The trials and tribulations of the most controversial theatrical subscription plan in the US took a new twist on Monday (August 6) as MoviePass said it had abandoned plans to raise monthly subscriptions by 50% and will instead limit the number of films members can see to three per month.
The development comes after last week’s short-lived idea to hike monthly fees from $9.95 to $14.95 elicited an irate response from members, and is aimed to mitigate the cost to the company of its 15% of subscribers who watch four or more films a month, which the company said was “compromising the business’ long-term stability.”
The new plan will go into effect on August 15 and affects monthly subscribers, while quarterly and annual members will remain locked into their existing terms until renewal date. It includes access to select first-run releases, removes the ’peak pricing’ price surge on high-demand films, and introduces a $5 discount on tickets once a member has watched three films in a month.
Wall Street liked the announcement. Shares in parent company Helios And Matheson Analytics climbed to more than 13 cents a share, bucking the downward trend of the past two weeks.
“We have heard our MoviePass Community and we will not be raising prices to $14.95 a month,” MoviePass 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.” MoviePass pays exhibitors the full cost of tickets for every visit by its members.
“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.”
MoviePass CEO Mitch Lowe said: “We are well aware that during our journey to innovate moviegoing — a form of entertainment that over time has become unaffordable and broken — we’ve encountered many challenges.
“However, any industry-wide disruption like MoviePass requires a tremendous amount of testing, pivoting, and learning. We discovered over several months of research that our customers value a low monthly price above nearly everything else, so we came together to create a plan that delivers what most of our loyal MoviePass fans want, and one that, we believe, will also help to stabilize our business model.
“While most of our loyal subscribers shared the passion for this new accessible movie experience and experimented fairly, the fact is that a small number have used our business model to a point where it was compromising the business’ long-term stability.
“As is true with any new company, we’ve evolved to accommodate what has become an unprecedented phenomenon. We are now creating a framework to provide the vast majority of subscribers with what they want most – low cost, value, variety, and broad availability – and to bring some moderation to the small number of subscribers who imposed undue cost on the system by viewing a disproportionately large number of movies.
“We believe this new plan is a way for us to move forward with stability and continue to revitalize an entrenched industry and return moviegoing to everyone’s financial reach.”
Helios And Matheson Analytics chairman and CEO Ted Farnsworth added: “All along, we’ve known that we need to invest heavily to prove our business model and bring enough subscribers into the business to truly understand their usage patterns and allow us to leverage ancillary revenue opportunities.
”However, one year and 3 million plus members later, it has become clear that a small number — only 15 percent — of the subscriber base has been stressing the system. We believe this new business model will immediately reduce our burn so we can refocus our efforts where they belong: making a permanent and positive change in this industry by creating an amazing theater-going experience and building a company that continues to benefit our nationwide community.”