Last week, MoviePass announced that it would begin charging extra fees for popular movie screenings on top of its monthly subscription fee. When I read the news, a familiar, fleeting feeling of outrage washed over me. I probably couldn’t tell you the titles of all the movies that I’ve seen at a steep discount since I signed up for the content subscription service last year. But I sure as hell could tell you all of the times I’ve felt personally scorned by the start-up’s adjustments to its initial deal of unlimited access to almost any movie at almost every movie theater for $9.95 per month.
My annoyance with the app began when MoviePass surreptitiously removed major AMC locations from its service as a strategic bargaining move against the theater chain. A few months later, CEO Mitch Lowe tried to demonstrate his company’s value by bragging that the app was able to track “how you drive from home to the movies,” and “where you go afterwards.” (After customers like me were understandably upset by this information, Lowe clarified he was “joking.”) In April, the company took away my ability to see the same movie twice. During a promotion in April, it switched to a four ticket-per-month limit plan for new subscribers, and Lowe hinted that its unlimited offering might never return. (He later backpedaled. Must’ve been another hilarious joke!) Starting next week, even if I get it together enough to catch a blockbuster movie at 11 a.m. during its opening weekend, I’ll probably have to pay extra money to see it because of MoviePass’s new surge-pricing strategy.
As you might expect, my growing bitterness toward MoviePass is shared by the millions of other people who subscribed to the service in the past year. Gizmodo lamented the most recent “bullshit changes” by describing surge pricing as “a tactic cooked up by the devil and Travis Kalanick in a contest to see who could be the most diabolically evil.” Recently, the MoviePass Reddit page was littered with posts about the changes. “I am a loyal Moviepass subscriber, and today I registered for AMC A-List,” one Redditor, who is referring to AMC’s new, competing Stubs A-List service, wrote. “NOT because I support AMC, but because, on a basic level: I want to pay money in exchange for a stable service without having to wonder if the company will process my payment and then reduce the service, without having to hope that the service will actually function on a given day, and without having to frustrate myself when the company refuses to provide any avenue for meaningful customer support over a prolonged period of time.” Others have simply declared MoviePass a scam.
The ironic subtext to all of this consumer anger, including mine, is that despite all the drama, both MoviePass and Stub A-List are objectively great deals. The average price of a movie ticket in the United States is around $9, and in coastal states like California and New York, I usually find myself paying double that. As long as I see at least one movie a month, I will continue to save a significant amount of money with a $9.95-per-month subscription service. And yet, the prospect of having certain privileges and price points ripped from my popcorn-buttered hands has inspired feelings of rage so deep that I have considered abandoning MoviePass the same way I did when ClassPass pulled this nonsense in 2016. Logically, I know the benefits of sticking around, but emotionally, the notion that these apps would dare to tamper with my freedom of movie choice, or hike up the price, makes me want to punish them. In analyzing these contradictory feelings I wondered: Why is my consumer brain so dumb?
“There is a psychological principle of autonomy,” Nick Kolenda, an author who writes about psychology and marketing, told me when I explained my thinking. Consumers want to feel like they’re making decisions rather than feel like they were manipulated into a purchasing decision, in the same way that being followed around by a salesperson in a store might turn you off to actually buying anything. “There are studies that show that just including the four words ‘but you are free’ anywhere reinforces that sense of autonomy, and makes people more persuaded,” Kolenda told me. “If you feel like someone is trying to persuade you or control your choice, you intuitively resist and put a up a wall.”
This desire for autonomy can encourage us to make nonsensical purchasing decisions, like canceling MoviePass, or snubbing slightly more expensive, but ultimately more reliable services like Stubs A-List. But it’s also one of the reasons that people tend to favor flat-fee models over pay-as-you-go models—even when it won’t actually save them money. Most modern subscription apps function on a flat-fee model, in which a consumer pays a lump sum every month for mostly unfettered access to something like a gym, rental equipment, or a telephone service. Pay-as-you-go typically means you’re paying smaller amounts more frequently, for one-time usage of, say, an exercise class, a scuba diving getup, or an international call. A flat-fee model is to a pay-as-you-go as a buffet is to a regular restaurant meal. Kolenda points to a 2000 study by Joseph C. Nunes that presented participants with hypothetical flat-fee deals versus pay-as-you-go options for services like online grocery delivery services and monthly pool access. Unless they were shown explicit data about their average monthly usage of those services, people almost always chose monthly fees for unlimited access over paying for individual usage. When offered service plans that were theoretically limitless, the participants generally overestimated the amount of usage they’d get from a flat-rate service plan.
