MoviePass's Business Model May Prove Fatal

August 1, 2018

By Conor White

MoviePass is raising its monthly subscription price and limiting the movies that customers can see during opening weekends, raising doubts over the struggling entertainment service's future.

The decision to raise the monthly price to almost $15 from $10 shows that the company's business model made it difficult to pay back exhibitors for the full-price movie tickets scooped up by the discount service's subscribers, said Jason Guerrasio, senior entertainment reporter at Business Insider.

MoviePass's strategy, which permits subscribers to see more films for less than a full-price ticket, may now be its downfall, Guerrasio said Wednesday during an interview on Cheddar.

The service sold more than a million tickets to "Avengers: Infinity War" and "Black Panther," two of the highest grossing films of all time. "Those are millions and millions of dollars, full ticket prices, that they had to go back and give back to the exhibitor," Guerrasio said.

MoviePass had allowed subscribers to see unlimited films for $10 a month, three films for $8. The new plan caps users' ability to see films on opening weekend if they play in more than 1,000 theaters nationwide. For big titles, subscribers are asked to wait two weeks.

MoviePass's parent company, Helios and Matheson, has been losing $20 million a month since last September, when its shares were trading for more than $2,700. A share is now worth less than a dollar.

MoviePass was founded in 2011, and found a wide audience last summer, when it slashed prices from as much as $50 a month to $10. It had 3 million subscribers in June.

Theater chains have responded aggressively to MoviePass's popularity, and many have launched their own competitive options: AMC now sells "Stubs A-List" subscriptions, which allow moviegoers to see three films a week for $20 a month.

"AMC basically created their service to dig at MoviePass," Guerrasio said. "They had been wanting to do it for years, and then they finally pulled the trigger when MoviePass basically beat at the hornet's nest of AMC, the biggest movie theater company in the world."

Guerrasio said that MoviePass has effectively disrupted the movie-theater business much like the music file-sharing service Napster upended the music business.

"MoviePass, whatever happens to them now, they've definitely started something now that everyone else is going to use," Guerrasio said.

For more on this story, click here.

close
We use cookies and similar technologies on this site to collect identifiers, such as IP address, and cookie and device IDs as described in our Privacy Policy.