MoviePass Slashes Offering to Three Films a Month
Short on cash, battered by investors and pronounced dead by critics recently, MoviePass will soon begin limiting customers to three movies a month, a major change from its current allowance of one a day.
MoviePass Chief Executive Mitch Lowe said in an interview that the new policy, which takes effect Aug. 15, will reduce the company’s cash burn rate by more than 60% and make its attempted transition to profitability “more manageable.” As of June, MoviePass’s monthly cash deficit was $45 million, parent company Helios & Matheson Analytics Inc. said in regulatory filings.
The policy changes come after a tumultuous several weeks during which MoviePass, which says it has more than 3 million subscribers, briefly stopped working in most theaters and
Helios had to borrow money at a high interest rate to stay afloat.
MoviePass subscribers pay $9.95 a month to see up to a movie a day. In practice 85% see three or fewer a month, and Mr. Lowe said his company is now focusing on those customers.
“They will not be affected at all by this program, and even better, they’ll stop hearing MoviePass is going out of business,” he said.
Related
Mr. Lowe said an 8% rise in overall domestic box office spending compared with a year ago cost MoviePass, which buys tickets at full price for its subscribers, more than expected. He also said investors grew impatient with its losses more quickly than he had anticipated and that, as public criticism mounted and Helios’s stock price fell, nervous vendors began demanding faster repayment, necessitating the $6.25 million loan, which the company has since paid off.
“I should have accelerated the process of reducing the burn faster in hindsight,” Mr. Lowe said. “Now I realize no matter how patient investors say they will be, they never are.”
Eager to preserve cash, MoviePass on July 27 stopped allowing its users at most theaters to see that weekend’s most popular film, “Mission: Impossible—Fallout.” The following Monday, MoviePass said it was raising its price to $14.95 a month and blocking customers from seeing new releases during their first two weeks on the big screen.
It also expanded a policy started in early July of adding a surcharge for certain screenings of popular films.
Mr. Lowe said the so-called “peak pricing” was supposed to be infrequent and low-cost. But as the company entered “cash constraint mode,” peak pricing became common. In New York and Los Angeles, it reached as high as $8 a ticket.
Those moves helped save cash, said Mr. Lowe, but angered and confused many customers. The company’s daily cancellation rate doubled, he said, though it has since “settled down.”
After one week of analyzing customer responses and internal debate, Mr. Lowe said MoviePass is abandoning those changes. The price increase and restriction on new releases are being revoked, there will be no surcharges, and users will no longer have to upload photos of tickets they buy to prove they are not committing fraud.
“We’ve been whipsawing people back and forth,” said Mr. Lowe. “I think we’ve got it now.”
Subscribers who see more than three films a month will get a discount of $2 to $5 a ticket, if they purchase through the MoviePass app.
Some of the 15% of current subscribers who see more than three films a month could cancel, Mr. Lowe said, particularly if they frequent an AMC Entertainment Holdings Inc. theater. The biggest exhibition chain in the U.S. has attracted 175,000 subscribers so far to a subscription plan that offers three movies a week for $19.95 a month.
As a result of the changes, MoviePass may take longer to attain 5 million subscribers than a prior target of the end of this year, said Mr. Lowe. “Ultimately, I believe this is a 20 million-subscriber business over the next three to four years,” he added.
Helios bought MoviePass a year ago and slashed the price to $9.95 a month for one film a day; it had previously cost $40 to $50 a month. Helios’s stock rose and then quickly fell, as short sellers bet the service couldn’t stay in business long, if it continued effectively selling tickets for less than it paid for them. Mr. Lowe said he still believes the company will ultimately prosper by building a moviegoing “ecosystem” in which MoviePass profits from concession sales, rides to theaters, and advertising.
MoviePass, which works at 91% of theaters in the U.S., says it has accounted for about 6% of the total domestic box office of $7.6 billion this year.
Despite a 250-to-1 reverse stock split on July 25, Helios stock closed at 7 cents a share Friday, down from more than $8,000 last October, accounting for the split. Its market capitalization is just over $100,000.
i'm two bart stops away so gonna check it out for christopher robin.
it's a wrap for moviepass.
..its like Hook but more subdued. First half is kinda slow..second half should've been the focus of the movie
