MoviePass Worked Out Great

https://www.bloomberg.com/opinion/articles/2019-08-07/moviepass-worked-out-great

by airstrike • 7 years ago

372 270 7 years ago

draw_down2• 7 years ago

It was always unclear to me why anyone who wasn't an investor or stakeholder should have cared that MoviePass spent/wasted a bunch of investors' money. If someone is selling dollar bills for 75 cents, who cares what their motive is, or if it's sustainable or whatever?

ForHackernews• 7 years ago

A bunch of movie industry types were worried that MoviePass was "devaluing" their product, but I agree consumers should just be laughing all the way to the bank (or the theatre, in this case).

kbos87• 7 years ago

That isn’t a false premise though - look at what a few tech companies trying to undercut one another did to the music industry. Not that artists were making the money before Spotify, but there was a lot more money in the system then than there is now.

freehunter4• 7 years ago

Many people worry too much about things that don't hurt/help them. This pops up a lot in politics as well, with people arguing for/against things that would not change their life at all. I think it's just human nature to pick a side and adopt that side's strong opinions. People like to argue, and arguing for/against the interests of popular billion dollar multi-national companies is an exceedingly risk-free argument to engage in.

In the case of MoviePass, the only concern I'd have is if they closed shop suddenly after I've already paid for a month of service. But if they stayed open long enough, it doesn't matter. I might have lost $5 but I saved $50 over the course of my membership.

draw_down2• 7 years ago

Interesting direction to take it, but I was thinking more like, HNers seem almost offended when someone's business model doesn't work how they think it should. If their runway isn't coming out of your bank account you really shouldn't care.

scarface7427• 7 years ago

Unfortunately, it does concern you because public pension funds are investing in venture capital funds. If the pension funds lose money, you are going to be on the hook to make up the difference as a taxpayer.

mikeash2• 7 years ago

Why worry about crime when you’re not the victim? Because not constantly screwing each other over whenever possible is the fundamental basis for society. When somebody is pulling an obvious con, it’s reasonable to be concerned even when you’re not the target.

JamesBarney• 7 years ago

Matt Levine cares because he thinks it's interesting, and his readers would enjoy his take on it.

And being a reader I definitely thought it was an enjoyable read.

coldtea• 7 years ago

If someone is selling dollar bills for 75 cents, who cares what their motive is, or if it's sustainable or whatever?

People who don't want to encourage fraud, e.g. con-men telling people about some great opportunity to invest in, and then living off of their dollars, while selling the rest for 75 cents to buy time and appear as "successful"?

rhino369• 7 years ago

I got burned because I paid for a year but they made their service intentionally unusable before I "made money" on the deal. But I new the risk going in, so that is one me.

But I a lot of people paid for a year and then got 1-2 months service before being cut off. That's basically a scam unless you claim VC immunity.

smacktoward6• 7 years ago

I think it wasn't so much about MoviePass per se as it was about the idea that MoviePass symbolized something broken in the modern economy -- that what it rewards isn't productive entrepreneurship that creates value by making life better for people, but rather burning tons of cash to wedge yourself into a position from which you can then extract rents from other people. The valorization of unnecessary middlemen.

mikestew2• 7 years ago

From an HN comment from today that I've added to my favorites: "It feels as though much of tech has gone from helping people accomplish their goals efficiently to a business model of extracting rents while providing no or little value."

I quote it because your comment made me think, "where have I recently heard that before?" :-)

camjohnson26• 7 years ago

Doesn’t the fact that MoviePass failed show that the economy is naturally filtering out those bad ideas?

gwbas1c3• 7 years ago

I'd think that, if they stopped providing value, the movie theaters would just undercut them?

After all, you probably spend more time in the theater than interacting with the moviepass service.

empath75• 7 years ago

it was just an obvious emperor's new clothes sort of situation.

b_tterc_p• 7 years ago

I don’t care about any one in particular.

I am concerned about the significant scale at which this is happening.

JumpCrisscross• 7 years ago

who cares what their motive is, or if it's sustainable or whatever?

Broadly speaking, when average Joe investors get burned, the public tends to pick up the tab. Whether through public prosecution, unemployment benefits, or the other consequences of a nuked nest egg. MoviePass didn’t get to those levels, but there is a rational reason to be wary of things that look like fraud in our system.

jvagner• 7 years ago

1) MoviePass claimed they would make up the difference by selling data. The press repeated this over and over again, as if the "selling $1 for $0.50" could be solved.

2) When companies like Uber can go public, after years of economic analysis saying they can never be profitable, and companies like MoviePass get positive press, it shows that either something is broken, or there is an opportunity chasm opening for those in the know.

kart232• 7 years ago

That's happening right now with scooter services, ridesharing, and food delivery.

