MoviePass: The “Get Big Fast” Strategy Case Study Solution

Introduction

The case of MoviePass presents a compelling study in business strategy, focusing on its “Get Big Fast” approach. Developed by Benjamin C. Esty and Daniel Fisher, the case outlines the challenges faced by MoviePass, a subscription-based service for moviegoers, and explores the pitfalls of rapid expansion without a sustainable business model. This analysis delves into the core issues, examines the strategic decisions made by MoviePass, and offers recommendations for a more viable path forward.

Case Issue:

The primary challenge for MoviePass revolves around its ambitious expansion strategy. While the idea of offering an unlimited movie-watching experience at a low monthly cost excited consumers, MoviePass struggled to balance the demand with a financially viable model. High acquisition costs, coupled with the need to negotiate with theaters, resulted in a substantial cash burn rate. The issue at hand is to determine a sustainable model that aligns customer satisfaction with financial stability.

Case Analysis

High Burn Rate and Customer Expectations
MoviePass faced a significant cash burn rate due to the difference between the subscription fees collected and the actual cost of providing the service. The company’s rapid customer acquisition outpaced its ability to negotiate favorable deals with theaters, leading to unsustainable losses. Simultaneously, customer expectations for a low-cost, high-value service were set, making it challenging to increase subscription fees or alter the service terms drastically.

Competition and Market Response
The movie industry is competitive, with various players offering subscription-based services or loyalty programs. MoviePass, while pioneering the unlimited movie-watching concept, faced responses from competitors, including theaters launching their subscription services. Adapting to this competitive landscape while maintaining its customer base became a complex challenge for MoviePass.

Conclusion

In conclusion, MoviePass’s rapid expansion strategy, while initially attracting a vast customer base, proved to be financially detrimental. The company’s inability to balance customer satisfaction with sustainable financial practices led to significant losses. To survive and thrive in this competitive market, MoviePass needs to reassess its business model, pricing strategy, and operational approach.

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Recommendations

Reevaluate Pricing Structure
MoviePass should conduct market research to determine an optimal price point that balances customer affordability with profitability. Offering tiered subscription plans or limited movie views per month can provide options for different customer segments, ensuring a sustainable revenue stream.

Strengthen Negotiation with Theaters
Negotiating favorable deals with theaters is crucial. MoviePass should work closely with theaters to establish partnerships that benefit both parties. Collaborative arrangements can lead to reduced ticket prices, ensuring MoviePass can provide value to customers without incurring significant costs.

Enhance Customer Communication
Transparent communication with customers is vital. If changes to the service, such as pricing or the number of available movies, are necessary, MoviePass should communicate these changes clearly and provide justifications. Managing customer expectations and demonstrating the value of the service can help retain customers during transitions.

Diversify Revenue Streams
Exploring additional revenue streams beyond subscription fees can contribute to financial stability. MoviePass could consider partnerships with movie studios, advertising within the app, or offering premium features at an additional cost. Diversification can create supplementary income avenues and enhance overall profitability.

Focus on Customer Experience
Exceptional customer service and an intuitive, user-friendly app can enhance the overall customer experience. Providing excellent service, addressing customer issues promptly, and continuously improving the app interface can enhance customer satisfaction and loyalty, ensuring positive word-of-mouth referrals and sustained subscriptions.

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