Numerous examples of products ahead of their time did not allow them to become famous. One of the innovations that failed was Microsoft SPOT Watch (Karella, 2020). Before the invention of Wi-Fi and Bluetooth, Microsoft decided to use FM to transmit various information to their watches. Microsoft called this technology DirectBand, and users paid for it. Microsoft SPOT could receive an email, weather information, messages, and other data directly to their watches. However, the device itself and the technology required for its operation were expensive for users, and the range of functions was limited. Fifteen years later, Apple successfully adopted this innovation to create its smartwatches. Their device now uses Bluetooth and WI-FI to provide all the information the user needs. Additionally, the range of available functions has been significantly expanded, which made the device convenient and attractive for purchase.
For strategic management, corporate failures should be studied to understand better what risk factors need to be considered. The first lesson illustrates that the success of a product or service is most influenced by the needs of consumers (Angert, 2021). When implementing innovative ideas, it is essential to consider how interested consumers are in these solutions. The second lesson is that innovation is often associated with failure, so it is necessary to consider this when calculating the risks. Finally, the third lesson presented in the case study is that it is important to analyze the causes of failure and apply this experience to improve work on future innovations. Thus, the case study emphasizes that failure is a norm in the corporate world. However, it is critical to decide how the company deals with it afterward.
MoviePass’s mismanagement and mistreatment of its clientele allow learning that unethical behavior cannot be used to stem the losses as it negatively affects customer relationships and trust. MoviePass was engaged in a series of anti-consumer behaviors aimed at restricting the ability of subscribers to buy tickets for popular movies (Angert, 2021). In particular, they tracked users to gain information about their actions, intentionally changed passwords for their accounts to prevent customers from buying tickets for in-demand titles, and charged extra pricing for specific movies and shows. The company’s decision was not ethical as they used the personal data of users without their consent, which violates their privacy.
MoviePass ultimately failed due to a lack of collaboration with other actors in the industry and unique services. The main strategic decision that led to the company’s downfall is the inability to create additional value for its customers, as MoviePass offered only discounts for shows and movies. The company failed to create a sustainable business model which could survive the competition. The product provided was easily replicated, which later was done by large movie theater chains such as AMC (Statt, 2019). The company could have taken different strategic courses during the stage of creating its model, collaborating with other actors in the industry to provide unique services. Additionally, the changes could have been introduced after the company decided to reduce the price of the subscription.
After MoviePass’s failure, many companies introduced their own subscription models, which were more successful. There are several factors that allowed their theatrical services to be in-demand. First of all, movie theaters understand the needs of their customers better and can focus on them (Yoon & Joachimsthaler, 2018). Movie theaters provide not only tickets for a specific release but a theatrical experience, which is the main value proposition. While customers spend less money on tickets, they can bring profits to the theater by buying concessions (Yoon & Joachimsthaler, 2018). Therefore, subscriptions provided by the theatrical chains give people a better customer experience and more diverse choices. Additionally, the model allows the theaters to attract viewers to recover from the pandemic decline.
Another critical factor is that movie theater subscriptions provide limited numbers of movies for a period that a customer can attend. For example, AMC’s Stubs A-List offers its customers to watch up to three movies per week (Faughnder, 2022). This allows the company to accurately predict the number of customers and the profit that they will bring. It is essential for strategic management to accurately predict such figures to make meaningful decisions regarding the model. Additionally, movie theaters provide discounts for concessions for members of their subscription plans (Dockterman, 2022). Overall, subscriptions provided by movie theaters allow them to attract more customers and revitalize the habit of attending the cinema after the pandemic, which in the future can make them sustainable.
6Despite the failure of MoviePass, it gave rise to subscription models in the industry. When the company ceased operation, the industry gained the opportunity to change moviegoing habits. Specifically, cinema tickets used to be excessively expensive for many people before the introduction of the model (Wilkinson, 2018). Due to high prices, people prefer to choose alternative platforms such as streaming services. After the failure of MoviePass, theater owners could analyze the main reasons for this outcome and evaluate the possible benefits of the system. Eventually, the industry now is able to attract more customers and gain more profits using the subscription model.
Subscription models are common nowadays as many people prefer to use them for many services. This factor makes the external environment more or less conducive to this style of service. Products that were not previously available to many people due to high prices are now accessible (Bertini, 2020). Additionally, movie theaters adopting the model offer their customers unique experiences, which is critical in the post-pandemic environment. The main reason for people to come to the movie theaters is a theatrical experience that they could not have anywhere else, which creates the main value. In terms of the external environment, consumers need such services after the long period of lockdown and the inability to visit movie theaters.
If a new entrant wished to introduce a service that offered subscribers the ability to watch movies in theaters for a flat rate, it would benefit from several strategic choices. First of all, it is important for the company to create value for its consumers (Bertini, 2020). MoviePass provided only financial benefits without unique consumer experience options (Statt, 2019). For the new entrant, it is critical to provide services that cannot be found in competitors. Therefore, the best strategic choice would be offering subscriptions for tickets and concessions. Additionally, the company could provide special offers to its customers as passes to events related to releases, special screenings, and various activities connected to the film industry. The best type of strategy could be offering subscriptions with additional services that can ensure profitability. The main problem is to give consumers a more diverse experience than existing theatrical chains, which requires collaboration with as many industry actors as possible.
