What Kind of Insane Business Strategy Is This, MoviePass?
I’m a MoviePass subscriber, and I think it’s great for moviegoers, though I am still flummoxed as everyone as to how it will ever be viable. Basically, you pay the service $10 a month, and they will pay for your movie tickets no matter how many times you go to the theater each month, as long as it’s not more than once every 24 hours, and as long as you don’t see the same movie twice. So, if you see four movies a month, you will spend $10 on MoviePass and MoviePass will spend $40 on your tickets.
Sounds like a great deal. For me. It sounds like a lousy deal for MoviePass.
It also seems like an insane business plan, of course, but what seems even more insane to me is that MoviePass is actually getting into the distribution business, as well. Over the weekend, John Travolta’s Gotti (directed by E from Entourage) opened in theaters with a dismal $1.67 million (it’s worth noting that it also sits at 0 percent on Rotten Tomatoes) on a $10 million budget.
We have since learned that 40 percent of ticket sales — or $668,000 — were made up of MoviePass subscribers.
So, let me get this straight: MoviePass spent a low seven figures for a stake in Gotti, and then literally paid for subscribers to go see that movie.
In effect, isn’t MoviePass paying twice?
Or, let’s look at it this way. Let’s say that MoviePass spent $3 million for its stake in the $10 million Gotti. You could argue that by sending its own subscribers to see it in theaters, it simply recirculated $668,000 of that, but that’s not even true, because the movie theater gets half, so only $334,000 went back to the investors, which is then divided among all those who had a stake. If MoviePass paid $3 million of its $10 million budget, then it would receive 30 percent of that $334,000 back, or about $100,000.
So, if I’m doing the math correctly, based on the opening weekend, MoviePass spent about $3.68 million for its stake in Gotti, and received $100,000 of its investment back, so in effect, the studio lost $3.58 million on the deal.
Is that right?
This is like saying: I will go out and buy all the ingredients to make you a sandwich, and then I will pay for that sandwich for you to eat, and in exchange, you have to give me your pickle.
I’m more and more convinced that MoviePass is part of a Brewster’s Millions-like ploy, where some guy is required to spend $500 million in a year and have nothing to show for it in the end except the shirt on his back.
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