CamelCaseName• 7 years ago

Lowe's happy-go-lucky persona marked a shift from the all-business Spikes, whom he had replaced in the company hierarchy as CEO. On the rare occasions Lowe made it into the office, staff would need almost an entire day to get him up to speed. His general attitude, as one source described, was, 'Well, what do you think we should do?'

How do people like this make it so far in their careers?

Ididntdothis• 7 years ago

You can go very far if you are charming and can communicate well with investors and other high power people. Look at Elizabeth Holmes. Theranos achieved almost nothing besides the ability to talk to investors and board members.

AlexandrB• 7 years ago

Luck and privilege. Money can buy a lot of second chances.

teej2• 7 years ago

I feel infuriated by this statement. Did he just not care? The company was burning around him, turning it around should have been his number 1 priority.

pnutjam• 7 years ago

Honestly, when you're riding tsunami you only worry about staying on the board. How could he have turned that dumpster fire around?

bumby2• 7 years ago

I agree in the context of not being in the office when his team needs guidance, this is bad.

But asking "what do you think we should do?" shouldn't be lambasted as an indicator of incompetence. In my experience, leaders who feel like they should have all the answers are the most incompetent ones.

joemi• 7 years ago

Surely there's an ideal middle ground somewhere between having all of the answers and having none of the answers.

smacktoward6• 7 years ago

The writeup says that Lowe was installed as CEO by the company that bought MoviePass, Helios & Matheson Analytics, and that the shift down to the $10 price point was the brainstorm of H&M's own CEO, Ted Matheson.

Put yourself in Matheson's (presumably quite expensive) shoes for a moment. You're in the process of acquiring this company, MoviePass, and you have some Big Ideas™ for it. Who would you want to have sitting in that company's CEO chair? Not an independent-minded entrepreneur who's full of ideas of their own, that's for sure. No, what you'd want is a yes-man, an amiable non-entity who can be counted on to do what you tell them to do while otherwise staying out of your way and letting you play with your new toy.

It's not uncommon for wealthy people to have a few people like this in their entourage, people whose job is to fill a chair so as to prevent someone who could cause the rich guy trouble from filling it instead. It's a job whose only requirements are that you get along with the Big Guy and are willing to unquestioningly do anything he tells you to. In other words, it requires all the business savvy of a block of cheese. But it definitely pays well.

lotsofpulp2• 7 years ago

They also serve as a fall guy for the real decision maker(s), in case things go south.

nafey• 7 years ago

This reminds me of Gervais principle. Basically sociopaths use clueless managers as pawn.

More details here: https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-...

ca98am79• 7 years ago

How do you acquire a job like this?

Zelphyr• 7 years ago

See also: The Hudsucker Proxy

PhasmaFelis2• 7 years ago

Given how obvious that seems to be, how did Lowe come away with a reputation as a savvy businessman?

rolltiide2• 7 years ago

the writeup says that Lowe was installed as CEO by the company that bought MoviePass, Helios & Matheson Analytics, and that the shift down to the $10 price point was the brainstorm of H&M's own CEO, Ted Matheson.

yeah I've been doing advisory for time

and sometimes that means installing myself as the board or executive in a company I'm advising

or my friends

or my friends have made a partnership to create another venture, but I consult with them, or I try to negotiate being a shareholder in some way etc

we always trade our network because its convenient and we work well together

it didn't start as nepotism, but now we are all just trying to get paid and get clout for more support in the future

I think a lot of people just work with their networks. Its honestly a miracle at all that there are giant corporations that hire basically anyone and pride themselves in doing so.

orky56• 7 years ago

Sounds like something to do with Russia, US, and the presidency...

scandox• 7 years ago

He was involved in Netflix early on. I'd say that will keep you rolling a long time.

H8crilA3• 7 years ago

Warren Buffett: "You want to buy a company that can be run by an idiot. Because one eventually will."

formercoder• 7 years ago

Very interesting article on the economics of MoviePass [1]

[1] http://aswathdamodaran.blogspot.com/2018/05/user-and-subscri...

tyre2• 7 years ago

Somewhat tangential but also maybe not: Matt Levine's "Money Stuff" is a fantastic newsletter. It's consistently hilarious while explaining a digestible number of very real events in finance and tech. He regularly muses about the absurdities and appreciating the bumbling creativity of humans. As you might expect, he spends a lot more time on the topics that fit into those interests (i.e. the recurring segment "blockchain blockchain blockchain" about companies being founded around/pivoting to blockchain with seemingly no reason to use it vs. a database except for hype.)

Anyway, great writer and I'd encourage folks to subscribe.

