Viden
//Thursday d. 27.09.18

Behind Moviepass: The fastest growing subscription service of all time

Share article

Written by Morten Suhr Hansen

Moviepass is to cinemas what Netflix is to television. An all-you-can-eat subscription service, which lets subscribers go to the cinema as frequently as they like, for a fixed monthly fee. This concept has been a huge success for Moviepass. So much that the Moviepass subscription service is now claimed to be the fastest growing subscription service of all time.

During the subscription conference ‘Subscribed 2018’ in San Francisco, Mitch Lowe, the founder of Moviepass, was invited to tell the story about the fastest growing subscription service in media and entertainment.

It was a story that took 2.000 the attendees by storm.

Mitch Lowe is not just anyone in the American movie industry. Back in the 1980’s, he ran a number of video rental stores in the area around San Francisco. However, in the middle of the 1990’s, he was forced out of business due to Blockbuster’s aggressive intake. In 1997, Mitch Lowe was contacted by Reed Hastings who planned to build an online DVD rental company. Just a few months after, Netflix was founded with Mitch Lowe as one of the three founders. The rest is history. Netflix is now a dominant player in the movie and television industry with more than 115 million subscribers worldwide. Now, Mitch Lowe is planning to do same with Moviepass!

So, what exactly is Moviepass? If you don’t already know the service, you’ll get the short version here. Moviepass was founded in 2011 but kept a low profile the first six years. In August 2017, just a short time after Mitch Lowe joined the Moviepass team, the company relaunched a revolutionary subscription service. For a fixed monthly price of 9.99 USD, subscribers receive a movie ticket daily. This means that subscribers can go to the movies in USA up to 30 times a month at a price equivalent to one movie ticket. No wonder Moviepass has become a hit in the US at record time!

It’s such a big hit that Moviepass, just four months after the relaunch, reached 1 million subscribers. It’s a faster growth than Spotify and Netflix experienced as start-ups, and Mitch Lowe is certain that Moviepass will reach 3 million subscribers before the end of 2018.

How have the established cinema chains welcomed Moviepass that sends millions of Americans to the movies each month? The same way as Blockbuster welcomed Netflix. Not very well. Moviepass has experienced rejection with threats of lawsuits and with endless articles about Moviepass’ impending decline.

Mitch Lowe has not kept quiet about his criticism of the established cinema industry: “The cinema industry is over. They don’t know their customers. Too much money is spent on marketing and too many independent movies never get a chance. Ticket prices have doubled in under 20 years, which has made it way too expensive – especially for families – to go to the cinema. The result is that fewer and fewer people go to the cinema. Especially the young consumers between 18 and 39 years are going less frequently.”

But why choose the subscription business model to get more people to go to the cinema? Basically, Moviepass’ concept offers a kind of safeguard against “bad” movies. When there is little or no extra cost to go to the cinema, cinemagoers (or subscribers) are much more willing to try different types of movies. Additionally, Moviepass’ analysis reveaks that when the customers don’t have to pay for the extra ticket, they spend much more money on soft drinks and popcorn. At the same time, one cannot ignore the fact that subscription business models are gaining popularity, also in the media- and entertainment industry. For the past five years, US consumers’ subscription purchases in the entertainment sector have increased by 18 percent. Simultaneously, the traditional transactional sales have decreased by 6 percent.

How is Moviepass supposed to earn money in the future, when the established cinema chains won’t get onboard and Moviepass has to buy tickets at full price? According to Mitch Lowe, it’s all about getting the ideal mix of customers. In the beginning, heavy-users will join the service. Later, cinemagoers with more regular consumption will join. Today, the average number of cinema visits per customer is down to 1.7 per month and it is declining slowly. At the same time, some of the cinemas have started giving a discount. However, the great potential lies in the huge amount of data and knowledge of the customers that Moviepass is able to collect. Film production companies are paying Moviepass to market their movies to relevant subscribers. Moviepass, like Netflix, already knows a lot about every single customer’s preferences.

Moviepass has also taken part in the actual film production and has already funded a handful of smaller film from independent film producers. Films which are offered to Moviepass’ subscribers only, as special-events. Hence, it is Moviepass’ goal to build a new ecosystem around their subscribers.
A new movie giant has been born. However, still only in the United States. It took 15 years for Netflix to enter the Danish market and the rest of Europe, but Moviepass seems to make things happen a bit faster!