Service of Subscriptions: A Winning Business Model—Sometimes

August 9th, 2018

Categories: Films, Inconsistency, Movies, Subscriptions, Success

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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4 Responses to “Service of Subscriptions: A Winning Business Model—Sometimes”

  1. ASK Said:

    Who can find one movie a day to attend? Given what’s coming out of Hollywood, three movies a month might be too much as well…

    To answer your question, I have never had trouble getting out of a subscription because I don’t subscribe to any of the services you mentioned in your post.

  2. Jeanne Byington Said:

    ASK,

    I think MoviePass realized that most movie lovers see 3 films a month so that their shrinking the offering would impact only a very few subscribers. I agree with you that there aren’t that many movies I want to see at a given time. And then there’s the time: You’d have to give up a lot to devote the three movies a week AMC offers with its subscription.

    As for getting out of subscriptions, I’ve wasted time trying to do so which is why I will not provide my credit card when I subscribe to magazines and newspapers and why I avoid subscriptions where this is the only option. I dislike the automatic renewal concept along with the anticipated fight to get out of the previous agreement.

    Eons ago I bought a book on graphics from the publisher as I was working with a lot of graphic designers at the time. The publisher began sending me more books and billing me, of course. Not one was of interest. It took me forever to get them to stop between letters and phone calls. I hadn’t signed up for a subscription, either. At first I paid to return the books. In the end I tossed them. Finally they stopped coming.

    For these reasons I am gun-shy when it comes to subscriptions.

  3. Protius Said:

    Most, if not all, of my life, I’ve believed that vendors and marketers had an advantage over consumers like me and got away with murder making money manipulating us with fancy subscriptions and phony online bargains. At one point some years ago, I became sufficiently annoyed with how time consuming it was to have to deal with these pests that I played dirty and tore up my credit cards and left them hanging. I then ignored the barrage of dunning notices which descended upon me over the telephone, the internet and by mail, and left them all hanging. My satisfaction with my revenge was palpable.

    [Incidentally, I later learned you can damage your credit rating if you do this. So don’t.]

    Now, largely because I lack confidence in the integrity of internet vendors, I renew my few subscriptions by check, and I rarely make purchases on line. However, I do believe that I am in a minority, and that most of my peers do not mind the aggravations which come with internet marketing.

  4. Jeanne Byington Said:

    Protius,

    I would have been tempted by MoviePass and I’m glad I didn’t fall for it. Having represented countless product launches and read about startup glitches I know to wait until kinks are ironed out and not to be in a rush. I’m grateful to those who don’t mind the almost sure agita involved in being among the first.

    I admit to buying plenty online if the price is right and I don’t feel fleeced by the shipping and handling charges. I try to wait until I need enough to meet the minimum requirement for free postage or for postage-free days. I never cottoned to Amazon Prime simply because I don’t buy enough from that source to amortize the $119/year subscription.

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