Also a great writer, and this _is_ almost entirely tangential, but also maybe not: Jia Tolentino. "Trick Mirror", her first book of essays, came out yesterday and the first is an accounting of the internet and our collective descent into hell, the subsumption of self through social media, the irreconcilable promise of the web vs. its business model, our magnified sense of the importance of our own opinions, feeling good about saying things vs. doing the work (e.g. tweeting about politics vs. organizing; changing our profile picture to add an overlay for a cause vs. working to solve that issue; etc.) All of this in <30 pages. Stunning work of prose, somewhat depressing, and tightly delivered with measured sobriety vs. the performative outrage we've grown accustomed to (she also covers that.)

cwal372• 7 years ago

Going along with the tangent, if you're into recent essay collections (as someone who has been very much looking forward to picking up Trick Mirror myself), you might like Impossible Owls by Brian Phillips which came out last year. I wouldn't call it as focused as it seems Trick Mirror is, but I get a similar kind of vibe from their writing sometimes.

tyre2• 7 years ago

Thank you for the recommendation! I love essay collections and will pick up a copy.

I can't say that Trick Mirror is entirely focused, unless you're responding to my description of her prose which very surely is. The opening essay is on the internet, another on drugs and losing faith and finding faith and megachurches and Houston hip-hop, another on our obsession with optimization, another on the complexity of campus sexual assault, etc. The collection is broad and each essay is deep. (I feel quite strongly that I would read Jia's writing on anything—sawdust, pecans, lice, dry cleaners—and that compounds itself when she writes about topics both so weighty, so broadly applicable, and yet so personal.)

What I love about the collection is it feels the way Joan Didion's or DFW's best narrative non-fiction feels. That kind of awe at the writing, that unfurling of confident and thought-through storytelling, that kind of blossoming of connections that form the richness of life and intellectual inquiry. The difference–and for me this is somewhat personal and so perhaps not universally relatable but feels like it could be–is that, at 30, she is writing about our time. She's writing about coming of age in and with the world we live in now.

Didion writing about the sixties and seventies and Wallace about the eighties and nineties and two thousands are both beautiful and timeless and a masterclass on what greatness feels like in your hands, but there's something special about reading someone cogently weave personal experiences about AngelFire and Twitter and political extremism and Anonymous and the crushing weight of forever being "seen" and performing on the internet. Something special because we are living it now.

I feel about Jia—as well as a few other living writers; Caity Weaver's profiles come to mind—the way I didn't know to feel about other living legends. That feeling of not appreciating what you have because you think it will last forever. I think about when Mac Miller was still alive (less than a year ago) or when Lil Wayne was on top of the world with Tha Carter III or when Chance the Rapper still made good music or when Obama was president or when Jon Stewart was on TV or when Jobs was leading Apple. I didn't consciously stop and appreciate not only the work but to be alive to live it, and now that those times are gone there's only nostalgia. I'm trying to be more mindful of witnessing generational talent in the moment and Jia's writing feels that way to me.

scarejunba• 7 years ago

I loved it. VC money in my pocket is always a good thing. MoviePass was a regular Robin Hood.

dhruvrrp• 7 years ago

Moviepass worked great when it handed you $2 of VC money for every dollar, but I appreciate the fact that it did end up disrupting the market as it died.

Most of the big chain now offer Moviepass-esque premium services. AMC now charges like what, $12 a month for 2-3 movies / week? That's how much individual tickets cost in the bay, so as long as a person watches even a single movie a month they're breaking even!

Rebelgecko2• 7 years ago

AMC changes their pricing based on where you live. It's $24/month in California

rtkwe• 7 years ago

Still movies are also more expensive there too so it probably works out and they're actually making money off concessions so unlike MoviePass they do benefit some from people using the service more.

Spivak• 7 years ago

This is kind of a stupid question, is it based on the billing address or something? Does your price go up or down if you move?

umvi• 7 years ago

That's a pretty good deal for them too. It doesn't cost very much for a butt to be in a seat for 2 hours, but just getting them in the door more often increases the chances of high margin concession purchases. Plus there are always the people that subscribe-and-forget

jfengel2• 7 years ago

Any idea how they get the movie distributors to buy into it? The infrastructure cost overhead is small, but as I understand it, most of the cost of a movie ticket ends up going straight to the distributor. I doubt the distributor wants them giving away complimentary tickets without getting something.

I'm not sure how these deals are structured, whether there's a per-viewing cost or a bulk "we rent this movie and show it as many times as we want to whoever we want".

flyGuyOnTheSly• 7 years ago

It doesn't cost very much for a butt to be in a seat for 2 hours

I thought that the deal between the movie theaters and the production companies were that they paid a flat rate per head that views the movie, with almost 100% of ticket sales going to the production company, where the theater only makes a profit on concession sales.

Is that no longer the case?

slg3• 7 years ago

I appreciate the fact that it did end up disrupting the market as it died.

