $6 per quarter on every user. That would imply that if MoviePass were ever to become cash flow positive, its members would need to be at 8 times as valuable to advertisers as Facebook users.
Projected Facebook revenue per user per year = ~$6.18 (per quarter) x 4= $24.56
Hypothetical MoviePass cost per user = $8.90 (average US ticket price, 2017) x 3 (movies per month) x 12 (months) = $320
MoviePass revenue per user @ $9.99 (per month) x 12 = $119.88
Net income per user -$ 200.12
Which, should explain why MoviePass is burning through nearly $73 million a month.
Pay no attention to the man behind the curtain
In an August 15th, 2018 letter to MoviePass members, Mitch Lowe, CEO, tried to quiet members’ fears or anger at the company, saying:
“The truth is, disruption and innovation require staying flexible and having an open mind.“
The response that popped into my mind was, yes, keep an open mind, but not so open that your brains fall out. The company portrays itself as the hero in an epic, when it is, from the outside, looking more like a tragedy.
Originally featured on Magnani.com
Written by Justin Daab, President @ Magnani
