It becomes the theater's problem if the customers have alternatives. In my area, they don't. There are 2 theater companies and 3 theaters. But say you're in Atlanta, there are tons of theaters, and often not too far from each other. So the decision to go to theater X or theater Y could easily be determined by which one accepts MoviePass.

Customer's line of thought: I've already paid for this service. It'd be stupid to see a movie without using it, because I'd be double paying (not entirely accurate, but this is the thinking). I can go 2 more miles and see the same movie at a similar time and not have to pay for the ticket. Sold!

The problem for MoviePass is the customers will do that, and MoviePass can't actually afford the tickets (since most of their spending, now, seems to be from borrowed money).

If MoviePass represent let's say 50% of your customer and suddenly they remove your theater from the list, I will bet you will lose about 90% of those MoviePass customers, so you will lose about 45% of your customers.

I have a MoviePass, and when they removed a big AMC theater around my place a couple months ago, I simply drove two more miles to the Century theater. I have zero loyalty to a specific theater//chain, I care a little bit about better seats though.

So yeah, their goal was to get that bargaining power by getting as many users as possible.

MoviePass' problem was that their biggest users were stingy as fuck. They would smuggle in their own snack and drink, instead of purchasing from the movie concessions stands.

This might not have been much of an issue (since MoviePass pays full price for the tickets), but they tried to make a play for all of a theater's concessions revenue rather than just the revenue traceable to MoviePass customers.

It's the GroupOn problem. You're allowing people to self-select for being cheap, wanting deals.

The MoviePass system was probably pitched like a health-club membership with the expectation that nobody would ever use it, or like a streaming service people forgot they were subscribing to, but it seems they've captured a base of enthusiasts taking full advantage of the program.

Or at least selecting for the heavy user/expensive customer. I rarely go to the movies for reasons that have nothing to do with ticket prices. They’d love me as a customer but I’d never sign up.

I agree and that's the issue when you compete and differentiate on price in the low market. The customers that subscribe, will do everything possible to save a couple $s.

I'm not 1000% up on how they tried to do it, but I remember seeing (on HN, I think) that they would see a non-chain theater be popular, and so they would threaten to not list their theater in the app unless they gave them a cut. The commenter said they saw it with 2 theaters, both initially told MoviePass to go pound sand, so they were delisted. One barely noticed, but the other saw a significant decline in patronage, so they had to go back to MoviePass, hat in hand.