(2.4) The Sneaky New Condition That Everyone Missed
MoviePass describes their Unique Value Proposition like this:
“Any Movie, Any Day, Any Theater…” “With MoviePass there are no blackout dates. See a new 2D movie every day, even on opening night!”
Given that promise, one of the recent changes to the MoviePass Terms of Service (TOS) shocked me:
2.4 MoviePass reserves the right to change or modify the Service or subscriptions at any time and in its sole discretion, including but not limited to applicable prices, at any time, without prior notice. MoviePass reserves the right to change the rules of movie-going attendance and ticket availability to members in connection with the Service at any time. MoviePass reserves the right to change from time to time the number of eligible movies a member can see per month. MoviePass reserves the right to offer members a new price option if they exceed watching a certain amount of movies per month.
Maybe I have spent too much of my life reading legislation and court opinions, but I think this means that if you watched one movie every day for a month, MoviePass could change the terms of the deal on a per member basis at will (whenever they want to).
To give you an idea of how this could be abused by MoviePass to increase profitability:
MoviePass actually pays for the tickets its users purchase (The Movie Pass Card is actually a very specific kind of Credit Card that requires activation per usage)
Now, Imagine 1 Million of the 1.5 Million MoviePass subscribers watch one or fewer movies a month, most likely MoviePass makes money off of every one of these subscribers (they have deals with enough movie houses, movie producers, and big data consumers to ensure that a break-even proposition is a win for them).
So, let’s assume the remaining .5 million people currently represent some level of loss for Movie Pass and it is possible for Movie Pass to figure out there a sweet spot somewhere between the people who make them money and the people who lose them money (in terms of the total number of movies watched).
I am pretty sure MoviePass is reserving the right to tell anyone who fully actualizes their membership beyond this (or any) sweet spot that they are reserving the right to negotiate the terms of the agreement on a per member basis.
In essence, they could start informing current members that if they watch X number of movies a month they can stay at the current rate but if they watch Y number of movies a month they would have to pay a different rate going forward.
In other words, they would be offering you a one movie a day for one month deal which would then become constantly renegotiated on an Ad Hoc basis into the future (based on whatever the sliding algorithmically determined line of profitability is).
This becomes even more concerning when you add in another of the new conditions (the All Caps were in the TOS):
If you consider the first part of 2.4 again:
2.4 MoviePass reserves the right to change or modify the Service or subscriptions at any time and in its sole discretion, including but not limited to applicable prices, at any time, without prior notice. MoviePass reserves the right to change the rules of movie-going attendance and ticket availability to members in connection with the Service at any time.
I think this means, they are saying that they can theoretically change the agreement and charge you the difference at any time.
In other words, it is possible they could start charging you more than other members simply for watching more movies than other MoviePass members do (and even more problematic, I think they are suggesting they have the right to do this without notifying you first).
Basically, they are giving themselves an emergency exit for those subscribers who actualize the promised service fully.
Even stranger is this seeming admission that the MoviePass business model is not sustainable coming at the same time MoviePass is engaged in a battle with AMC Theaters who claim, not surprisingly, that the MoviePass business model is not sustainable.
“AMC claims that part of the concern is for the consumer, as the company predicts that MoviePass will eventually fold due to this new pricing structure, leading to a lot of disappointed movie fans. It’s certainly true, that since MoviePass is simply a middleman, and that MoviePass will be buying normal price tickets from theaters, it doesn’t seem like a long-term viable price point.”
I am a huge fan of MoviePass, and I am most certainly one of the people who could be charged more as a result of these changes, but this whole thing makes me wonder if even MoviePass is admitting, through their new TOS, that a month of in-theater movies is worth much more than $9.99.
If that is the case, the effect of what MoviePass is doing could be akin to what Japan did in the 80’s when they dumped cheap Semiconductors into the United States market to run out competitors (destroying the domestic semiconductor industry in the process).
On the other hand, in-theater viewership has been declining steadily over the last several years, so it seems pretty clear that the Movie Chains have incorrectly priced movie tickets as well.
It makes you wonder if AMC and other holdouts need to listen to the immortal words of Laurence Garfield (one of my favorite all-time movie characters):
“Obsolescence. We’re dead alright. We’re just not broke. And you know the surest way to go broke? Keep getting an increasing share of a shrinking market.”
Still playing around with all the implications in my head (and I could certainly be wrong), but I do think most everybody who has commented on the change in the MoviePass TOS might have missed the forest for the trees.
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