The company should avoid providing only ticket subscriptions as MoviePass did. Modern theatrical chains can offer better subscription options for their customers, so new entrants should focus on extra services. New companies should avoid ceasing collaboration with major actors in the industry in order to create value for their customers. Additionally, as MoviePass illustrated, new entrants should not be engaged in any unethical behaviors as the corporate image has greater significance.
MoviePass has been recently relaunched, but its success in the future is a controversial question. The company renewed its subscription model, offering different price plans and providing consumers with a set amount of credits they can spend on movie screenings (Dockterman, 2022). Various movies will cost different amounts of credits depending on the release level. The founder of MoviePass notes that the company made deals with several theater chains to buy tickets at a discount. However, major US chains such as AMC, Regal, and Cinemark are not included (Dockterman, 2022). The success of MoviePass in today’s environment is highly improbable due to competition.
MoviePass has one major benefit for consumers, which is the ability to attend screenings in various theater chains at a lower price. However, people are not likely to go to the nearest or favorite theater to see the new release. Major theater chains now provide their own subscriptions, which include discounts for concessions, as well as extra options such as ticket reservations (Daly, 2023). Therefore, customers are likely to choose one of their offerings rather than pay for MoviePass. The company will probably not be successful as it did not change the main aspect of the strategy and still does not offer value to its customers.
The pandemic introduced major changes to the movie industry due to the rise of streaming services and the rapid decline of movie theaters. Many production companies such as Universal, Disney, and Warner Bros. changed their models, shifting towards shortening theatrical windows and releasing movies on streaming platforms. Lockdown limited the opportunity for people to attend movie theaters, which led to enormous losses in the industry. If previously viewers could go to the theater to see the newest release, now they are forced to wait for its launch on streaming platforms. This gave the companies the opportunity to collaborate with such companies to keep the audience interested in their movies and gain profits from releases. The situation resulted in shortened theatrical windows, as well as video-on-demand streaming options, for higher fees (Whitten, 2021). The use of streaming services allowed distribution companies to make profits from their new releases in the condition of closed movie theaters.
Entities involved in the movie industry can learn from the situation that it is necessary to use diverse channels of distribution in the modern environment. Although streaming services significantly alter the habits of consumers in terms of watching movies, the theatrical experience remains a valid option. Streaming gave distribution companies the opportunity to make profits in spite of lost theatrical releases (Whitten, 2021). However, theatrical experiences remain an important stream of revenue for the business, which cannot be ignored. Major companies diversify their release channels after the pandemic. They focus both on movie theaters and streaming services in order to gain benefits from various platforms of distribution (Whitten, 2021). Nowadays, theatrical and streaming releases can be used by distribution companies for different purposes and to attract different audiences. Additionally, movie producers have an opportunity to diversify their activities in terms of making content separately for big and small screens. This can offer more freedom for moviemakers to create different experiences for various groups of viewers.
Although movie theaters have survived a major challenge in recent years, they are likely to survive and grow in the future. In the long term, the theatrical experience cannot be replaced by streaming services. Some people will completely switch to streaming as the primary source of content consumption. However, there are people who value theatrical experience and movies that are made specifically for that purpose. Attending movie theaters provide customers with a whole set of activities which include not only the actual screening but concessions, socializing, different levels of visual and sound effects, and other features. Therefore, movie theaters create unique value for their customers, which is unlikely to lose demand, especially after the introduction of new subscription options. The main problem of theaters in the past is high prices and low accessibility, which is no longer the case.
The best strategic alteration that can give movie theaters the best opportunities is creating specific content for theatrical screening. Modern technologies allow movie theaters to provide a unique experience for viewers using the best visual and sound effects. This creates the most value for them as people attend theaters not only to see new releases but also to watch them in the best quality possible. Distribution companies can create movies specifically for theatrical screening with longer theatrical windows in order to attract customers. It can be beneficial to diversify the content for streaming and theaters, making those channels parallel. Modern MovePass-style subscription models can be used perfectly for this purpose providing better access to movie theaters. Prices for tickets continue to rise due to more complicated and expensive movie production processes, which can be altered by subscriptions. People can choose between watching content at home using streaming or going to the theater for the same money. This will make movie theaters a distinct service that will not have streaming services as its direct competitor.
References
Angert, C. (2021). MoviePassed out: Lessons gleaned from corporate failure. Quarterly Review of Business Disciplines, 8(2), 135-156.
Bertini, M. (2022). Selling value, not subscriptions, is the future of business. Forbes. Web.
Daly, L. (2021). MoviePass is relaunching. Here’s what’s changing. The Ascent. Web.
Dockterman, E. (2022). Everything you need to know about the MoviePass relaunch. Time. Web.
Faughnder, R. (2022). MoviePass died. But this movie theater subscription service hit a milestone. Los Angeles Times. Web.
Karella, A. (2020). Microsoft SPOT and the beginning of smartwatches. Medium. Web.
Statt, N. (2019). Why MoviePass really failed. The Verge. Web.
Whitten, S. (2021). Movie theater owners are frustrated about streaming, but their survival depends on studios. CNBC. Web.
Wilkinson, A. (2018). Why MoviePass is the future — Even if it doesn’t survive. Vox. Web.
Yoon, E., & Joachimsthaler, E. (2018). How to fix MoviePass. Harvard Business Review. Web.