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MoviePass’s fuzzy business model includes tracking users’ locations

Users don’t really seem to care.

MoviePass House Park City Daniel Boczarski/Getty Images for MoviePass

MoviePass, the company that allows subscribers to see one theatrical-release movie a day for a monthly flat fee, has always seemed too good to be true. Once MoviePass lowered its fee from $50 per month to $9.95 — which it’s currently lowered again in a “limited time” promotion to $7.95 per month — subscription numbers exploded, inviting the inevitable questions: How is this sustainable? How can MoviePass make money from what seems to be a money-losing business model?

MoviePass CEO Mitch Lowe has given various solutions to this quandary. For instance, he’s said that he hopes the service will attract consumers who “settle into” a steady diet of just one movie a month, thereby allowing the company to profit on its investment. At other points, he’s hinted that the company could negotiate revenue-sharing deals with movie theaters and studios for bringing in audiences — particularly for indie films and non-blockbusters that could use a MoviePass promotional boost.

But Lowe has also been clear about what’s at the core of the company’s monetization strategy: collecting user data.

MoviePass has been open about collecting user data, but less so about what it plans to do with it

In August 2017, a data analysis firm bought a majority share in MoviePass, which allowed the company to drop its subscription fee to the $9.95 price point. Lowe, who was a founder of Netflix and served as president of Redbox, told the Recode Media podcast in February that MoviePass was modeling itself after Netflix and “companies like Facebook” — specifically the part where Facebook monetizes the data you provide as a user.

“It’s free, but they’re monetizing all the advertising and all the data about you,” Lowe said. “That’s exactly what we are [doing].”

Lowe has been so open about the plan to monetize MoviePass user data that while attending the Entertainment Finance Forum on March 2, he titled his keynote presentation “Data Is the New Oil: How Will MoviePass Monetize It?”

During the presentation, Lowe opened up for the first time with specifics about what kind of user data MoviePass is interested in — and instantly caused a frisson of anxiety among users. As first reported by Media Play News, Lowe told attendees that the company planned to track users’ behavior before and after the movie — by tracking their movements to and from the theater.

“We watch how you drive from home to the movies,” he said. “We watch where you go afterwards.”

After the media erupted in alarm over these statements, Media Play updated its report with a longer quote from Lowe’s statement, in which he pointed out that users’ addresses and other information are provided by users themselves, and positioned the data collection as a way to improve the moviegoing experience:

We get an enormous amount of information. Since we mail you the card, we know your home address, of course, we know the makeup of that household, the kids, the age groups, the income. It’s all based on where you live. It’s not that we ask that. You can extrapolate that. Then because you are being tracked in your GPS by the phone, our patent basically turns on and off our payment system by hooking that card to the device ID on your phone, so we watch how you drive from home to the movies. We watch where you go afterwards, and so we know the movies you watch. We know all about you. We don’t sell that data. What we do is we use that data to market film.

Lowe said the goal with this data tracking is to ultimately “build a night at the movies,” where, for example, the service might make local recommendations for places to eat before the film, with partnerships from vendors.

(At this point, it’s worth noting that as long as you have GPS location tracking disabled on your phone — which is something you may want to do anyway, for a wide variety of privacy reasons — there’s no way for MoviePass to track your location.)

But some users responded with concern, and TechCrunch noted that specific language about tracking your movements shows up nowhere in the company’s privacy policy. The company soon issued a follow-up statement in which it stressed that the data tracking was being used only for internal purposes and would never be sold to an outside company. (This is the part where we remind you that MoviePass is owned by a data analysis firm.)

“We will not be selling the data that we gather,” the statement read in part. “Rather, we will use it to better inform how to market potential customer benefits including discounts on transportation, coupons for nearby restaurants, and other similar opportunities.”

This isn’t the first time in recent weeks that MoviePass has drawn criticism for arguably overstepping. It reportedly prevented some users from buying tickets to the new Jennifer Lawrence film Red Sparrow through MoviePass — a move that the company responded was done to “optimize” user experience. It also has garnered criticism for asking users to take photographs of their ticket stubs, in order to prove they actually watched a film, before they can apply their MoviePass to the next day’s feature. The company told Gizmodo the move was intended to cut back on moviegoers exploiting the service.

Still, despite these flare-ups, the company says it’s poised to top 5 million users by the end of the year. And despite the alarm stoked by the revelation that MoviePass is following you around your neighborhood — and despite recent evidence that this kind of data tracking doesn’t always end well — plenty of users seemed to greet the news with a cynical shrug.

This kind of “meh” response is undoubtedly what MoviePass is counting on — and so far, it looks like counting on its users to be disengaged, and working that into its business plan, is going pretty well.

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