Can You be Too Customer-Friendly? The End of Moviepass
September fourteenth was a very sad day. The provider of unlimited cinema entertainment for one very low, unsustainable price, Moviepass, finally went under. Not that this was in any way a surprise from the day Moviepass crafted their unsustainable strategy, but we, the users, can still weep.
Are there any lessons to be learned from Moviepass's failure, though? In some ways, Moviepass is an example of how to quickly drive subscriber growth. The company went from obscurity to over 3-million subscribers seemingly overnight after they adopted their $9.99 all you can watch subscription plan. Unfortunately, as they well knew, such a business model was unsustainable unless they could pivot the user base into more profitable avenues. They did not.
The Moviepass strategy is the business equivalent of that guy in high school who tried way too hard to make everyone like him. Sure, everyone will hang out with you while you allow them to empty your parents' liquor cabinet at no charge, but the "friendships" will quickly end when the liquor dries up.
The grow subscriber base at any cost model is not only confined to startups, however. Take AT&T, one of the oldest, lumbering corporations in existence. In an attempt to compete in the increasingly competitive streaming market, the giant essentially gave away $200 Apple TVs in exchange for pre-paying for three months of DirecTV Now service (which is less than the cost of a new Apple TV). While this strategy did help to grow AT&T's to the second-highest subscriber base in the OTT market, they quickly began bleeding subscribers as soon as the promotion went away.
These tactics beg the question, can a company be too customer-friendly? How does one draw the line? Should an exit strategy be crafted before an unsustainably customer-friendly strategy is crafted, or should one just launch and hope a new strategy emerges?