It might be too early to say that for sure. The AMC service was created when MoviePass was still a player and was very much a response to them. I believe AMC also only committed to that pricing for a single year and we just recently passed that 1 year anniversary. Now that MoviePass is functionally dead, there is little stopping AMC from raising prices to the extent that basically kills this model for the average consumer. We might soon find ourselves back in a market similar to the early days of MoviePass when one of these unlimited subscriptions costs $30-50 and is only viable for an incredibly small group of moviegoers.

blackflame70002• 7 years ago

I'm not sure AMC would want to kill off this service. First, having subscribed customers is a much more reliable source of revenue than depending on the next big blockbuster so you can profit off the popcorn. Second, AMC doesn't lose nearly as much money per movie because they make money back on refreshments and there are almost always extra seats in the theaters. Furthermore, what's to stop AMC from saying a person who saw Avengers 3 times from really reporting that they only saw it once? I'm not sure how that whole process works but in theory, AMC could hide how many movies are actually seen in order to limit payment to studios for tickets purchased.

gamblor95611• 7 years ago

Competing movie chains have also introduced monthly plans.

MoviePass proved the demand. They simply lacked the data or leverage to make their business model work.

AMC and Regal have both. Crucially, they can negotiate with the movie studios re the payouts for ticket purchases; MoviePass could not. This is probably the biggest and most important factor behind why AMC/Regal can make these plans work but MoviePass never could.

bduerst• 7 years ago

Movie theaters do not make money off of ticket sales, but concessions.

I imagine that AMC worked out a subscription-sharing model with the studios, where the subscription fee is split across the movies attended. As long as people show up to movies, a percentage are buying concessions and AMC is making money.

hyperbovine• 7 years ago

Now that MoviePass is functionally dead, there is little stopping AMC from raising prices to the extent that basically kills this model for the average consumer.

At which point, someone "rediscovers" MoviePass 2.0 (probably with some artificial twist to let everyone know that THIS IS NOT MOVIEPASS), an obliging VC materializes to huck a couple more unicorns on the fire, and it's deja vu all over again. I mean, nothing in this article suggested that the practice is going away any time soon...

m4634• 7 years ago

It could be like the webvan/peapod era, which pulled in the big players, but then reality caught up.

michaelbuckbee• 7 years ago

There was a previous article going around about how Disney was forcing theaters to keep their movies up for longer theatrical runs. This coupled with the absolute dominance of Disney (aka Marvel, Star Wars, Pixar, Fox and of course Disney) means that the A-List all you can eat might be a smart move as they'll have trouble filling seats late in the run and can still make it up on concessions.

metafizikal• 7 years ago

For my local movie theater, AMC's subscription is $24/month. Doesn't seem bad if you see three movies per month (it says three per week with no blackouts). Considering that I see maybe 5-6 movies/year in the theater, it's not actually worth it at all.

kbenson• 7 years ago

My understanding, from asking my manager when I worked at a movie theater in high school well over twenty years ago, is that the vast majority of profits on movies that have recently come out are from concession (snack bar) sales. Something like 85-90% of the ticket price goes to the distributor in the first few weeks, and that percentage drops over time (until you have the rare movies that last much longer than others in the theater and are almost all profit for the theater by that point). The thing is, while I'm sure that calculation for how much is owed per ticket is not entirely simple, I'm not sure it's necessarily set as a specific dollar amount. I suspect it's a minimum but also a percentage of ticket price, so they can capitalize on theaters in more expensive locations (or that provide premium experiences).

So, even if AMC assumes 3 movies are seen a month on average across those card holders, it might be that they can conceivably break even with the distributors at that price. If that's the case, it's a major net win as those people are not only likely to spend money at the concession stand, they are probably going to spend more, since they don't feel like it's already been an expensive endeavor to go to the movies (not only is it much cheaper, it's also time shifted away from the time you might want to get snacks for the movie, so you feel like you're there for free basically).

In the end, there's a lot of interesting ways movie theaters might be able to leverage these memberships to their advantage. That said, I imagine the distributors will probably push for slightly different payment contracts if that becomes the norm.

philjohn3• 7 years ago

It's super odd this is a new thing to the US - UGC in the UK (which has eventually become Cineworld) was already offering an unlimited monthly pass in the late 90's

It's still offered, and at £17.99 (and a 20% discount on food) it's a good price if you watch more than 2 movies a month.

casefields• 7 years ago

In the last 2 years there hasn't been a single discussion of MoviePass without someone like you confused and detailing how the UK has had it for years. We get it. We really do.

OJFord• 7 years ago

Is 'MoviePass' limited to one cinema chain? AFAIK Cineworld's unlimited pass is only good for films at its own cinemas?

