MoviePass: The 'Get Big Fast' Strategy
HBS Strategy Case No. 719-424 (2019)
Posted: 25 Apr 2019
Date Written: April 1, 2019
In August 2017, MoviePass dramatically lowered its monthly subscription price from $50 to just $10 which allowed subscribers to see up to one movie per day. The idea was to rapidly scale the business to the point where they could generate incremental revenue streams from related businesses (e.g., a share of ticket and concession revenues from theaters, advertising revenue from movie studios; and revenue from ride-sharing companies). Within two days, MoviePass had gotten 150,000 new subscribers; within six months, they had more than 2 million. But as of February 2018, the company faced four challenges: theaters were resisting the concept, investors were shorting the stock in record numbers, competitors were beginning to appear, and cash was running short. Could CEO Mitch Lowe (a co-founder of Netflix and former President of Redbox) convince investors that they did, indeed, have a viable business model and could monetize their growing subscriber base? Lowe also had to decide whether to raise subscription prices to cover the growing losses or keep prices low to attract subscribers as quickly as possible.
The goal of this case is to understand the advantages, disadvantages, and economics of a "get big fast" strategy as well as the determinants of viability for a subscription business.
Keywords: subscription business, market entry, growth strategy, profit vs. growth, cash burn, data analytics, business strategy, value creation, buyer power, entrepreneurship, movie industry, racing
JEL Classification: L1, L11, L26, L8, M13
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