August 6, 2018
Financially strapped MoviePass plans to limit subscribers to three theatrical screenings per month as it desperately tries to cut overhead costs and avoid insolvency. The service is also canceling a planned price hike.
The change comes just days after the service, which has more than 3 million subscribers, said it would increase the monthly subscription fee 50% to $14.95 (from $9.95) and restrict daily access to movies (i.e. blockbusters) released on more than 1,000 screens until two weeks after their debut.
“We have heard our MoviePass community and we will not be raising prices to $14.95 a month,” the service said in a statement. “The new plan is focused on usage by the bulk of our subscribers who have historically used MoviePass to attend three movies or fewer a month. Additionally, the new plan addresses past misuses which imposed undue costs on the system, including ticket scalping, unauthorized card usage and other activities, which in the past necessitated the use of certain remedial measures that have sometimes been inconvenient for our subscribers.”
In an interview with The Wall Street Journal, MoviePass CEO Mitch Lowe said the latest change would take effect Aug. 15 and help slash the company’s monthly cash burn by 60%. Through June, the service was spending $45 million more per month than it was generating.
“[Subscribers] will not be affected at all by this program, and even better, they’ll stop hearing MoviePass is going out of business,” said Lowe.
Indeed, with corporate parent Helios and Matheson Analytics’ stock hovering around 7 cents per share — after a 205-to-1 consolidation of shares — the company is in dire straits on Wall Street. Most analysts have written off a company that was heralded as industry disruptor/innovator just last September. Company officials predicted 5 million subs by the end of the year.
HMNY was forced to take out an emergency loan (since repaid) just to keep the lights running. Lowe admits efforts to stem the fiscal hemorrhaging should have been instigated earlier.
“I should have accelerated the process of reducing the burn faster in hindsight,” Lowe said. “Now I realize no matter how patient investors say they will be, they never are.”
How subscribers react to the new rules remains to be seen. AMC Theatres’ rival $19.95 service, AMC Stubs A-List, has generated nearly 200,000 subs since launching a month ago. It offers members access to three movies per week on any AMC screen, including Imax and Real3D.