If you’re currently among the 3 million people that have a MoviePass subscription, we’d strongly encourage you to use it now. Tomorrow, you may not be able to.
Yes, as of the time of this writing, MoviePass is still in business. But there’s been a flurry of issues, stock plunges and negativity to assume that its days as a service are numbered.
In case you’re unaware of just what MoviePass is, know that it’s actually a very promising concept – especially if you’re someone who sees several movies at the theater each month. For less than $8 per month, consumers are privy to see up to three movies a month. A more expensive $9.95 (at the time) per month plan allowed consumers to enjoy up a movie every day at the theater.
It was easy to utilize. You got a card to show, browsed an app to pick a show time at a participating theater and then picked up your ticket at the box office before enjoying the film. So where did this concept go off the rails? Let’s examine:
Borrowed Money for Borrowed Time?
It seems that MoviePass underestimated how much users of the service were going to take advantage of it. Certainly, MoviePass was hoping to follow the gym model of business. You pay monthly for the service, but – for one reason or another – don’t get your money’s worth out of it. In the gym environment, members don’t put the wear and tear on the equipment when they don’t show up – which benefits the gym’s bottom line long-term. In MoviePass’ case, the company banks the monthly membership fee and doesn’t have to (presumably) pay as much to its theaters that are part of the network.
But last month, news came that MoviePass borrowed some $5 million so it could pay for movie tickets. And now the service has raised monthly membership prices – and not just by a few dollars. Its plan that once cost under $10 was increased about $5 to $14.95. There are reports that also indicate that the business isn’t sustainable, as it regularly spends anywhere from $20 to $40 million each month. And its stock is in the gutter. The company, which once had a market value of $374 million is now valued at less than $1 million today.
Amid all of this negative publicity, it’s unlikely that its 3 million subscribers are going to grow to a point where it can survive as a company. In fact, more people are probably going to be hitting that “cancel” button to take advantage of its “cancel at any time” feature.
Limited Release Viewing
One of the great things about MoviePass is that you could use it on any movie, whether it was a new release or had been in theaters for months. That’s not the case anymore. Want to see the new Mission Impossible movie? If you have MoviePass, you’ll probably have to pay out of pocket to do so – at least for about two weeks. Yes, amid all of its troubles, MoviePass is now cutting member access to new releases and some popular films. That’s not going to win you any new fans.
Competition
While MoviePass is likely to fail (or at least exist in a completely different manner), it seems that one theater chain is learning from MoviePass’ woes: AMC. Yes, the theater chain has begun its own member service, where for $20 a month consumers are able to see up to three movies a week. Reports indicate that the service already has close to 200,000 members – and this number is expected to tick up into the millions within two years. It’s a good bet that if MoviePass doesn’t do itself in with its troubles that its consumers will put the nail in the coffin for it by jumping to AMC’s service.
The bottom line is that movies are expensive to see at the theater. Though the average price of a ticket is about $9, snacks and special, more expensive, IMAX or 3D viewing can make for one expensive night out. It’s wise for companies to bring affordability back to people who love going to the movies. MoviePass isn’t getting it right, but perhaps someone else can.
Regards,
Ethan Warrick
Editor
Wealth Authority
