Of Movie Prices and Juicers

ATG Michael Giacometti Of Movie Prices and Juicers

  • Michael Giacometti
  • Viewpoint
  • September 28, 2017

There are some interesting pieces of information that came across my desk recently. The first was an article talking about the whole idea of MoviePass and AMC’s resistance to it. The second was how AMC’s stock has dropped 47% because of the larger problem of lower revenue for movie studios as well as the changing habits of consumers. The final piece was an article about Juicero, the company that sold the $400 internet-connected juicer, went under. In my mind, which centers around CPQ and Subscription, this is all related to a larger issue: failing to relate and adapt to your consumer.

  • Most of us have heard the research saying that the lifespan of companies in the Fortune 500 have dropped from 75 years in the 1970’s to 15 years today. More access, more information, and more choices mean that companies need to keep adapting to stay relevant.

What people do not talk about too much is how the relationship between business and consumer has always been more akin to a dialog. It’s capturing, analyzing, and leveraging the information coming from both parties in this conversation that allow you to adapt. Yes, companies must change, but consumers need to find new ways to stay loyal in a world of large and small businesses vying for their attention.

So, how do movie theaters and juicers relate in this? Why are they even mentioned in the same post?

The problems presented in both situations are two sides of the same coin. In AMC’s case, it’s a failure to leverage technology and trends to disrupt their business model. In Juicero’s case, it’s straying too far from an established market to enable meaningful disruption through technology and trends.

Both could have leveraged modern CPQ principles to play a key part in stabilizing their business models. CPQ, or to expand upon the concept, the ATG Monetization Ecosystem™ is a set of domains, sub-domains, and processes that, at its core, facilitate a relationship between buyer and seller. As in anything else relating to the interaction between two parties, it’s all about communication, adaptation, and fulfillment. Of course, it’s much deeper than that, but going back to the example of two people having a dialog, neither party is privy to the thoughts and sub-processes behind the conversation.

Juicero

  • Juicero was a San Francisco based startup that sold high-end juicers. The user would insert a juice packet, hit the button, and have fresh juice poured into a cup. It was considered the “Keurig” of the juice market.
  • Of Movie Prices & Juicers - ATG Monetization Ecosystem™

Investors wanted a piece, and for an initial retail prices of $700, it was found in high-end hotels and restaurants. The packets were only sold if the buyer already owned a Juicero machine. Regular consumers weren’t interested, despite the hype. Even after slashing the price to $400, the juicers still weren’t moving.

The final blow was a report by Bloomberg saying that squeezing the Juicero packets by hand was faster and more effective than using the machine. Even after receiving this feedback, Juicero was unable to alter their business model. They went under because their disruption was not based on any established norms in the juicer market. Understanding their consumer, configuring packages based upon consumer choice, their ability to pay, and their likes/dislikes could have saved the company.

Even using Subscription Billing techniques such as charging by the packet and giving the machine away for free could have stressed the simplicity, innovation, and variety of the Juicero without creating a barrier due to the price of the machine.

AMC

  • The struggle of the large movie theater chains has been well documented. While adding features such as recliner seating and in-theater dining has helped a bit, the entire industry is looking for a way to stay relevant when consumers are more spontaneous in their behavior and are more likely to pursue premium video-on-demand vs. the traditional movie theater experience. This stagnation combined with a weak box office has caused a sizeable loss for chains such as Regal and AMC.

MoviePass is a company that allows subscribers to sign up for a $9.99 monthly fee and see as many movies as they want in whatever theater they want. It allows for consumer spontaneity as well as the possibility to see as many movies as possible for a price less than a single movie ticket. MoviePass promises flexibility and accessibility. AMC has not signed on to the MoviePass program as of this date.

The goal of a subscription model is really to build an intimate relationship between buyer and seller. Even if the product isn’t consumed on a regular basis, there is still an exchange of money simply for access to the goods or services. AMC either adopting the MoviePass program or creating their own proprietary service helps to create this intimate relationship. We are moving towards a subscription economy where consumers are more willing to part with a small fee per month for a service they can choose to take advantage of vs. paying a larger, one-time fee for a product that may be optically expensive.


Leveraging the concepts in the ATG Monetization Ecosystem™ can have both long-term strategic and short-term tactical impacts to companies either looking to disrupt an industry or evolve a long-held business strategy.

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Michael Giacometti is a Principal Consultant for ATG. Michael has provided industry expertise to external research agencies like Forrester and MGI Research, and created new B2B, B2C, and B2SMB channels for clients leveraging innovations in the gifting, sharing, and subscription economies.