MoviePass CEO Mitch Lowe recently revealed the company’s financial structure, but caused an uproar when he revealed that the service collects location information of users when they enter or leave the theater, according to TechCrunch. MoviePass offers a new movie everyday to members in theaters for under $10 per month.
Under the current arrangement, the company pays the theaters the going rate for every ticket. However, its business model is based on getting discounts and revenue sharing deals in exchange for driving traffic. The more concerning fact, however, is that the company is collecting the location information of the users.
“We get an enormous amount of information,” Mitch Lowe said. “We watch how you drive from home to the movies. We watch where you go afterwards.” It’s not just the GPS based tracking, but the firm is also aware of the addresses that can be a potent tool for demographic segment information.
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The MoviePass CEO is confident that the location tracking feature would eventually allow the company to develop user-oriented services beyond the theater. Citing an example, the executive said the data can be used to offer suggestions on nearby restaurants if a user is looking to eat something before the show. Vendors listed on MoviePass would pay a small amount to the firm for recommending them.
“Our bigger vision is to build a night at the movies,” Mitch Lowe said.
Defending their business model, Lowe said that Netflix develops content worth $8 billion every year and for that the company needs to borrow money. And, platforms such as Facebook are free, but they are earning revenue from advertising and all the data about the user, the CEO said.
“That’s exactly what we are [doing],” Lowe said.
Prior to Lowe’s explanation, the company has largely been secretive on the inner workings of its business model. Lowe, however, did hint about the user data collection and monetization practices during an interview with Recode last month, notes AppleInsider.
It is good to see that Mitch Lowe is open about how they are looking to open revenue stream. However, the extent of data that the company collects should concern privacy advocates. Users would have assumed that the company could collect data related to ticket sales, movie choice, and promotions. But, they would have never thought that it keeps track of the location of the user before and after watching the movie, notes TechCrunch.
The policy also notes that the company takes security seriously, and the details collected are safeguarded in every way. The location coordination data is transferred via Secure Socket Layer technology into password-protected databases, the company informs.
Later, in a statement to The Verge, the company confirmed that as of now, it is only exploring the use of location-based marketing to better the user experience. Also, the company promised that it will never sell the user data, rather use it to achieve its goal of offering a “complete movie going experience at a price anyone can afford and everyone can enjoy.”
Apple iOS users can turn off the location sharing on the device if they are not sure about the intentions of the app. They can simply go to the Settings app, navigate to Privacy and then select Location Services and then MoviePass.
In separate MoviePass-related news, the app last week did not let users in a few markets buy tickets for Red Sparrow, possibly due to a failed negotiation with the film industry. “We occasionally remove some films from our ticketing inventory in some markets for a limited time, similar to how we organically promote films in certain markets to better understand member behavior,” MoviePass said in a statement to Slashfilm.
In the past, the company did the same thing with films like I, Tonya and Death Wish. It could be that the company is testing its power to impact user choice by directing them to other shows by blacking out the movie that users want to see, notes The Verge.