A few years ago, venture capital subsidized the company’s moviegoers. Today, new unsustainable business models can be found in select manufacturing industries.
The Alliance for American Manufacturing is no stranger to documentaries. We found the Oscar-winning “American Factory” fascinating, for example. And if I could find a way to write at length about “American Movie” on this blog, believe me: I would.
Oh, also, we produced one of our own. It’s called “Relighting the Flame“. It’s only about 26 minutes long; you can watch it on YouTube for free, after you finish reading this blog, of course.
Anyway, it’s in this spirit, this love of observational cinema, that I watched the recently released “MoviePass, MovieCrash,” which chronicles the rise and fall of the eponymous subscription service that for a time allowed users to go to basically as many movie screenings as they wanted for only $10 per month.
Now, I like movies as much as the next guy. For instance, I have seen “The Godfather” (Parts I and II), “Big Trouble” (starring Tim Allen), and a little hidden gem called “Sleepaway Camp.” I was even in the movie business for a short while; I worked at a movie theater as a teenager, though I wasn’t exactly a model employee. I remember slipping into a virtually empty theater and sleeping through the back half of “End Of Days.”
That said: I was admittedly not in the target market for MoviePass. As an adult, I can count on one hand the number of movies I’ve seen in a theater in the past few years. And since you asked, here they are (followed by my truncated reviews):
“Hereditary.” Very scary! Couldn’t sleep for a week! Good lord!
“Good Boys.” I barely remember this one.
“Top Gun: Maverick.” Both dumb and cool!
“The Super Mario Bros. Movie.” It was a rainy day and my kids liked it.
“Labyrinth.” The local indie theater showed this 1980s Jim Henson classic on a lark, and my kids liked this one too.
O.K., that’s six, so it took two hands. But, on second thought, maybe I would have been precisely the kind of subscriber MoviePass would have loved to have had. Why? Because I just don’t go to the movies that much.
This is the way that gyms, for instance, make their money: Lots of people pay Gold’s or LA Fitness a monthly fee, but only a few of them ever show to use the weights and elliptical machines. MoviePass at its inception was kinda like this. Every part the small, plucky startup, it used geolocation and debit cards to build a small subscription base of people who liked going out to the movies. The documentary lays out that even while the big theater chains like AMC didn’t like making room for this company, it was driving turnout; MoviePass quite literally putting more butts in theater seats. And the company’s monthly subscription cost like $50. That’s still a deal, if you go to the movies a lot. A ticket in those days was already close to $12 or $13.
In the mid-2010s, MoviePass brought on an executive who had been involved in the early days of Netflix – it is revealed that my man had a line on discs the company could use when it used to mail DVDs – who promised he could unlock capital investment. In order to boost the company’s subscription pool he cut the subscription to $10 and to that specific end it worked: Users signed up in droves. And he unlocked that credit.
Mr. DVD brought on another guy with a mysterious access to capital, and these two jamokes forced its founders off the board, started spending extravagantly, and ran the company into the ground within a year.
It was not a good idea to spend a million bucks advertising at Coachella or financing the production of what has been called one of the worst films in recent history – the John Travolta gangster movie “Gotti” – but the heart of the problem for this reimagined MoviePass was simple math: $10 a month for nearly unlimited movie tickets does not add up, especially when $10 typically doesn’t cover the cost of one ticket. And MoviePass users were going to the movies lots more than that. One guy says he went 428 times. Another wild-eyed man describes seeing one of the “Avengers” flicks over five or six viewings – going back to watch the first half, then the second half, then again to see a part he missed earlier during a bathroom break.
The new CEO and moneyman were all over the media, claiming plans to sell user data the service collected, and suggestions were feigned that the company could barter with the theater chains for a cut of concession sales they were helping to generate, but none of it panned out. Two years after their stewardship resulted in bankruptcy, the U.S. Department of Justice leveled fraud charges against the pair – the litigation is still ongoing – and that’s after MoviePass had to settle with the Federal Trade Commission for purposefully locking out subscribers to increase revenue. Simply put, their business model was not sustainable, in the same way that WeWork’s model was not sustainable: It was subsidized by venture capital money until the money ran out.
Now MoviePass is back in the hands of its founder, who has reacquired it, increased its fees, and importantly stopped paying brand ambassadors like Dennis Rodman and throwing parties headlined by 50 Cent. It even turned a profit recently for the first time in the company’s history.
But we have new businesses built on unsustainable models to subsidize our lifestyles. SHEIN and Temu, two Chinese fast-fashion giants that sell ultra-cheap apparel allegedly made with forced labor use a U.S. trade loophole to sell directly to American consumers duty-free, have seen explosive growth in recent years. The Chinese auto industry, meanwhile, has been heavily subsidized at the local, provincial, and national level for decades; it’s now in a serious state of production overcapacity and seeking export markets into which it can dump its largesse because Chinese domestic consumption is chronically suppressed. Sooner or later Chinese autos will likely be sold in the United States and – despite significant U.S. tariff rates – still for far less than competing American models.
The difference between instances like the rise and fall of MoviePass and the burgeoning growth of Chinese fast fashion, or the advents of worldbeating Chinese automakers backed by lavish and sustained industrial policy, is its bubble eventually popped. On its own. Popping these other bubbles will not be so easily done.
“MoviePass, MovieCrash” is streaming on Max.