$10 a Month Can Buy You a Daily Movie Theater Ticket. Is It Too Good to Be True?
At first glance, MoviePass seems like an offer that's great for moviegoers, and perhaps theater owners, but terrible for the company offering it. For $9.95 a month, MoviePass offers members one ticket a day to any regular (not 3D or IMAX) movie; the company says MoviePass is available in more than 91% of U.S. theaters. In theory, that means a member could see 365 movies each year in theaters for less than $120.
That seems like an offer that's too good to be true. But Ted Farnsworth, CEO of Helios and Matheson Analytics Inc. which just purchased a majority stake in MoviePass -- which is led by Netflix co-founder and former Redbox president Mitch Lowe -- insists that's not the case. Farnsworth explained in an email exchange with The Motley Fool why his company believes in the service.
"MoviePass will be paying the full price of every ticket sold at theaters, with the exception of IMAX or 3D," Farnsworth wrote. The company originally sold its all-you-can-see plan for $30 a month, hoping to make money in the way many gyms do -- profiting from people not using the service much, but not cancelling. Its new $9.99 price has a different, much longer-term, financial model.
Source: Fool.com