Mindwipe• 7 years ago

Yeah, I am puzzled that MoviePass supposedly proved this model, when US cinema chains often have ownership of international subsidiaries that were doing it before MoviePass was conceived.

tareqak3• 7 years ago

https://www.amctheatres.com/amcstubs/alist says

Our plan prices are determined by geography and may vary by location.
Choose any format, including IMAX® and Dolby Cinema.

pkroll• 7 years ago

AMC A-List is $21.95/month, not counting NY, CA, CT, MA, NJ. That's the 3-movie-a-week subscription.

dogma1138• 7 years ago

Are theaters even breaking even on screenings? From what I understood the economics are based on the value added services AKA the food crap as well as merch for the larger box office hits.

I think the idea behind movie pass was basically the same economics as behind a gym as long as most people don’t take the full advantage of their membership and are tied to a contract they’ll make money if everyone does it’s a different ball game.

The problem with movie pass is that their model is too easy to replicate by the theater chains and cut them off, i really don’t understand why they got VC funding even if they could scale to the point of making a profit this model simply can’t be easily protected against competitors especially when the competitors are part of your service supply chain.

ehsankia• 7 years ago

I think at 10$, it was way to cheap to even survive on the gym-economics. I think the plan was to build a huge userbase, and then use that as leverage to:

1. get better prices from theaters to send users there

2. make deals with studios to send users to their movie

3. make deals with nearby stores to send users there

it backfired when all the theaters called the bluff and just started their own membership program, and held out until Moviepass bled out all their VC money.

rurban2• 7 years ago

Theatres are not breaking even, that's why they were all bought by the studios which control now everything: production, marketing, distribution. A typical cartel.

And they use their power to distribute lower quality and conquer foreign markets to disrupt that market also. A theatre is only a small part in that chain.

megaremote• 7 years ago

It is complicated. The share US theaters pay studios changes each week. So studios want films with up front popularity, studios want sleeper hits.

scarface7427• 7 years ago

It’s at least $23 a month. AMC negotiated with the production companies to book each movie seen as costing $8.99. They then give the studios between 40-70% of that. Movie theaters have always made their money on high margin concessions and more recently alcohol sells. They also make money from ads showing before the movie.

AMC is not losing money from the deal.

listenallyall17• 7 years ago

This is not true. AMC decided on its own to base reimbursements to studios on an average ticket price of 8.99. There was no negotiation, and no guarantee studios will continue to accept this rate. So far, studios are taking a watch-and-see attitude, hoping the overall quantity increases but currently, a studio exec sums it up by saying "I'm taking a haircut".

https://www.bizjournals.com/losangeles/news/2018/06/25/amc-s...

wyldfire• 7 years ago

They said Lowe ordered that the passwords of a small percentage of power users be changed, preventing them from logging onto the app and ordering tickets.

Genius move! Truly diabolical.

jjoonathan• 7 years ago

There are a few services I have to use that enforce password rotations this way. Scummy? Yes. Effective? Also yes.

compsciphd• 7 years ago

I used it daily. I had an issue where I couldn't login. I used the built in mechanism to reset the password and continued to use it fine. I'm not sure effective it was. (in the year I had my membership via their costco offer, I saw 200+ movies)

tareqak3• 7 years ago

I feel that this act is unethical somehow, but I can't place exactly how. I would presume that the user is still allowed to perform a password reset, but I see this as a "soft" denial of service. I don't think any of the power users broke the Terms of Service and MoviePass didn't change these terms until later.

MoviePass was literally advertising a service it wasn't truly willing or able to sell at scale. I'm glad I stopped using them once I heard they were becoming bankrupt.

Bartweiss5• 7 years ago

I mean, ToS aside, it's probably illegal. It's arguably wire fraud, and quite likely breach of contract.

MoviePass made false representations by internet "for obtaining money", and knowingly deprived paying customers of tangible property (i.e. movie tickets and/or monthly payments). Specifically targeting power users makes the financial motive pretty undeniable, and timing it to delay them while a popular movie sold out shows that tangible loss was the intent. Before 2010, it would probably have been honest services fraud to boot - as Scalia opined, everything was honest services fraud - but that's been narrowed to bribes and kickbacks. It wouldn't be a trivial conviction since the company wasn't outright robbing people (e.g. by disabling the accounts altogether) but "plausibly a felony" isn't where most of us like to do business.

More convincingly, it's the sort of thing that could invite class action lawsuits or demands for refunds. The ToS may not have covered this specific action, but fraudulent misrepresentation is still grounds to seek damages in a contract.

paxys3• 7 years ago

How is it hard to see how this is unethical? You are paying for a service, the company is deliberately making it hard/impossible for you to actually use that service.

