Every investor wants AI to be Uber. Burn cash now, win the market, raise prices later, print money. The losses are an investment in dominance.
It's the wrong story. The honest one is MoviePass and the difference is the whole ballgame if you're betting your costs on cheap AI staying cheap.
Uber's losses had an exit. MoviePass's didn't.
Uber bled billions on purpose. But notice why the bleeding stopped. Once it owned a city - enough drivers, enough riders, a habit - serving one more ride barely cost anything while its pricing power climbed. The subsidy bought a position that got cheaper to hold. Network effects did the work. There was a door marked "profit" at the end.
MoviePass sold unlimited movies for $9.95 a month. The flaw was brutal: every time you used it, they paid the theater near full price for your seat. The more you loved it, the more they lost on you. Scale never fixed the math - it multiplied the loss. Your best customers were your worst customers. It grew itself to death in about a year.
One subsidy had an exit. The other had a cliff.
The line that separates them: for Uber, usage trended toward revenue. For MoviePass, usage was cost.
So which one is an LLM?
Sit with that line, because LLMs fall on the wrong side of it.
Every prompt burns real compute, every single time. Your heaviest users - the ones running agents, generating all day, building their whole workflow on it - cost the provider the most. Using it more makes the math worse, not better. That's the MoviePass shape exactly: usage is cost, not revenue, and the people who love it most bleed you fastest.
Uber's cost per ride fell toward zero as it scaled. An LLM's cost per query is inference, and inference doesn't drop because you signed up more customers. It climbs with how hard each one leans on you. Models do get cheaper per token over time - but agents now spend tokens fifty at a time, and the frontier keeps moving to bigger, costlier models everyone then expects as standard. The cost floor keeps walking forward.
There's no geographic density to defend, either. Weights leak. Open models catch up. The "unlimited intelligence for $20 a month" plan is running the MoviePass playbook with better branding.
You can already watch the same death spiral
This is the part that should make the analogy land. MoviePass didn't die in one step. It died in a sequence - and AI is visibly walking the same one.
MoviePass tried to hold the unlimited promise, then started carving it up: blackout dates on the movies you actually wanted, peak-hour restrictions, "fair use" caps, verification hoops, and finally a hard quota that replaced "unlimited" entirely. Each step quietly admitted the model didn't work.
Now look at AI in 2026. The best models drifting out of the flat subscription and behind higher tiers or API metering. Usage windows and rolling caps. Slower models on the cheap plan, the good one upstream. Limits that tighten right as you grow dependent. None of that is failure of the technology; it's the same forced retreat from "unlimited," just run earlier and more gracefully than MoviePass managed. We're several steps into a seven-step story whose last step, for MoviePass, was the lights going out.
Where the analogy breaks (and it does)
I'd be doing the same lazy thing I'm criticizing if I pretended it's a clean match. Two real differences:
AI has a moat MoviePass never had: switching costs. Once your data, prompts, tools, and your team's habits live inside one provider, you don't wander off for a dollar. That's far stickier than a movie subscription.
And providers have an escape MoviePass fumbled. MoviePass metered late and clumsily, and customers revolted. AI companies are metering early and smoothly, while the product is still loved. Same move, just run better.
So LLMs won't "die" like MoviePass. But the flat price will, the same way unlimited movies did.
What a leader actually does about it
This isn't "AI is a bubble." The technology is real and permanent. The pricing is the temporary part. Three moves:
Budget for the real cost, not the coupon. If your business case only works at today's subscription rate, you don't have a business case. You have a free trial. Model what happens when your most valuable, heaviest use becomes your most expensive.
Don't get hooked on one provider's cheap tier. The more generous it feels now, the more certain it is to tighten. Build so you can swap models without rebuilding the house.
And separate your real moat from the discount you're enjoying. The discount ends. Your data, your workflow, the thing a competitor can't copy - that's what deserves the investment.
MoviePass taught a generation a hard lesson: when the thing you love is sold below what it costs to make, the love is the problem. AI is more durable than that. But the price on your invoice today is a story about someone else's funding round - not about what this actually costs.
Plan for the bill, not the trial.
Posts