“Because people are influenced by boundaries of their perceived usage, any efforts to alter the minimum or maximum number of times people believe they might use a product or service may affect choice,” the study concluded. It’s the same classic principle that leads people to sign up for gym memberships in January, thinking they’ll hit the treadmill enough to make it count. Applying this logic to MoviePass, it makes sense that every time the company tinkers with our precious moviegoing access in some way, subscribers recalibrate and decide the service might no longer be worth it. Our personal calculations might be incorrect, but it’s likely the equation we used to sign up for the app in the first place was already overly optimistic.
Knowing this much, you’d think a business like MoviePass might embrace a pricing strategy that would require them to send fewer emails to its customers that beg users for their “steadfast support of our company and growth.” Apple, for instance, applies a marketing method called price skimming to its products to convince customers they’re getting a deal. At its annual product announcements, the company simultaneously discounts its older gadgets while revealing the shiny, new full-priced ones. MoviePass instead chose a strategy that marketers call “price penetration.” The company desperately needed users to jump-start its business, so it lowered its subscription prices to lure them in. In doing so, it has blown through millions of investment dollars. Now it must slowly but surely raise prices to prove it can actually be profitable.
“In general, penetration pricing and starting really low is not advisable,” Utpal Dholakia, a marketing professor at Rice University’s business school, told me. “Trying to take away that price and make it higher, people are angry. It’s always much more difficult and not advised to start with penetration pricing. It’s better to start on the higher side and then lower prices.”
Unfortunately, very few subscription-based businesses are as cash-rich as Apple, and these companies know that overpricing their products will drive away customers in the short term. Companies like Uber, Blue Apron, Netflix, Spotify, and now MoviePass have followed a new, concerning business model which aims to sustain a business on venture capitalist dollars first and (hopefully) profits second. The result of this new business model has left us at a new normal: that in which a company positions itself to perpetually disappoint and anger its customers. “With MoviePass, there’s no way down, it’s all up,” Dholakia said. “They’re starting with the lowest level possible.”
The best we can hope for now is that companies like MoviePass learn how to be less chaotic with their adjustments. Other subscription companies have, at least, managed to improve over time. Back in 2011, Netflix CEO Reed Hastings sent his company into a downward spiral when he announced, via blog post, that Netflix would both raise prices, and launch a separate DVD-by-mail business called Qwikster. Now price increases are couched in explanations about how the additional cost will be used to improve the service for customers. (The fact Netflix has invested billions of dollars in original programming and is generally seen as a reliable, valuable service—you know, one of the trademarks of a good business—also helps.) This year, Amazon announced that it would once again raise its prime membership from $99 to $119, but that it would wait another two months to apply the hike to existing members. The end result might be the same for the consumer, but the more time a company gives us to forget that it is slowly taking advantage of our addiction to its service, the less severe the public reaction will be. These companies stand apart from MoviePass, in part, because they’re easy to navigate, deliver what they say they will, and provide actual customer service. MoviePass is still a young, bare-bones company that can’t even get the image sizes in its customer emails right. It has an F rating from the Better Business Bureau for failing to provide adequate customer service in its largest period of growth, and its menu of services shifts so frequently, that, at any given point, customers don’t even know what they might be paying for. “Increase in prices is difficult for everyone,” Dholakia said. “No consumer likes a higher price. The challenge that the company faces is how to make the process as painless as possible. Most companies find ways to reduce the pain, but MoviePass just can’t seem to make the pain go away.” If this darling startup wants us along for the ride, they at least have to promise the wheels won’t fall off. MoviePass might be a good deal. And as dumb as the consumer brain might be, it can still spot a shoddy operation when it sees one.