This would be a very easy class action lawsuit if the company actually had money to pay for it.

swanson• 7 years ago

I still maintain that $HMNY (the parent company) stock was an interesting and unique case where the average person could buy shares in, essentially, an early stage startup that had tremendous consumer interest and growth.

Most of the time you see tech startups they are either in the seed/VC stage (you can't invest unless you are accredited and have connections) or the IPO stage (mega-companies that everyone has heard of).

Did it turn out poorly? Yes (Share price went from $35 to $1 for a while and then down to basically zero). But was it a good process? I think so!

rossdavidh• 7 years ago

There is a school of thought that says that you shouldn't let people without investment experience, put their money into early-stage tech startups run by people they know nothing about, precisely because they are less likely to understand that the great majority of startups fail. It's an elitist school of thought, for sure, but I have to say there is some truth to it.

mikestew2• 7 years ago

It didn't used to be an elitist school of thought, because a school of thinking on the subject wasn't needed. There were high enough fences to keep the riff-raff out (high transaction fees, inaccessible markets for commoners, et. al.). Thanks to e-Trade, Schwab, and the like, those fences got torn down, not knowing those fences not only kept people out, but they also kept the bad things in. Bad things like super-duper sketchy penny tech stocks (HMNY).

Elitist? Meh, no more elitist than, say, a climbing permit for Mt. St. Helens (which is just $15 and fill out a form). Put up even a token barrier, even if it can easily hopped over.

aasasd• 7 years ago

Well thankfully now there are crowdfunding and ICOs for the hungry amateur investors.

H8crilA3• 7 years ago

The Intelligent Investor footnote: "In Graham's times IPOs were considered an undignified exploitation of the naive investor, and big investment banks steered away. How things have changed in the 2000 era."

kart232• 7 years ago

I remember when r/wallstreetbets was going nuts over this stock. Someone actually bought it and made a ton of money, and I suppose that inspired more people to buy in, and lost money on the resulting fallout.

H8crilA3• 7 years ago

Some things never change.

The Oldest Book Ever Written On Trading Stocks (It’s 330 years old!)

http://bilalhafeez.com/the-oldest-book-ever-written-on-tradi...

umeshunni• 7 years ago

Here's the story - HMNY ( Helios & Matheson Analytics - the parent company of MoviePass) is owned by an Indian company that filed for bankruptcy in 2016 and then re-emerged with MoviePass in the US.

The entire thing is probably a giant money laundering or tax evasion scheme.

https://www.moneylife.in/article/helios-matheson-liquidated-...

https://www.insider.com/moviepass-owner-emerged-from-indian-...

jonknee4• 7 years ago

The entire thing is probably a giant money laundering or tax evasion scheme.

Donating money to movie theaters is not how money laundering or tax evasion occurs.

peteradio2• 7 years ago

Losses can be tax deducted to cover partially reported incomes.

m4634• 7 years ago

What if you donate dirty money, then collect clean money from subscribers?

crazygringo• 7 years ago

Considering how all money streams for MoviePass depend on domestic card transactions which generate 100% auditable records... I'm completely failing to see how it could possibly result in money laundering or tax evasion.

Can you explain how? I don't see any obvious explanation in the articles you linked.

jonknee4• 7 years ago

It's in vogue to describe a business you don't understand as "money laundering" even when you don't understand money laundering.

dbancajas• 7 years ago

the money they pay AMC has to come from somewhere right? Cue in illegally obtained money that's now in the system. profit??

robocat• 7 years ago

Probably not in this case, but thinly traded share prices could be used to launder money.

Adam 1 buys shares with clean stake.

Adam 2 pumps share price with dirty money.

Adam 1 sells shares, getting stake back, plus clean profit.

Adam 1 short sells shares.

Adam 2 dumps shares, dropping share price.

Adam 1 cashes in on short.

Adam has laundered dirty 2 money into clean 1 money.

Needs a story to work the market a bit. This could work at a business level too.

KibbutzDalia• 7 years ago

The biggest problem was only “cherry pickers” bought the service. People who were already spending $10 a month or more in movie tickets. For it to work it needed to be a “breakage” play, like gym memberships.

Also theaters started getting non-movie-goers back in occasionally they may have been perceived as more valuable “conversions” and Moviephone admissions would have been discounted.

davinic2• 7 years ago

I believe the economic term for this would be "adverse selection".

bpicolo• 7 years ago

People who were already spending $10 a month or more in movie tickets

I don't think that's the case. I know a ton of people who went from seeing movies almost never to seeing them several times a month. They had the opposite problem of a gym - having a moviepass membership available actively changed people's moviegoing behavior on a wide scale.

Gyms also don't pay a per-visit overhead cost for a given member.

