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MoviePass, a San Francisco based start-up, has been a hot topic on every media blog this week, and inspired outcries of jubilation from moviegoers everywhere. The concept is simple: MoviePass is essentially Netflix for theaters. You pay a monthly fee and get to go to unlimited films in theaters. The start-up announced the launch of their beta test in San Francisco earlier this week. If you don’t know what I’m talking about, I recommend reading “All-You-Can-Watch MoviePass Brings Netflix Model to Theaters,” on Epicenter.

When I read this article on Wednesday, I thought: “Awesome! But how the heck did they get the exhibitors to agree to this?” I wanted to know the terms of the deal(s) MoviePass had made with the theater chains. Well, apparently, they skipped this step entirely. It came out today that MoviePass had announced their launch without getting consent from “participating” theaters. When exhibitors discovered they were supposedly “participating,” they publicly denounced MoviePass. As a result, the MoviePass beta launch has been delayed.

Now that the cat is out of the bag, I can’t help but wonder whether MoviePass’s management is brilliant or completely incompetent. When MoviePass announced their launch, either they naively thought exhibitors would accept the new system, or they knew it would fail but expected the press response to help them force a dialogue with the heretofore uncooperative exhibitors.

If the management believed their launch would be successful without the buy-in of the “participating” theaters, then they must be unforgivably incompetent. Yes, MoviePass had agreements with internet ticket vendors who probably would have paid the theaters for the MoviePass users. But without the explicit buy-in of the theater chains, staff at “participating” theaters wouldn’t have any proceedures for accepting MoviePass “tickets.” The exhibitors wouldn’t have any process by which to account for the number of MoviePass users or get reimbursed for the cost of the seat.

If, on the other hand, the MoviePass management knew the launch would fail, I’d call the move brilliant but risky. Even though MoviePass has a strong value proposition for the entire film industry, it can be hard for a start-up to be taken seriously by a major corporation, like AMC. The enthusiasm generated by MoviePass’s announcement offers some proof of concept. Additionally, MoviePass has ensured the attention of giant exhibitors by listing them as “participating theaters.” But this stunt could backfire. It could inspire the animosity of every exhibitor operating in San Francisco, without whose cooperation MoviePass’s business is doomed.

Of course, MoviePass could have other reasons for their pre-mature launch. Perhaps they’re preparing for another round of financing and thought a stunt like this could increase their valuation? I really don’t know. But I earnestly hope it isn’t incompetence… because I would really love to see MoviePass make it to New York!

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