Is MoviePass Going Down in Flames?
MoviePass, an overambitious service that offers “unlimited” movie tickets to members, is in serious financial trouble. The company is running out of time and money. This should come as no surprise; MoviePass offers users a sweet deal that was always too good to be true. For $9.95 a month, members could get free tickets to see a movie a day in theaters. That’s thirty movies a month! The problem is, MoviePass still had to pay full price to theater chains for every ticket. Turns out, MoviePass is losing money hand over fist.
MoviePass’s business model was always questionable, but investors were eager to throw cash at parent company Helios & Mathison when they promised to be the next big “disruptor” and transform the theater industry like Netflix had transformed home video. In theory, the company needed at least 5 million users. According to Helios & Mathison, this would amount to 20% of all U.S. ticket sales. At that point they would have a powerful bargaining position with producers and theaters. (This is just another way of saying that they planned to lose a lot of money so that they could force other companies to give them money in the future.)
Until that point, MoviePass banked on the idea that, like a gym, most customers would buy a monthly membership and never show up. They could make money on monthly fees and pay out a certain amount to theaters. Unlike a gym, however, most people actually enjoy going to the movies. Whoops.
Helios & Mathison have burned through millions and are running out of cash according to a new report from Bloomberg. Now, MoviePass has tried to cut costs—restricting how many movies customers can see in one day and how many time they can attend the same film. Looks like it’s too little, too late.