The movie subscription service is bleeding cash, but a case can be made that it changed the business of moviegoing

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If something sounds too good to be true, it probably is. 

Which leads us to MoviePass, the beleaguered startup that has shaken up the way the movie industry does business, and now may have shaken itself right out of business. 

If you're unfamiliar with MoviePass, here's how it works, or at least how it's supposed to work: Subscribers pay $9.99 a month for access to one movie a day, at the theater. 

But movies are more expensive than that, you say! That's true, and that's where the problem comes in. It's an inherently unsustainable business model -- MoviePass pays studios $12-$14 per ticket -- and the service nearly came crashing to a halt on the weekend when users who went to theaters hoping to see "Mission: Impossible - Fallout" were faced with the equivalent of "out of order" signs on their Moviephone apps.

Back at MoviePass HQ, the service was dealing with an impossible mission of its own, and needed an immediate $5 million cash infusion to cover operational costs. The fallout was drastic, with MoviePass having to apologize to users. Late this week, its parent company's stock came crashing down to 12 cents.

Now what? MoviePass isn't dead, but the writing is on the wall. Or at least the memes are: the company was the butt of the internet's jokes all week, with users expressing confusion over the state of their subscriptions and posting jokes about the service's untimely outage.

But don't call the company a failure. MoviePass -- which has signed up more than 3 million subscribers since it launched in San Francisco in 2011 -- aimed to be the movie version of Spotify, where users pay one fixed monthly cost in exchange for access to the history of recorded music, give or take a few Jay-Z albums. 

Instead, it may wind up the movie version of Napster, a scrappy outsider that came along and exposed cracks in the way an industry works and paved the way for the upending of an entire business model.

Napster didn't survive, but it changed the music industry forever. MoviePass could claim a similar legacy. 

For consumers, theaters and even the industry, the upside of MoviePass is obvious. For users, they're saving money, as long as they go to more than one movie a month. Theaters make most of their money at the concession stand, not the ticket booth, so even if you MoviePassed your way in to "Teen Titans Go! To the Movies" and bought a popcorn or a bag of Sour Patch Kids, they're happy. And in an industry that saw domestic attendance fall to a 25-year low in 2017, warm bodies inside movie theaters are a good thing.

But bills have to be paid, and that has created, well, issues for MoviePass. In the wake of last weekend's debacle, its handy $9.99 price point has been upped to $15 a month, and access to top titles such as "Mission: Impossible" has been restricted during a blockbuster's first two weeks of release.

it was the latest change to the service in what has been a rocky couple of months, after it added surge pricing to popular films in June and in the spring eliminated the ability to catch repeat viewings of the same movie. It took a simple model and made it confusing, which is deadly when success lies in simplicity. 

The MoviePass effect is already being felt on the industry, however. AMC Theaters launched its own subscription plan in June, and Cinemark introduced a similar program late last year. It's an acknowledgement that the MoviePass idea works, even if its model was flawed. And that's the first and most important step: changing people's minds. 

In the record industry, CDs are nearly extinct. Uber and Lyft have changed the way people get rides. The movie industry was due for a shakeup, and even if it didn't get it right, MoviePass got there first. Whatever comes next, it might not be too good to be true.  

agraham@detroitnews.com

(313) 222-2284

@grahamorama

    

   

 

 

  

 

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