Commentary

MoviePass Reverses Its Price Hike, Limits Users To 3 Movies A Month

In its latest effort to keep the house lights on after discovering that people don’t like 50% price hikes, MoviePass will ditch its plan to raise its fees but will limit patrons to three flicks a month. That conforms neatly with the frequency that 85% of its customers put down their clickers and head to the multiplex, it says.

“MoviePass, which generally pays movie theaters full price for each ticket while only charging users their subscription fee, has been struggling financially in recent months. ‘Struggling financially’ is a bit of euphemism, actually. Last month MoviePass simply ran out of money, requiring an emergency $5 million loan to even remain in service,” NPR’s Camila Damonoske reminds us.

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The policy announced yesterday replaces “other recently announced changes, including a boost in the monthly subscription fee to $14.95, that were highly unpopular and drove away customers, adding to the company’s financial strains,” reports Ben Fritz for the Wall Street Journal. “Chief executive Mitch Lowe said in an interview that the new policy, which takes effect August 15, would reduce the company’s cash burn rate by more than 60% and make its attempted transition to profitability ‘more manageable.’”

MoviePass, which is owned by New York data firm Helios & Matheson Analytics Inc., “bet on what many view as a wildly flawed business model: It pays theaters the full price for each ticket its customers buy, intending to make money by selling consumer data. But major theater chains criticized the plan, calling it unrealistic, and have refused to share lucrative concession revenue. And the goal of selling consumer data to major studios and distributors hasn’t panned out,” writes Samantha Masunaga for the Los Angeles Times.

You might want to catch a couple of classic media interviews featured on the Helios & Matheson homepage before they’re relegated to the place where bombs like “The Lone Ranger” and “King Arthur: Legend of the Sword” go.

In one, CEO Mitch Lowe tells CNN Money’s Frank Pallotta how “$10/month movies is possible.” In another, he tells CNBC’s “Power Lunch” panel, “like an all-you-can-eat buffet or any unlimited service, when subscribers first start, they gorge on movies in the first three or four months. Then they slowly but surely settle into a pattern which is still double what they used to do. Our target is someone who only spent $50 last year going to the movie theaters — and now at $9.95, they're spending $120 at movie theaters a year.”

In an impassioned piece for The Week, early adopter Jeva Lange says she has watched about 250 movies since she joined the service — initially for $35 a month — while it was in beta in 2013 when she was living in rural Vermont. She began traveling “as far as Albany and New York City in search of arthouse and foreign films for what felt like, at my volume of consumption, practically free,” she writes.

“It doesn't take a degree in mathematics to realize that … MoviePass was hemorrhaging money on ‘power users’ like myself, even five years ago. Nevertheless, the incredible — and perhaps incredibly stupid — happened: In August 2017, MoviePass announced that it was lowering its subscription price to $10 a month, a number that seemed so insane and unsustainable that some people didn’t sign up out of pure suspicion. But plenty of others did. Lowe boasted that, for awhile, approximately 80,000 subscribers would join MoviePass every, ‘like, three days,’” she writes.

“While most of our loyal subscribers shared the passion for this new accessible movie experience and experimented fairly, the fact is that a small number have used our business model to a point where it was compromising the business’ long-term stability,” Lowe states in the release announcing the new restrictions. “As is true with any new company, we’ve evolved to accommodate what has become an unprecedented phenomenon.”

Lowe, who was a member of the founding team at Netflix and served as president and COO of Redbox, has evidently experienced an intense period of being schooled by reality.

“I should have accelerated the process of reducing the burn faster in hindsight,” Lowe tells the WSJ’s Fritz. “Now I realize no matter how patient investors say they will be, they never are.”

2 comments about "MoviePass Reverses Its Price Hike, Limits Users To 3 Movies A Month".
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  1. Marcelo Salup from Iffective LLC, August 7, 2018 at 8:59 a.m.

    MoviePass must be one of the most flawed plans EVER. No amount of subscription fees is ever going to make up the $10 - $14/ticket that it wound up paying the theaters. No amount of selling information is ever going to compensate the company for the money it loses every time someone goes to a movie a second time. Think about it... information is basically sold on a CPM basis, movies are paid on a CPP basis. That's huge.

  2. Paula Lynn from Who Else Unlimited, August 7, 2018 at 9:57 a.m.

    They sell your data. Not only do subscribers put little to no value on themselves, but they don't care. WAKE UP ! You are being traded and sold. Is there anymore you need ?

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