Archive for August 9th, 2018

Service of Subscriptions: A Winning Business Model—Sometimes

Thursday, August 9th, 2018

Photo: Tundra Restaurant Supply

Before Amazon customers buy a toothpick, its 100 million Prime subscribers have handed the company from $77.88/year to $119/year, representing the cost to students and everyone else respectively. [Some may be grandfathered at $99.99.] Nobody outside the company seems to know the breakdown so you can’t do the math but 100 million paying $1/year would represent a tidy sum.

Subscribers get benefits such as free fast shipping for eligible items, shopping deals, streaming films and TV shows.

Photo: videoblocks.com

According to Rachel Siegel of The Washington Post, “The real money, though, is in the buying power these shoppers wield: Prime members reportedly spend an average of $1,300 a year on Amazon, compared with $700 for its customers who are not members.” And it seems that many of the former don’t comparison shop.

The subscription model works for others such as Netflix, which Siegel reported has 125 million members. Health clubs too—which count on people paying for a year and not returning after a few months.

Photo: What’s-on-Netflix.com

On the other hand, MoviePass has had trouble calculating its fee and benefits–a shame as the concept originally served a purpose, especially for customers in cities where one movie ticket costs upwards of $15. Its monthly fee will soon increase to $14.95 from $9.95. According to Nishant Mohan in The Wall Street Journal, “MoviePass, which has more than 3 million members, lost $98.3 million on $48.6 million of revenue in the quarter ended March 31.”

Tuesday’s Journal reported that the company would limit subscribers from one movie a day to three a month. Ben Fritz wrote that the company had forecast 5 million subscribers by December 2018 which chief executive Mitch Lowe admits might not happen quite that fast. He told Fritz: “Ultimately, I believe this is a 20 million-subscriber business over the next three to four years.”

Meanwhile, it’s trying to stay afloat. It has competition such as AMC Entertainment Holdings with 175,000 members with a monthly $19.95 charge to see three movies a week at its US theatres. MoviePass “plans to limit the availability of first-run movies opening on more than 1,000 screens during the first two weeks.” It also has had technical glitches. One recent day its app featured showtimes for e-ticketing theatres, only, and none others.

I’ve noticed disgruntled customers gripe on social media. One subscriber wrote on Facebook: “I’m unable to cancel my account. They say you’re liable for a year. It’s crazy. You have to go thru their app for customer service and that took more than 2 hours.”

Have you had trouble getting out of a subscription? How many times can a company stumble and succeed in the end?  Are there some subscriptions you endorse? Any you don’t?

Photo: crisistimes.com

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