MoviePass has been under scrutiny in the last few weeks after their 6.2 million dollar loan and interrupted service while fans were trying to see "Mission: Impossible – Fallout." These technical difficulties sparked some panic and speculation that the company might go out of business. However, the company stated in a recent email to subscribers that they are indeed still standing. Their prices for new and current subscribers will increase.
As we've seen over the last year, MoviePass has brought big changes for the film industry. With movie ticket prices climbing in recent years, a monthly payment the same amount as a single ticket for unlimited movies does sound pretty great. After all, MoviePass pays the theater back at full price for each ticket used by a subscriber, so there's really no harm or scam going on here.
But what is going on? How can MoviePass offer these low prices? Well, there's always been talk of MoviePass selling user data, although Lowe, the CEO, claims that is not what's going on. Regardless of what they're doing with this data, they have it. They're tracking and collecting it and studying the habits of moviegoers.
So what do we have here? We have a company with services that are changing the film industry, and we have impressionable moviegoers who want unlimited movies at affordable prices. However, MoviePass might actually be hurting the film industry because they are causing people to expect high volume and quality at a low expense.
Let's take a look at where your money goes when you pay full price for a movie ticket. If a regular movie ticket is $10, that means $4 goes to the theater and $6 goes back to movie studios in different ways.
That $4 goes toward the theaters' expenses, like wages and rent. This is why theaters charge so much for concessions. If the majority of people come in and only buy a movie ticket, the theaters aren't keeping that much, so they have to charge another $4 for a soda.
The $6 that goes back to movie studios also gets broken up and given to different aspects of the film industry. Most of it goes to marketing and promotions at around $2.50. About $1-2 goes toward the actual production of the movie. Sixty cents goes toward the actors' salaries and $1 goes toward reel and digital distribution.
It's actually rare that movies will turn a profit. Sure, they make millions at the box office, but that number is calculated over the total distribution time and reported in dollars instead of ticket sales to reflect changing percentages over the course of the movie's time in the theater. Opening weekend is important for movies because this is when they receive the highest percentage back from ticket sales.
When MoviePass does things like blackout blockbuster movies on opening week, they are affecting the film industry by hindering ticket sales on those crucial first few days after a movie release. Thus, they are changing the habits of moviegoers when they are supposed to only be studying those habits.
MoviePass also influences moviegoers when they use ads in their app. Movies like "Justice League," "Coco" and "The Man Who Invented Christmas" showed increased box office sales as a result of advertising through MoviePass. When they used surge pricing on certain movies, ticket sales through MoviePass dropped for those movies.
MoviePass has stated they will no longer use surge pricing or blackout blockbuster movies (with some exceptions) in their recent email, but they have set the scene. They are pioneers of movie theater subscription services and just because they decided not to use these practices, doesn't mean another service won't come along later and "perfect" it.
We need to step back and look at the product for which we are paying. It takes lots of work and time and money to make a movie. Besides the actors and directors and higher-ups in the industry, most people who work on a movie set do not make that much money. Breaking into the film industry takes a lot of time in entry-level jobs that pay very little or are volunteer-based per project. Most workers get paid a certain percentage per project instead of per hour, so when movies make more money, studios can afford to pay their people better.
When you think about it, a $10 movie ticket isn't really that big of a price for the product you're viewing. You have to think about the value. It took millions of dollars to produce a movie, and you get to enjoy it for a mere $10 on average.
Why are monthly payment programs taking over? Besides MoviePass, we also have music streaming services, television and movie streaming services, services that send monthly mail packages of different products, and other subscriptions. It comes back to this need our society feels for instant gratification. I mean, we can access most of these services on our phones now, instantly. So why do we need to go out to a theater and pay full price?
"If you teach people that movies aren't worth individual purchases — if you suggest to them that movies are all part of the same river of content and dipping a toe here is no different than jumping in up there — you are implicitly teaching them to disrespect the product on the big screen and encouraging them to reach for the small screen in their pocket."
Raving fans will always want to pay full price for a service or product they love. MoviePass is changing the film industry, but not in a good way. Over time, their influence could desensitize moviegoers to the true value of the product. Once consumers aren't willing to pay for what a product is actually worth, they either stop paying or the industry must change. What will that mean for the film industry?
So the problem here is that MoviePass affects the habits moviegoers would practice without the service, which in turn affects the ticket sales and thus revenue to the film industry. MoviePass might not be going out of business now, but maybe it's time for them to rethink the way they are impacting the film industry.
