An early Netflix Inc. executive, Lowe, who now runs a startup called MoviePass, has come up with the idea to drop the price of the company’s movie ticket subscriptions on Tuesday to $9.95 in order to get more people into seats. This fee will let customers see any movie every day at any theatre which accepts debit cards in the U.S.
Namely, this could lead to MoviePass losing a lot of money. The company also raised money by selling a stake to a firm in New York – Helios and Matheson Analytics Inc. Their shares rose 5.7 percent at the close Tuesday in New York. Chief executive officer at Helios and Matheson – Ted Farnsworth stated that their goal was to amass a large number of customers and collect data on viewing behaviors. They intend on using this information for marketing and advertising.
This idea should be welcomed by theater operators since the top four of them lost 1.3 billion dollars in market value after a disappointing summer. The number of sold tickets in the U.S. and Canada declined a bit last year, while box office revenue slightly increased due to more expensive tickets. Namely, the price of tickets has doubled in the last two decades. Eric Wold, an analyst at B Riley & Co. said that while MoviePass can drive more people to theaters and thus benefit the exhibitors, the overall impact is “more negligible than anything.” In his opinion, investors may be misinterpreting the MoviePass business model.
MoviePass was established in 2011, and its original business model was similar to a gym membership. The man who helped get Netflix off the ground – Lowe, was named CEO last year. Lowe hopes that the new strategy will help resolve problems of the theater industry’s decline. In his opinion, it is the high price of the tickets that’s keeping people away. Nonetheless, the data-based business model is still not in the foreseeable future.