Moviepass: A bold trendsetter slowly dying out

Moviepass is the deal that was too good to be true.  I started my subscription 10 months ago, and in that time, I’ve seen 34 movies.  That comes out to a little less than $3 a movie.  Movie tickets at my theater typically cost $12, and nationally the average is $9.38.  That means it is nearly impossible for Moviepass to earn a profit if moviegoers go to just one movie a month on the company’s $9.95 one-movie-a-day plan. 

It is easy to see why this model isn’t working, and why Moviepass recently felt compelled to rework their business plan.  However, Moviepass has stumbled greatly in creating a model that works for them.  They tried raising the price to $14.95, creating a surge pricing system that would charge an extra fee for blockbuster movies, and adding ticket verification requirements.  The current plan is back to $9.95 a month, but only includes three movies per month, and it includes major restrictions on which movies are available. Throughout all of this, they have been unclear about what the exact business model even was.  Sometimes they think the math works on their subscription model, and at other times, they believe profitability could come from the Facebook model, selling subscriber data to advertisers.   

Regardless of what business model they think works, Moviepass is likely going to fade out.  The financial situation is a mess.  They ran out of money in late July, and they have been losing roughly $40 million a month.  Their parent company, Helios and Matheson, used a reverse stock split to help boost their tanking stock up to $21.  The stock plummeted again, and it now sits somewhere between two and four cents amid market and investor skepticism of Moviepass’s financial status.  A board member of Helios and Matheson recently resigned, claiming that Moviepass withheld information on business decisions regularly. 

Ted Farnsworth, the CEO of Helios and Matheson, has said that other start-up companies such as Uber and Amazon have, at various points, lost billions of dollars and are still around and very successful today.  This may be true, but the key difference between those companies and Moviepass was investor confidence.  Investors saw both the consumer and financial potential for those companies, while investors are currently running as far away from Moviepass as they possibly can.  

For all of Moviepass’s missteps, it has undeniably had a positive impact on theater-going.  Over three million people are currently subscribed to Moviepass, and their impact on the industry cannot be denied, as Moviepass still represents six percent of movie tickets bought in America.  Ticket sales are declining as prices increase, and media consumption via Netflix, Hulu and other platforms makes it harder to get people to the theaters.  However, Moviepass has caused subscribers to buck this trend, with 85 percent saying they go see movies more now that they are Moviepass customers, according to a Hollywood Reporter survey.  People are pushing the boundaries of their movie interests, with 49 percent saying they have seen more movies they would not typically see.  

I have certainly seen more movies than I used to see, many of which fall outside my comfort zone.  Additionally, I have seen more movies that receive mixed or even bad reviews now that I am not paying for each ticket individually.  Farnsworth calls this “Moviepass insurance”.  People are less likely to be annoyed they saw a movie they did not like if they paid nothing out of pocket.  

Whether or not Moviepass will be around to enjoy it,  the service has clearly revolutionized the ticketing process. AMC, who have been highly critical of the $9.95 plan, calling it unsustainable, introduced their own subscription based service called the AMC A-List.  The A-List costs $19.99 a month and includes three movies per week at AMC theatres that can be rolled over to subsequent weeks.  Additionally, IMAX and 3D movies are available, something that has always been restricted on Moviepass.  The service seems to be doing quite well, picking up 175,000 subscribers in the first five weeks of business. 

Sinemia, another mostly movie subscription service, has been a competitor of Moviepass for quite some time, although they have always had the smaller subscriber base and typically more expensive plans.  However, that has changed recently with the introduction of a $9.99 plan for three movies a month, matching Moviepass’s deal.  Sinemia also allows customers to book movies in advance, something Moviepass does not offer, and it does not have any of the restrictions on which movies are available.  This new $9.99 plan now accompanies their previous offers of a two movie a month plan for $7.99 for one movie plan and a $14.99 three movie a month plan that includes IMAX and 3D.