How Does MoviePass Make Money? Is It Legal for Them to Sell Data About Their Users' Movie-Going Habits?

MoviePass, once a groundbreaking subscription service for moviegoers, offered its members access to a variety of films in theaters for a flat monthly fee. This model was attractive to consumers but posed several challenges in terms of financial sustainability. Let's explore how MoviePass has historically made money, the legality of selling user data, and its impact on the business.

How MoviePass Made Money

1. Subscription Fees: The primary revenue stream for MoviePass was its subscription model. Initially, users paid a monthly fee (at times as low as $9.95) to see an unlimited number of movies in theaters. However, since MoviePass had to pay theaters the full price of each ticket its subscribers used, it was often operating at a loss. The subscription fees alone weren't enough to cover these costs, especially for avid moviegoers who took full advantage of the service.

2. Partnerships and Advertising: MoviePass also aimed to make money through partnerships with theaters, studios, and advertisers. The company hoped to strike deals where it could promote specific movies, offer discounts on concessions, or provide users with special offers based on their movie-going habits. This strategy intended to enhance the customer experience while securing additional revenue streams.

3. Data Monetization: Another potential revenue stream for MoviePass was through the collection and sale of user data. The company gathered valuable insights into users' movie preferences, viewing habits, and other behavioral data. This data could be monetized by selling it to advertisers and studios interested in targeting moviegoers with specific content or promotional offers.

4. Tiered Subscription Plans: Over time, MoviePass began experimenting with different subscription tiers. These plans limited the number of movies users could watch per month or restricted them to certain days or theaters. This approach helped curb the significant financial losses caused by unlimited movie access, while still keeping the service affordable for many users.

Is It Legal for MoviePass to Sell User Data?

The question of whether it's legal for MoviePass to sell data about users' movie-going habits touches on the broader topic of data privacy laws and user consent.

1. User Consent: In many cases, companies can legally collect and sell user data as long as they obtain informed consent from users. This is typically done through privacy policies and terms of service agreements that users must accept when they sign up for the service. If MoviePass had a clear policy stating that user data would be collected and potentially sold, and users agreed to those terms, then the company would be within its rights to sell that data.

2. Privacy Laws: The legality of data collection and sale also depends on the jurisdiction and applicable privacy laws. In the United States, data privacy laws are somewhat fragmented. The federal law known as the Gramm-Leach-Bliley Act (GLBA) regulates how financial institutions handle user data, but it does not apply to companies like MoviePass. On the other hand, states like California have enacted stricter data privacy laws, such as the California Consumer Privacy Act (CCPA), which grants consumers more control over how their data is collected, used, and sold.

Under the CCPA, companies are required to disclose to users if their data is being sold and give them the option to opt out of such practices. If MoviePass operated in California (or dealt with Californian users), it would need to comply with these regulations, ensuring that users had the opportunity to limit or prevent the sale of their personal information.

3. Ethical Considerations: Beyond legality, there's the ethical question of whether it's right for companies to sell personal data without offering clear and transparent control to their users. Even if MoviePass followed the letter of the law, some users might feel uncomfortable with their movie-watching habits being tracked and sold for profit. Transparency is key here—users should be fully aware of how their data is being used and have the power to make decisions about it.

Conclusion

MoviePass’s primary revenue stream was from subscription fees, but it also explored other avenues, including data monetization. While it is legal for companies like MoviePass to sell user data if they obtain proper consent, this practice is regulated by privacy laws that vary by jurisdiction. For consumers, it's essential to be aware of a company's data policies and to take advantage of opt-out options if available.

As data privacy laws continue to evolve, companies that collect personal information must balance profitability with user trust and ethical considerations. For MoviePass, financial woes ultimately overshadowed their business model, but their story highlights the challenges many subscription services face when trying to balance consumer benefits with profitability.