Responding to a large negative outcry, MoviePass is walking back the rate increase it announced last week. On Friday, the movie subscription service announced that it was planning on hiking it’s $9.99-a-month fee to $14.99 as a way to combat its mounting debt. Additional tickets would cost an additional $5.00 per ticket. The new plan goes into effect on August 15 and as monthly subscripbers hit their renewal date from that point forward they will be rolled over to the new plan.
Additionally, MoviePass also announced that it would be doing away with other recent changes to their program including surge pricing, which added an additional charge for tickets to popular, in demand screenings, the blocking of certain high demand films in their first two weeks of release and the need for ticket verification.
But it wasn’t all good news for subscribers. Where previously MoviePass allowed its users to see a movie a day every day of the month, they will now only be able to see three movies a month total. The company explained in their press release that “because only 15 percent of MoviePass members see four or more movies a month, we expect that the new subscription model will have no impact on over 85 percent of our subscribers.”
Here is the complete press release from MoviePass –
MoviePass™, the nation’s premier movie theater subscription service and a majority-owned subsidiary of Helios and Matheson Analytics Inc. (Nasdaq:HMNY) (“Helios”), announces its new subscription plan and business model effective August 15, 2018. MoviePass’ new subscription plan retains its industry-low monthly subscription rate of $9.95 and at the same time creates a long-term and sustainable business model. The new plan will include many major studio first-run films. For our subscribers who have migrated to the new subscription plan, we are suspending Peak Pricing and Ticket Verification. MoviePass continues to be the most widely enjoyed theatrical subscription service in the United States, available at 91% of the theaters.
We have heard – and we have listened to – our MoviePass Community and we will not be raising prices to $14.95 a month. 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. 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.
Beginning August 15, 2018, MoviePass subscribers will transition to the new plan upon their renewal, which gives subscribers up to three movies a month for $9.95, and up to a $5.00 discount for any additional movie tickets. Because only 15 percent of MoviePass members see four or more movies a month, we expect that the new subscription model will have no impact whatsoever on over 85 percent of our subscribers.
“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,“ said Mitch Lowe CEO of MoviePass. “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.”
Monthly subscribers will be given the opportunity to subscribe to the new plan when their current plan comes up for renewal beginning August 15, 2018. Annual subscribers will not be affected by this plan until their renewal dates. Any subscriber can still cancel anytime.
“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,” said Ted Farnsworth, Chairman and CEO of HMNY. “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.”
