🎧 Listen: In today's episode of The Journal podcast, as MoviePass gets ready to stage a comeback, its former CEO explains what went so wrong the first time around
This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.
Ryan Knutson: Welcome to The Journal, our show about money, business and power. I'm Ryan Knutson. It's Monday, October 3rd. Coming up on the show, a conversation with the former CEO of MoviePass about how the company actually planned to make money and why their plan failed so badly. A couple weeks ago, we got on a video call with Mitch Lowe.
Ryan Knutson: One of the first things Mitch did as CEO was lower the price a lot, all the way down to 9.95 a month for basically unlimited movies. What was your rationale for lowering prices? Ryan Knutson: Mitch had a lot of plans. He thought theaters would appreciate all the new business and give the company discounted ticket prices. He thought they might be able to get a cut of concession stand sales, and he planned to sell all the customer data they were collecting. He also thought movie studios would pay MoviePass to advertise.
Ryan Knutson: But of course, the service had one major weakness. While customers were paying MoviePass 9.95 a month. MoviePass was paying most theaters the full ticket price, meaning the more people who went to the theater, the more money MoviePass lost. On top of that, Mitch's other ideas for making money we're all just ideas. They weren't really bringing in money yet. So in the meantime, every single new customer they signed up just cost the company more and more. But at the 9.
Ryan Knutson: Did you have any concerns that this thing would grow as fast as it did with that 9.95 price point? Ryan Knutson: How much time did you think you had when you set out on this 9.95 plan? I mean, you got to 150,000 subscribers in a couple days. Initially, did you think, "Oh, the amount of money we've got that's going to last a few years."?
Ryan Knutson: How did you feel when you saw those numbers just taking off like a rocket ship, and you're adding thousands of subscribers every single day? Ryan Knutson: Without the support of theaters. Mitch and MoviePass marched ahead, but it turned out that there were marching toward a field of problems. That's next. Let's talk about when things started to turn south. At what point did you start to think that MoviePass was going to collapse or wasn't going to make it?
Ryan Knutson: MoviePass desperately needed a way to slow its customers down and get them to buy fewer tickets. So Mitch says, the company started looking for users who the company believed were abusing the service. People were trying to share passwords or find workarounds to get extra tickets. The company asked a percentage of those users to change their passwords and lock them out of their accounts until they did so.
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