MoviePass or MovieFail?

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Published on October 3, 2018, at 1:30 p.m.
by Savanna Guitard.

Many companies have seen short-lived popularity, yet none quite as short as MoviePass. In August 2017, the company became a hit when it offered customers a chance to see one movie a day for just $9.95 a month. Subscriptions surged, surpassing 3 million at the peak of the company’s success.

Yet, securities filings showed that MoviePass was burning through cash at an alarming rate, and the company couldn’t keep up with its growing audience. Aside from money problems, MoviePass tried to fix its issues by limiting customers to only three movies a week. This change in movie options led to a large loss of customers, which caused the company to report a decline of millions of dollars.

The rapid rise and fall of MoviePass can teach us a lot about business communication.

Be consistent.
In 2012, the company charged between $25 and $40 per month for an unlimited plan, depending on where a customer lived or how often they went to the movies. Then, in 2017, it changed the plan to $9.95 per month, and again in August 2018, it implemented a new price of $14.95 a month.

Constant change leads customers to lose faith in a company. If customers don’t trust a company, then they not only stop supporting it, but also tell their friends to not support it. With the power of the internet, one upset customer can convince dozens more with comments and social media posts.

Being consistent goes for more than just pricing, but also applies to a company’s mission and values. A company needs to be consistent to build its brand as well as customer trust and respect.

Listen to your fellow employees.
At the end of August, Carl Schramm, a member of the board of directors for MoviePass, resigned due to concerns about corporate management. Schramm wrote, in a letter filed with the Securities and Exchange Commission, that “a number of business decisions have been presented to the Board of Directors, without sufficient time for the Board to examine complex documents … or to discuss how the proposed actions fit into the Company’s strategic plan.”

The lack of communication within the company led to more issues with the board feeling left out of executive decisions and not being notified of company changes. Schramm leaving caused even more public distrust of the company. No one likes to feel ignored, especially when it comes to their ideas. Although not every idea is going to make a million dollars, it is important that all opinions are heard in order to keep a company moving forward.

Employees want to be part of the company, so ensuring that they feel heard boosts company morale and builds trust within the company.

Accept failure.
Companies are going to make mistakes. The best way to deal with failure is to be open with the public and to clearly explain how the problem will be fixed.

When MoviePass started to lose money, it hid the losses from its customers and took out a $5 million loan. Customers realized something was wrong when their passes were denied and the pass policy changed, limiting how many movies they could see.

The inconsistency of MoviePass’ business not only frustrated customers but caused many to cancel their passes. Being open with customers makes a company authentic. Although it may anger some, it will show a company’s ability to stay honest. If MoviePass would’ve been up front with customers about why it was changing the price, some may have been willing to pay more; however, when customers felt tricked, they canceled their plans altogether.

MoviePass is a great company to learn from when it comes to business communication. A company must be honest and stick to its core values if it wants to stay afloat amidst a crisis. If customers have respect for a company, it will go a long way in the world of business.

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