Join NexChange - the professional
network for the financial services
industry - and receive a free one-
year subscription to Forbes
Things Are Not Going Well For MoviePass
Capital Markets, Lifestyle
This is far from a summer blockbuster for MoviePass.
The subscription service known as the “Netflix of the movies” on Tuesday announced that it was increasing its monthly fee to $14.95 from $9.95 within the next month, part of “several new measures aimed at accelerating the plan for profitability,” the company said in a statement. The announcement follows a string of setbacks for MoviePass, including four times in less than a week that subscribers were shutout from using their cards to purchase tickets – being greeted by an error message when they would try to log onto the MoviePass website.
The company was also forced to borrow $5 million last week because it could not afford to pay its bills, as the New York Times reports. There are now questions about whether the company will be able to survive much longer.
As Vulture notes, the successive service interruptions in the past several days sent “stock in MoviePass’s parent company, Helios and Matheson Analytics, into a seeming death spiral.”
Around the movie industry, the predicament prompted grave doubts about MoviePass’s ability to continue its operations going forward. Helios and Matheson stock fell 60 percent to $1.20 at the close of trading Monday. If its stock goes under $1 a share, the big-data firm risks a delisting on the NASDAQ, ensuring major difficulties in raising future rounds of financing to keep MoviePass afloat. (MoviePass could not immediately be reached for comment Tuesday.)
MoviePass chief executive Mitch Lowe posted an open letter to subscribers on the company’s website apologizing for the service interruptions – and to also explain why the subscription service will no longer be allowed for some of the bigger Hollywood movies. Interestingly enough, he referenced Netflix in his explanation.
As we continue to evolve the service, certain movies may not always be available in every theater on our platform. This is no different than other in-home streaming options that often don’t carry the latest shows or movies that may be available on other services. For example, you can’t ever find Game of Thrones on Netflix, nor is Season 4 of Schitt’s Creek available there yet. Here at MoviePass, we have strived to make every movie in theaters available to you as part of your subscription, and Peak Pricing has allowed – and will continue to allow – us to do so.
In addition to raising its monthly fees, here are some other initiatives MoviePass will be taking to try and improve profitability:
- Actions that have been implemented are currently cutting the monthly burn by 60%.
- A future increase of the standard pricing plan to $14.95 per month within the next 30 days.
- First Run Movies opening on 1,000+ Screens to be limited in their availability during the first two weeks, unless made available on a promotional basis,
- Implementation of additional tactics to prevent abuse of the MoviePass service.
“Over the past year, we challenged an entrenched industry while maintaining the financially transparent records of a publicly traded company,” Ted Farnsworth, CEO of Helios, said in the statement. “We believe that the measures we began rolling out last week will immediately reduce cash burn by 60% and will continue to generate lower funding needs in the future.”
Photo: Getty iStock