MoviePass has customers, but now they need to make money

Last summer, MoviePass introduced a seemingly impossible-to-pass-up offer. For less than the price of a movie ticket (depending on where you're located), you can see one per calendar day in a movie theatre. The offer proved to be something people are interested in and caused the amount of paying subscribers to increase by more than a million over the last year.

The easy part for the team behind the service was getting people to sign up for it. Now they've got to make money off their customers, and we're finally learning how that'll all work.

An offer they can't refuse

The most astounding part of MoviePass is the price. With the money saved from skipping two coffees a month, you can purchase a subscription that'll let you see a movie, in theatres, each day. That's a few hundred dollars of value at your disposal each month and the company pays full price for each movie people see.

To be incredibly clear, the more people who sign up for MoviePass, the more money the company loses. Really, the company loses money when someone sees more than one movie in a month, which isn't a difficult thing to accomplish.

Initially the company couldn't keep up with the demand as people flocked to the service, and over the last year more than a million people have subscribed. Each person is issued a debit card which is how they purchase their movie tickets.

MoviePass Usage from 2017 to 2018

When it first launched the price was pegged at between $30-50 per month, depending on where you live. But then the prices were cut to a cool $9.95 a month, which boosted signups greatly and made the service more affordable to people across the country.

The company pays full price for movies its members see too, only getting a discount with select theatres who have offered one to the company. Plus, though all these ticket sales are driving people to purchase more concessions, the company doesn't get a cut of those either.

Opening the door

By operating this sort of service, MoviePass wedged itself into the experience of purchasing a ticket that had previously only involved the theatre and customer. Now when someone using the service sees a movie, both MoviePass and the theatre can collect the data on the purchase and what movies are selling. The company then goes to small, independent studios to demonstrate that through in-app promotions and emails, they can influence the movies people choose to see.

Subscribers are more likely to see small, indie movies versus blockbuster ones because they aren't forced to take a monetary risk if the movie doesn't turn out to be good. Purchasing around 5 percent of all movie tickets sold in the US per keep, promoting movies to subscribers at this scale is no laughing matter for MoviePass or the studios it is selling data to.

Inserting itself everywhere

With the launch of MoviePass Ventures, the company hopes to not only sell tickets to movies but to become a company that co-produces small budget films. Armed with the knowledge of the types of movies that sell, they can acquire the rights to movies that will captivate their audience.

If this sort of tactic sounds familiar, it's because Netflix already does the same thing. They take money from their subscribers and use it to produce content that is proven to be successful, albeit on a quite larger scale. Becoming a distributor gives filmmakers a commitment that something will be on the big screen and doesn't harm the bottom line of MoviePass since the ticket is free. Investing early on in movies allows the company to cash in not only on ticket sales, but also streaming and digital sales too.