Last night MoviePass powered down its servers, slapped a ‘Gone Fishin” sign on its homepage, and died. Few mourned its passing. Since 2011 the New York-based movie theater subscription platform (movie-theater-tickets-as-a-service?) had pedaled a model that shrinking numbers of investors thought it would ever truly pull off. Yesterday even that tiny clique was proved wrong.
MoviePass’ final act was slow, painful and, of course, inevitable. Last year, when AMC pulled out of an agreement with the firm, the writing was on the wall: MoviePass bought tickets at near-face value from showers, and sold them at a reduced rate to its members. It takes no genius to spot the fatal flaw.
As other exhibitors left, and user numbers plummeted, MoviePass began to better resemble an investor-facing pyramid scheme than a business. It shouldn’t have taken until September 2019 for the last employee to switch off the lights.
Will the tech industry, and its deep-pocketed backers, learn anything from this sad episode? Silicon Valley’s past and present is peppered with companies that never even threatened to turn a profit. Uber hasn’t made money in its decade of operation—even as it pivots to bus services and other costly plans. Red Herring outlined WeWork’s shaky economics, as the fellow New York startup continues to shoot for a much-discussed IPO.
Silicon Valley has always been a chance to win big, or lose big. For every Facebook, or Google, there are seven Webvans, Vonages or Pets.coms. That MoviePass has been consigned to the latter, far bigger pile, will do little if anything to stop investors rolling big on questionable bets.
One thing the company’s fall may do, is to make investors more wary of firms whose customers don’t really need them. Once theater providers realized they didn’t need MoviePass, it was over. AMC and Cinemark, first and third respectively in a list of the U.S.’ largest cinema chains, have announced that their in-house subscription plans have landed over a million users each.
Throw in a market that is shrinking thanks to home-streaming services like Netflix—moviegoers bought 1.35 billion tickets last year, down from 1.58bn in 2002—and it’s a wonder MoviePass ever got off the ground. This is not a heavily-populated industry like movie or TV: AMC, Cinemark and Regal operate the vast majority of the country’s movie theaters. Even tie-ups with loan companies, and shady Big Data plans, could not save MoviePass.
So, RIP MoviePass. We knew ye well, but not as well as ye knew yeself. Will your demise be just another number in the growing listicles of tech-industry disasters? Probably. But you just might have saved some investors from making the same mistake twice.