How can MoviePass stay in business by charging users only $6.95 a month to watch unlimited movies? Because it isn’t just selling movie tickets — it’s selling data on the people who buy them.
Chief Executive Mitch Lowe acknowledged to TheWrap that “there are people out there who think our subscribers are going to see so many movies that we can’t support it.” He said the math works out — and that the company will also earn money by selling user data to studios, exhibitors and other businesses.
But faster than you can say “Cambridge Analytica,” he also said MoviePass is trying to be transparent with its customers about the data it collects — including names, addresses, e-mails, payment info and telephone numbers.
The company has walked back comments Lowe made earlier this month about tracking subscribers whereabouts at all times. “We watch how you drive from home to the movies. We watch where you go afterwards,” Lowe said, causing instant backlash from customers, and the subscription service to remove a “location” feature from its app.
One reason MoviePass is temporarily dropping its price so low is that the more subscribers it attracts, the more data it can collect, analyze and sell.
The company shares data on subscriber moviegoing habits with partnering studios and theater chains (like Landmark, which announced an exhibition deal with MoviePass on Tuesday).
The company pays exhibitors and studios the full price of a movie ticket when subscribers go to see a film, yet it’s only getting as much as $10 per month from its customers in return. On its face, the model doesn’t sound at all sustainable.
But the company doesn’t expect to be overwhelmed by users who see many movies a month for less than the price of a single ticket. On average, MoviePass subscribers use the service one to three times a month, Lowe said.
“Eighty nine percent of moviegoers are that occasional moviegoer,” Lowe told TheWrap. “We need about 50 to 60 percent of our subscriber base to be made up of occasional moviegoers to be profitable.”
He said MoviePass is on track to hit 3 million subscribers by this summer and 5 million by the end of the year.
Ted Farnsworth, chief executive of MoviePass owner Helios & Matheson, said studio advertising will also become a main source of revenue as studios use customer data to target customers more effectively.
“We think there’s a lot of money to be made per subscriber,” Lowe said.