MoviePass is raising prices, restricting access to blockbuster films
Since the introduction of MoviePass, which allows theater-goers to see one movie a day for a monthly subscription fee, there have been questions about sustainability: How long can MoviePass keep paying for movie tickets when subscribers are only handing over $9.99 a month? Answers to those questions continue to arise as MoviePass announces an upcoming price hike, as well as restrictive access to blockbusters.
In a press release, MoviePass and its owners at Helios and Matheson Analytics Inc. announced “new measures aimed at accelerating the plan for profitability.” Those measures include raising the standard $9.99/month package to $14.95/month — to be made within the next 30 days — and limiting the availability of “First Run Movies opening on 1,000+ Screens” during the films’ first two weeks in theaters, “unless made available on a promotional basis.”
The “implementation” of unspecified “additional tactics to prevent abuse of the MoviePass service” are also cited. Users had already begun to take note of previous MoviePass restrictions, including surge pricing.
These changes come days after the MoviePass app went down for subscribers last Thursday, when Mission: Impossible — Fallout premiered. The company cited “technical issues” in a tweet to subscribers, but an SEC filing revealed MoviePass had requested $5 million to course correct after running out of funds.
We are still experiencing technical issues with our card-based check-in process and we are diligently working to resolve the issue. In the interim e-ticketing is working. We apologize for the inconvenience and appreciate your patience while we resolve this issue.
— MoviePass (@MoviePass) July 27, 2018
“The $5.0 million cash proceeds received from the Demand Note will be used by the Company to pay the Company’s merchant and fulfillment processors,” the filing reads. “If the Company is unable to make required payments to its merchant and fulfillment processors, the merchant and fulfillment processors may cease processing payments for MoviePass, Inc. (“MoviePass”), which would cause a MoviePass service interruption. Such a service interruption occurred on July 26, 2018. Such service interruptions could have a material adverse effect on MoviePass’ ability to retain its subscribers. This would have an adverse effect on the Company’s financial position and results of operations.”
MoviePass also now has to compete with AMC’s theater-subscription service. As of Tuesday, the theater chain reported the enrollment of 175,000 fully-paid members to Stubs A-List, which launched on June 26. AMC is anticipating 500,000 subscribers by June 2019.
Alamo Drafthouse is similarly testing its own movie pass service.
Speaking to MoviePass’ future, Helios Chairman and CEO Ted Farnsworth said in a statement, “Over the past year, we challenged an entrenched industry while maintaining the financially transparent records of a publicly traded company. We believe that the measures we began rolling out last week will immediately reduce cash burn by 60 percent and will continue to generate lower funding needs in the future.”
MoviePass CEO Mitch Lowe commented that the changes to the service “are meant to protect the longevity of our company and prevent abuse of the service. While no one likes change, these are essential steps to continue providing the most attractive subscription service in the industry. Our community has shown an immense amount of enthusiasm over the past year, and we trust that they will continue to share our vision to reinvigorate the movie industry.”
