What MoviePass CEO Mitch Lowe Learned From Being Audacious
Fast growth can be bad, be good to your neighbors, and the movie industry needs disruption.
PHOTO CREDIT: Getty Images
MoviePass was named as the No. 1 most fearless company of 2018 by Peter Csathy, the author of Fearless Media. In the book, Csathy lists his "Fearless Five" companies that made the most audacious media moves in 2018.
MoviePass beat out more established disruptors like Netflix (which is investing big in original content) and Amazon (which is investing big in everything--from Alexa to original content to your local Whole Foods grocery store).
Much of the audaciousness can be attributed to MoviePass's CEO Mitch Lowe (formerly CEO of Redbox and a founding executive of Netflix). In a bold plan for market share in Aug. 2017, he reduced the subscription price for all you-can-see movies to $10 a month. Despite the well-publicized missteps of the company--constantly changing movie pricing plans, falling stock prices for parent company HMNY, and disgruntled subscribers--Csathy called MoviePass a daring experiment. MoviePass's new model defined a completely new way to see movies and forced movie theater chains and distributors to rethink movie going in our streaming age.
Lowe is not only a bold innovator and CEO but also a friend. Now that he's stepped down from his day-to-day duties as CEO, we had a short chat about the lessons he learned from his experiment in disruption.
Your company can grow too fast
Most companies want to grow exponentially. But too much fast growth can be just as bad as slow growth for the company. With the new all-you-can-view plan, MoviePass grew to 1 million subscribers in four months and then added another million in six weeks.
Lowe said MoviePass ran into multiple challenges from the scaled growth. The company needed loans to cover the cost of movie attendance. Their technology teams had to deal with connecting to all theaters. There were also problems with how to keep people using the system honestly: for example, scalping tickets or purchasing food from the concession stand using the company's money. And new users were watching too many movies. So MoviePass had to change the availability of watching new releases, which dissatisfied many subscribers but was necessary for the long-term survival of the company.
How you handle growth, just as you handle lack of growth, Lowe said is what determines your long-term company survival. In this case, the idea was to treat these missteps as experiments in order to learn the right model that would work for all concerned.
Be a good member of the ecosystem
MoviePass hadn't laid the groundwork with all stakeholders when Lowe first lowered the subscription price. He knew the low subscription price wasn't sustainable without buy-in from all stakeholders. The plan was to support the low subscription price by entering into agreements with movie theater chains for subsidies or sharing concession sales, to earn income by marketing movies to consumers directly through the app, and to sell the usage data of their customer base.
Instead of acceptance, MoviePass found resistance from theater chains for the new plan. AMC famously threatened not to honor the card. Deals for sharing revenues from concessions did not materialize. And MoviePass came under scrutiny with how it would use customer data, so Lowe had to issue a public explanation that MoviePass wasn't tracking customer movements.
The takeaway, Lowe said, in order to succeed you need to be a good member of the ecosystem.
The movie industry is ripe for disruption
If there is one lesson Lowe learned, it's that the movie theater experience is still ripe for disruption. Most people see five movies a year, but MoviePass showed people would go to the theater more often if the price was right. Tickets sales increased by 9.9 percent.
The service attracted over three million subscribers and many people were going to movies multiple times per month. The plan was so successful in enticing people into the theater that rival plans emerged from AMC and Sinema.
While MoviePass hasn't gotten all movie lovers on an all-you-can-view for one low price option like Netflix yet, it did get people thinking it should be an option. I've been a very happy member for over a year.