This is more or less why AMC can successfully offer A-List.

paxys3• 7 years ago

You both are saying the same thing. They needed people who paid the monthly fee but never went, but instead got people who went a lot. And gyms definitely do pay a per-visit overhead since space is a fixed and precious resource, especially in urban areas.

Scoundreller• 7 years ago

The US didn’t need MoviePass for this.

Movie theatre subscriptions have been a thing in France for a very long time.

adventured2• 7 years ago

They've been a thing in the US for a long time as well. I remember them in the early 1990s when I was a teenager, so I assume they probably existed for decades before that. I don't know why MoviePass was perceived as a good idea, other than the notion of centralizing the service into one bigger company and away from individual theater chains (which could then give an entity like MoviePass leverage to suck more value out of the movie theaters as a whole; another middleman parasite that adds very little real value).

adventured2• 7 years ago

Outline for the Business Insider story referenced in the article that covers the MoviePass history in greater detail:

https://outline.com/ZPqaXs

jsgo• 7 years ago

In some ways, MoviePass always felt really scammy so never went in with it: a too good to be true proposition (also, it isn't a gym membership: they can't guilt you into signing up for a year right at New Years. So buoying the users who didn't leverage the pass yet paid for it vs those who really leveraged it seemed to be an unattainable dream).

But that being said, when AMC came out with their own version? I went for it and I'm very pleased. I can take my daughter to see a movie pretty much whenever (2-3 a month, really. Have to buy her ticket because it is only for 18 and up though. A single movie essentially pays for that month though). Plus, I seem to get some kind of money voucher thing as this most recent time I had $60 available somehow and the drinks and popcorn were billed to that.

So maybe MoviePass was trying to play the middleman in a way they couldn't as they couldn't control the theaters as much as they hoped for their own survival, but the existence of it maybe clued theaters into a different revenue stream that could work for them (and customers). So thanks MoviePass.

notafraudster• 7 years ago

MoviePass did attempt one gym-like move: telling you you couldn't re-register for 9 months if you cancelled. This isn't exactly the under-utilization strategy of a gym, but I think it's plausible they had thought they were going to curb costs a bit from under-utilizers.

quickthrower2• 7 years ago

Gyms succeed on this because it takes will power to keep going. OTOH a movie is enjoyable and having free movie tickets sitting there that you are not claiming would seem insane.

gamblor95611• 7 years ago

If only MoviePass had gone B2B and partnered with theaters to provide the backend systems for white-label movie subscription plans, they'd still be around today.

charlesdm• 7 years ago

That is a completely different line of business, though.

scarface7427• 7 years ago

Why would the movie chains need MoviePass? AMC already had its own online system for payments, reservations, had mobile apps and website and had handheld system to allow e-tickets. They had the free AMC Stubs program already where people could register. Adding the subscription plan wasn’t that heavy of a lift.

I’m sure Regal had something similar.

aerovistae• 7 years ago

I don't know why it didn't occur to them to do a pass for movie snacks instead. Probably with a mild discount they could reap a decent profit there if the movie theaters could be negotiated into reducing their extravagant prices in return for increased sales.

vcanales• 7 years ago

Movie theaters wouldn't allow it. Snacks are expensive because movies are not really that profitable for them.

huac• 7 years ago

movies are profitable for some of the parties in the chain, but the theaters specifically must pay so much in licensing fees that they don't make much on a given ticket.

gamblor95611• 7 years ago

Movie theaters make all their profits on concessions. There's no way they would let a 3rd party take control of, or even interfere with, their primary profit stream.

sjcsjc2• 7 years ago

I really like this writer's style. This Dickens reference is hilarious:

Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. Annual income twenty pounds, annual expenditure three hundred million pounds, result unicorn.

nlh• 7 years ago

He's hilarious and has a column in the same style every day! Subscribe and enjoy life a little more every morning:

http://link.mail.bloombergbusiness.com/join/4wm/moneystuff-s...

(no affiliation, just a Matt Levine fan)

Bartweiss5• 7 years ago

Levine's article "Arbitrage Discovered" might be my all-time favorite econ essay. It's about an investment product that let you trade on past stock prices in the present. Levine is usually pretty calm and wonkish, but this arrangement was so breathtakingly self-destructive that he spends the piece writing things like "It's not actually an arbitrage. EXCEPT NO HOLY GOD IT IS THIS IS AMAZING."

https://www.bloomberg.com/opinion/articles/2015-02-27/arbitr...

mbesto• 7 years ago

Hear hear!

If you're a techie and want to understand the financial world (particularly big VC and public equities), I highly recommend reading him daily. He breaks super complex things and makes them very easy to read...and SUPER entertaining.

PhasmaFelis2• 7 years ago

It seems like 90% of startups have the business plan "step 1: get as many users as possible at any cost, step 3: profit." Hardly anyone talks about it or seems to think it's weird. I don't get it.

chrisseaton• 7 years ago

But it's often effective.

