Is MoviePass's Business Model Feasible with Buffet Economics?

The concept of buffet economics can provide insights into whether MoviePass had a viable business model. While the popular response might suggest that MoviePass failed to provide value, there is a possibility that a revised version of its model could have been successful. Movies, like food, are often consumed in bulk, making the idea of an all-you-can-watch (AYCW) service intriguing. Let's explore how buffet economics could have influenced the success of MoviePass's business strategy.

Understanding AYCE in the Food Industry

In the food industry, all-you-can-eat (AYCE) buffets operate on a different principle from standard a la carte dining. Customers pay a fixed entry fee and are free to consume as much food as they desire. Buffets employ various techniques to ensure profitability despite this open-ended pricing model.

Techniques for Maximizing Profits in AYCE Buffets

Buffets typically increase revenue by making the cost of consumption less than the entry fee. To achieve this, they use tricks such as:

Large Plates and Cheap Fillers: Offering large plates allows customers to feel full without significantly raising the cost of their meal. Carbs and other cheap filling items are placed at the start of the line to encourage consumption. Sma11er Plates and Smaller Utensils: These help in creating a feeling of having eaten more than one would have in a normal restaurant setting. Bulk Cooking and Group Portioning: Cheaper, bulk-cooked dishes are used, ensuring that the cost per item is lower than the entry fee. Limited Expensive Items: Expensive items are offered in limited quantities, typically placed at the end of the line, to spur more customers to return.

Applying AYCE Principles to the MoviePass Model

MoviePass operates similarly to an AYCE buffet, where users can watch unlimited movies for a fixed monthly fee. However, the same principles that apply to buffets could have been applicable to MoviePass:

Adjusting the Model for Higher Demand

Unlike the average theatergoer who sees one movie a month, MoviePass subscribers likely watch several movies per week. To make the model profitable, MoviePass could have:

Negotiate Lower Ticket Prices: By negotiating lower ticket prices with theater owners, MoviePass could have reduced the cost of watching a movie. This would align with the AYCE goal of ensuring that the consumption cost is less than the entry fee. Control Theater Eligibility: Selecting theaters that are willing to participate in the MoviePass program ensures that only theaters with significant potential customer traffic are included, maximizing profitability. Premium Tiers: Offering premium tiers could provide additional revenue. For example, subscribers could pay more for the ability to watch new releases or access exclusive events. Points or Limits System: Implementing a points or limits system could control the number of movies a user can watch during peak periods. This ensures that theaters see higher revenue from concessions sales, which is where the real profit comes from.

Strategic Considerations for Success

While the buffet economics model offers valuable insights into how MoviePass could have improved its business model, several strategic considerations were crucial for success:

Partnership with Theaters: Strong relationships with theaters are essential. MoviePass needed to ensure that theaters benefited from the model as well, possibly through additional revenue from concessions. Customer Education: Educating customers on the value of watching multiple movies for a fixed fee could have helped in aligning their mindset with the buffet economics model. Market Research: Understanding the habits of frequent moviegoers better could have provided insights into how to design a model that truly maximized value for all parties involved.

Conclusion

The concept of buffet economics offers a lens through which to view the potential success of MoviePass. By adapting the principles of AYCE buffets, MoviePass could have made the model more feasible. However, it is important to note that various external factors, such as market dynamics and customer behavior, also played significant roles in the ultimate outcome.

While it remains uncertain whether a revised MoviePass model could have succeeded, the lessons from AYCE buffets provide valuable insights into the complexities of scaling a service that promises unlimited consumption for a fixed fee.