MoviePass. It sounded like every movie-lover’s dream: a $9.95 monthly subscription service that lets you watch a movie everyday in theaters. Sounds too good to be true, right? It was. That’s why, despite the valuable data MoviePass amassed, their money ran out. So why did the 2017 plan that had 3 million users collapse? Simple, MoviePass’s failures were rooted in poor data planning and analytics. Though their main commodity was consumer data, MoviePass wasn’t able to survive internally. And internal data management is an equally essential segment of business longevity.
Financial troubles and outages plagued the company for the past year, but they’re still alive (after a few changes). MoviePass is a more of a data-collection company now than anything else, but will they be able to successfully analyze their own data?
How does it make money?
It seems ridiculous at first glance, but it’s not that crazy. Like most other digital tech, customer data is a huge component. Data insights were the lifeline of MoviePass’s lifespan. By leveraging data (movies choices, theater locations, demographics, and more), MoviePass teamed up with studios, advertisers, and theaters. In exchange for “unlimited” movie access, customers were providing precious consumer data to MoviePass and its partners. Data was then used to drive ticket sales and MoviePass would make money through the contracts. It isn’t just a ticketing service, it’s more of a data-collection service. They know where you live, what you like to watch, when you watch, where you go, and everything else your phone tells them. MoviePass CEO Mitch Lowe says, “We know your home address, of course; we know the makeup of that household, the kids, the age groups, the income” which isn’t alarming (or is terrifying) when you realize most businesses do this.
However, their business model was flawed early on. As the number of customers increased, MoviePass overlooked their capabilities to handle so many subscribers. From its birth in 2011 to 2017, MoviePass only grew by 20,000 subscribers. When they lowered the $50 price tag to $9.95 in desperation, customers flocked to the deal and quickly overwhelmed the company. For months, MoviePass worked on a $151.9 million deficit.
Maybe losing money was part of the plan because MoviePass collected the data they wanted. On the other hand, planning to take a nose dive and depleting all resources, credibility, and trust isn’t a smart move.
What should they have done with data?
Having big data is never enough. It’s what you do with the data that changes the outcome. This goes for both the front-facing business and internal operations. Any large business needs to analyze resources, potential ROI, cost of operations, report to shareholders and investors, as well as customer experience. Ted Farnsworth (CEO of MoviePass’s parent companies) asserts customer fraud ruined the company. He believes people abused the service by getting tickets for non-members and using the MoviePass debit card on other things. But was it just an unsustainable model? Loyal customers had been complaining for some time about abrupt service outages, movie availability, and customer service. The cost of running the business was more than the revenue they made and the biggest data pitfall.
What could’ve been different? Internal resource planning. ERP (Enterprise Resource Planning) employs custom software and applications to handle big data segments. Analytics and reports would be valued as much as revenue as part of a comprehensive business model. Take a look at AMC, once on the defense against MoviePass, now has a successful members-only subscription plan that seems to be working. AMC Stubs has an “A-List” tier that allows members to see up to 3 movies a week, get free large popcorn refills, collect redeemable points, waive online ticketing fees, and more. It has reportedly seen 14 million increase in AMC theater visits and is not at risk of losing revenue because the perks are priced to support the model.
Data insights are a matter of life and death (for business)
There have been way crazier and laughable businesses that succeeded. so why not this one? Will MoviePass be able to get back on its feet with a successful business model? It’ll depend on how they use their data. No matter how well they manage to stand up, it can come undone as quickly as before. Data products are a necessity to business, so take a lesson from MoviePass on what not to do with data.