Startup MoviePass Acquires Moviefone for Only $1 Million - The UpStream

Startup MoviePass Acquires Moviefone for Only $1 Million

posted Friday Apr 6, 2018 by Scott Ertz

Startup MoviePass Acquires Moviefone for Only $1 Million

When Verizon purchased AOL and created their nostalgia unit, formally called Oath, the company was looking for content production. It was just one of many examples of "line owners" looking to get into the content production market. AT&T purchased DirecTV, intending to enhance their distribution, and wants Time Warner for the content.

Obviously with the purchase of a company as large and sprawling as AOL comes some unwanted baggage. For example, part of AOL was the long-running Moviefone brand, a company that provides remote movie access. Originally provided through the phone number 777-FILM (famously parodied on Seinfeld), the company shifted to online and mobile movie information and shut down the phone number in 2014.

This week, Verizon was able to unload the brand, which does not serve the Oath purpose of being a content producer, on a startup that many people erroneously have called Moviefone for months: MoviePass. This company allows you to pay a certain amount per month to see "unlimited movies" in theaters (though you are actually limited to a single film per day). Verizon let the brand go for only $1 million, a massive loss for the AOL brand, which purchased the company in 1999 for $388 million.

The Moviefone acquisition makes a lot of sense, and not just for the existing brand confusion. By combining the informational partnerships of Moviefone with the theater viewing experience of MoviePass, subscribers to the service can get a lot more information about the movies they are considering seeing without having to leave the MoviePass environment. They can also leverage the Moviefone userbase to encourage subscriptions to the MoviePass service.

MoviePass CEO Mitch Lowe said of the purchase,

This natural alignment between MoviePass and Moviefone will help us grow our subscriber base significantly and expand our marketing and advertising platform for our studio and brand partners. Moviefone has been a go-to resource for entertainment enthusiasts for years, and we're excited to bolster its presence and bring this iconic platform into the entertainment ecosystem of the future.

Of course, the next important step is to successfully leverage the buyout. MoviePass has had some troubles attracting new customers. Recently, they resorted to a price reduction for a full-year purchase. Obviously they have had some success with it, but they will need to retain growth to be able to stick around at all, let alone validate the purchase of an iconic brand like Moviefone. Hopefully those plans will not include the controversial user tracking feature in the long-term.

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