MoviePass will once again allow customers to sign up for its popular movie-a-day monthly subscription package after briefly taking the offering off of its website, Variety has learned.
Since April 13, MoviePass has only been offering a promotional $29.95 three-month plan. That only allowed users the freedom to see four movies a month, but it threw in a free trial of iHeartRadio’s All Access on-demand streaming package. The move set off alarm bells that MoviePass might be running out of money — fears that were amplified after an independent auditor publicly raised questions about the service’s ability to continue operating.
“We never planned to abandon the flagship product that everybody loves,” said MoviePass CEO Mitch Lowe in an interview. “Any time we’ve done a promotional package, we’ve taken the monthly plan off our site.”
That seems to be a different position than the one Lowe espoused last week. In an interview with the Hollywood Reporter, Lowe said he didn’t know if MoviePass would go back to offering a movie a day. But the MoviePass head said he didn’t want to limit interest in the iHeartRadio promotional package by tipping his hand.
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“It’s marketing 101,” he said. “We wanted to focus everybody on this partnership promotion. If people knew the [movie-a-day] plan was coming back, they might not be interested in the iHeartRadio deal.”
MoviePass’ business model has left some scratching their heads. The company pays movie theaters full price for the tickets its customers buy, so it is essentially subsidizing their movie-going at a loss to its own bottom line. MoviePass claims that it will eventually be able to monetize its more than two million subscribers by running ads, partnering with theater chains, or figuring out a way to make a profit on the data it collects on its users.
Despite the auditor’s negative report, Lowe said he isn’t worried and downplayed the conclusions.
“That’s just really relative to how much cash we have at any one time in the bank,” Lowe said. “We have a constantly evolving business model. We’re getting more and more occasional moviegoers and cutting back on fraud and abuse. I feel very confident about our trend lines and I know we’re going to continue as a going concern and continue to be popular.”
Lowe recently came back from CinemaCon, the annual exhibition industry trade show that took place last week in Las Vegas. When theater owners expressed skepticism about his ability to stay in business, he said he had a simple message for them: “See you in 2019.”
The changing plans weren’t the only thing that upset some users. MoviePass announced this month that it will not allow users to see the same movie twice. Lowe said the company is changing its rules to prevent fraud. He said the company believes that some families are using one card among each family members, and speculated that some users are buying tickets to popular movies with their MoviePass cards and then turning around and scalping the tickets to make money.
“A small percentage of people are abusing the system,” he said. “By doing this we can continue to provide a great service.”
KanyeMyBae on May 2nd, 2018 at 17:02 UTC »
well thanks to variety this guy named Mike Movieman has his debit card all over the internet.
asdfoiuqwer on May 2nd, 2018 at 15:37 UTC »
Short FAQ
How does it work? The basic process is you sign up and they mail you a mastercard. Then you go to a supported theater, launch the app, and select the movie you're seeing (standard 2D screenings only). The app will ping your gps to confirm you're within 100 yards of the theater and if so, it'll load enough money onto the mastercard for you to buy the ticket at the box office or ticket kiosk. When it works, it works fine.
How is this sustainable? In its current state, it isn't. Their plan is to burn money to gain as many subscribers as possible as quickly as possible in order to force the major theater chains to negotiate a deal with them on discounted tickets. If a big enough portion of the movie going population is buying their tickets through moviepass, then they can go to AMC/Regal and say "we're going to de-list you from the app if you don't give us $x discount on every ticket". They've already done some testing by de-listing a few select AMC locations so they know that a majority of their customers will just go somewhere else if a theater is de-listed so the threat can have an impact on the theater's profits. The only question is if they have enough money to burn in order to gain that magic number of subscribers that the major chains will have to play ball. Whether or not this plan actually works is yet to be seen.
See the /r/moviepassclub FAQ for more details:
https://www.reddit.com/r/MoviePassClub/wiki/faq
Edit: As others have pointed out, they do have a few other revenue streams, such as selling user's viewing habits and advertising specific movies in the app or through email blasts. But as long as they have to pay full price for every ticket, that income won't be enough to be profitable. The CEO has said in multiple interviews that their main goal is forming partnerships with theaters to negotiate discounted tickets and the only way that's going to happen is when they have enough leverage (subscribers) to force them to.
mandalorian222 on May 2nd, 2018 at 15:26 UTC »
Just enjoying this for as long as I can.