Big companies like Facebook will pay cash or valuable equity to take those engaged users off your hands in an acquisition.

Bartweiss5• 7 years ago

My favorite summary of this entire pattern is that VCs would happily fund a company which sold dollar bills for $0.90, figuring they could get users now and raise prices later. (After all, they already raised the price from $0.70 and nobody complained!)

TrackerFF• 7 years ago

Well, yeah, it's because that's all you hear from incubators, accelerators, investors, etc.

I've been to so, so many startup / entrepreneurship conferences / competitions / workshops and what not the past years, where the main takeaway has been: "Growth is everything, business models can be reshaped later on".

I mean, sure, it's all fun and games for the startups and consumers - they're being bankrolled and subsidized by VC money, but it's a very artificial state. Lots of products start to suck the moment monetization enters the picture.

6gvONxR4sf7o• 7 years ago

Everyone constantly talks about it. At least on sites like this.

scarface7427• 7 years ago

There is nothing weird about it. Profit is not the goal of either the management of the company or the investors. Their goal is either to get acquired or go public and sell their shares as soon as possible.

dclowd9901• 7 years ago

It stands to reason that once they got a critical mass of users, they would be able to negotiate ticket prices with theaters, a la a distributorship like Wal-Mart, Costco or Amazon.

The trick is holding out long enough to get there, and I think they severely underestimated the general public's free time.

hammock• 7 years ago

Clever and it takes the format of an old quote: "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."

sjcsjc2• 7 years ago

Or perhaps a slightly older quote ;-)

https://dickensroundtheclock.wordpress.com/2015/03/11/in-sho...

slothtrop• 7 years ago

I knew it was going to be Levine just from this comment

mruts• 7 years ago

You can't get better than Matt Levine. He probably has the best blog/newsletter on the internet, finance related or not.

cbanek• 7 years ago

Matt Levine and Kevin Muir (of https://www.themacrotourist.com/ fame) are two of my favorites. Also, shout to to https://heisenbergreport.com who isn't nearly as well known, but still has the gonzo financial reporting style.

PopePompus• 7 years ago

The Dickens reference is nice, but I think the MoviePass story would be better told by Lewis Carroll.

diminoten• 7 years ago

So running an early stage startup is basically performance art, with an intended audience of VCs?

listenallyall17• 7 years ago

AMC's CEO thought he was so smart and defiant by eliminating what he saw as a competitor, yet was, in reality, probably the largest individual block purchaser of AMC movie tickets. Meanwhile in the midst of this bull market, AMC's stock hit an all-time low just last month, from which it has recovered slightly (still trading about 65% below 2016). With some tweaking to its ticket availability, MP could have been these over-extended theater chains' golden goose -- huge surge in off-peak ticket sales with zero marketing cost to the theater -- yet they failed to recognize it, instead, actively sought to crush it.

throwawaythekey2• 7 years ago

Major cinema chains in Australia went one step further and would actively block your payment from going through if they detected you were using a moviepass like product.

After becoming frustrated with my payments being rejected I reached out to one of the cinemas. I explained to the likely overworked support worker that they were essentially both turning down free money and being hostile to me personally as a customer by refusing my payment method. As I should've known the support was powerless to do anything but repeat "we are not associated with product x".

Suffice to say I no longer offer unsolicited advice to theatre chains.

ajdlinux• 7 years ago

What kind of MoviePass-like products were operating in AU?

natvod• 7 years ago

This part struck me as well:

But, no, the main constraint on MoviePass’s growth seems to have been the actual production of plastic prepaid credit cards, which it couldn’t print fast enough:

Given how much money they were losing, it wasn't possible use digital cards that could be added to phone wallets? Or am I missing something here?

phonon• 7 years ago

Yes, the primary way to use the service was with a MoviePass credit card. From the theater's point of view, it was just a regular credit card. MoviePass eventually wanted to move to direct ticketing, but they made enemies of the major theater chains do their aggressive and unsustainable business model.

ErikAugust• 7 years ago

The joke is: “We will lose some on every unit, but we will make it up on volume!”

tombert• 7 years ago

I remember it took almost two months for me to receive my card. Since they were completely unresponsive via email support, chat, or the phone, I was starting to worry that it had gotten lost in the mail or something, or worse that they had never shipped it.

it was getting to a point where I looked at their website, noticed that they were based in NYC (like me), and thought about applying to a job there purely as a means to talk to someone, and complain about my card never arriving.

Sadly, I chickened on that plan, but I really wish I had gone through with it; I would have loved to see how awesome their office was if they were totally OK hemorrhaging money with no real strategy on making it back.

MoviePass Worked Out Great

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