Bad news ahead for movie fans: MoviePass, a New York-based company founded by Stacey Spikes and Hamet Watt in 2011, may soon go out of business. With the way their business is currently operating, the company is burning through all of the money that they aren't making - and subscribers are not ready to lose them.
If you aren't yet familiar with MoviePass, here is a basic run-down:
For the subscription fee of $9.95 per month, you will receive access to an "unlimited" number of movie theater tickets via a debit card sent to you by MoviePass. Although the service is marketed and often referred to as "unlimited", users are actually restricted to watching one movie per day (note: the MoviePass website clarifies 'unlimited' as meaning that there are no black-out dates to using the pass).
Still, at $9.95 a month, one movie ticket per day is an absolute steal.
Subscribers check into their nearest movie theater through the MoviePass mobile app, and purchase their ticket in line using the debit card provided by the company, which covers the cost of the ticket. This service is currently compatible with over 4,000 theaters nationwide.
Subscribers save money from the very first time they use the service - if a standard movie ticket costs $13.95, users will still save $4.00, even if they only use the pass once a month. While this is great news for subscribers, this is devastating to the company as they will lose money each time their service is used. In fact, MoviePass' parent company Helios & Matheson lost over $150 Million last year, up from their loss of $7.4 Million the year prior. Thus, concerns about the sustainability of this company are understandable and valid. Why, then, would MoviePass choose to continue providing this service?
CEO Mitch Lowe is hopeful that as MoviePass' user-base increases, the company can expect to turn a profit by 2019. While there are plenty of reasons to doubt this claim, Lowe has just as many points on why MoviePass is beneficial for both consumers and studios. MoviePass has already proven that when it markets a film on behalf of studios, viewership of that film increases.
This is especially beneficial for the movies that are not big blockbusters, and who have a limited budget on advertising and production. Additionally, independent films, which often suffer from low attendance, are more likely to gain viewers due to the fact that movie-goers will not have to purchase a real ticket. The opportunity cost of seeing an indie is much less when the ticket is essentially free.
Lowe also expects the company to turn profit as they slowly acquire the 'casual movie-goers' into their user base. These are the people who go to theaters only a few times a year (which, according to Statista, includes approximately 78% of Americans). While these subscribers still save money on tickets, they are actually pushing their consumption higher than necessary.
By paying $9.95/month, but still attending perhaps four times a year, consumers are spending more per year than they would before (from $40-$60 to $120). Of course, they have to opportunity to attend more frequently at no added cost, but there could also be other factors that discourage viewers from going to the movies. Thus, MoviePass makes money from dormant subscribers, much like how gyms profit from members who pay but do not actually use the facility.
This does not change the fact that MoviePass is quickly and steadily bleeding out money. In an effort to slow down their losses, MoviePass has come up with a short-term solution: a partnership with iHeartRadio. For a limited time, new subscribers will gain a free 3-month trial for iHeartRadio's streaming service.
The catch is that these new subscribers will also be limited to only four movies per month, as opposed to the normal one-a-day rule. Current subscribers need not worry, they will continue to get the same unlimited service that they signed up for.
Although the future of MoviePass is still in the air, it is clear that they are refusing to go down without a fight. And with the amount of benefit to subscribers, I can't help but hope that MoviePass will pull through.
Summer vacation is right around the corner, and there is no better time than now to look into MoviePass. While I am devastated that the company is not currently offering unlimited tickets, four movies per month for $9.95 is still an undeniable offer.
With so many good movies coming out within the next few months (Avengers: Infinity War, Solo: A Star Wars Story, Deadpool 2, etc.), I expect to be at the theater on more than one occasion. And as a broke college student, I want to be able to save money without sacrificing on enjoying myself. MoviePass is the perfect service for those who want to go to the movies without spending an insane amount of money, and I would recommend trying it out before it's too late.
