“The day the music died,” “This is the end,” “All things must pass,” whatever trope you use, new “cost-reduction” measures may signal a death knell for MoviePass, the subscription service that has flipped the script on the movie industry.
MoviePass on Tuesday announced it is implementing “several new measures aimed at accelerating the plan for profitability.”
Among those measures, the subscription service will increase the standard pricing plan from $9.95 per month to $14.95 per month, and it will limit the availability of first-run films – read: blockbusters like “Mission: Impossible – Fallout” and “Christopher Robin.”
“These changes are meant to protect the longevity of our company and prevent abuse of the service. While no one likes change, these are essential steps to continue providing the most attractive subscription service in the industry,” said MoviePass CEO Mitch Lowe.
The changes come nearly a year after the company lowered the cost of its service from $35 to $9.95 per month to see one movie per day without the user incurring any additional fees. The price drop caused the service to see a dramatic increase in subscriptions.
“Our community has shown an immense amount of enthusiasm over the past year, and we trust that they will continue to share our vision to reinvigorate the movie industry,” Lowe said.
While MoviePass has continued to see dramatic increases in its user base, its parent company, Helios and Matheson Analytics Inc., has seen a dramatic plunge in its stock offering. This has amounted to HMNY approving a reverse stock split last week to save itself from falling off the NASDAQ stock exchange.
“Over the past year, we challenged an entrenched industry while maintaining the financially transparent records of a publicly traded company. We believe that the measures we began rolling out last week will immediately reduce cash burn by 60 percent and will continue to generate lower funding needs in the future,” said Ted Farnsworth, chairman and CEO of HMNY.
Users were greeted with an error message in the MoviePass app after the company said it missed a payment to one of its fulfillment processors.
On Thursday, subscribers were faced with an inoperable app after the company said it missed a payment to one of its fulfillment processors.
This resulted in HMNY borrowing $5 million to keep MoviePass in operation, while also seeing its stock freefall from nearly $7 at market open on Friday down to as low as $0.50 on Tuesday.
Regardless of MoviePass’s fate, the company has done what it originally set out to do, which is to disrupt the movie industry.
Since the company lowered its monthly subscription price, movie theaters like AMC and Alamo Draft House have either announced or launched their own subscription models. Competing service Sinemia has also experienced a surge of interest.
