You probably heard about MoviePass by now. For those who haven’t, MoviePass is a subscription that allows you access to a large theater network for a low monthly fee. Not only does MoviePass create more customer visits in theaters, but increased spending on concessions, leading to overall incremental revenue for the industry.
Needless to say, they are making tremendous ripples in the entertainment industry!
Started in 2011, MoviePass has gained a significant subscriber base of 2.5 million customers; of which 2.3 million joined after mid-August last year. Guess what happened last August? MoviePass slashed their prices from $50/month to $9.95/month causing the surge in customer subscriptions. MoviePass frequently changes their price level and offering in their efforts to drive adoption, but they also learn more about their customer behavior with each price/package change.
What is particularly interesting about MoviePass is they know the value they deliver to partners: more customers and more data. They know the value they provide to their users: more entertainment at lower prices. They are looking to capture the value not just from their primary monetization method, the subscription fee, but also from supplementary monetization methods including:
MoviePass’ tremendous growth hasn’t been without obstacles and risks. Time and again they faced issues with big chains especially AMC, against sharing snack revenues with MoviePass. Now with a bigger customer base and more proof of driving incremental sales, it is getting harder for AMC to resist toeing in line with MoviePass.
Tech companies can draw 4 lessons from MoviePass’ rapid growth:
Many technology companies struggle to determine the best monetization model and price points given the goals of the company. Often, this is because of lack of alignment around a goal (revenue growth vs. profitability vs. customer growth, etc.).
Once everyone has agreed on a company goal, invest time to understand the value you create for different players in the industry, explore supplementary monetization methods, and experiment with different price levels and offering structures. This will give you more information to determine the right monetization method, right partners, and right price model to reach your organization’s goal.
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If you like this blog by Mayuresh, check out our video blog series on Pricing with Confidence.