MoviePass is continuing to make changes amidst its cash struggles.
The once-red-hot ticketing service will now limit customers to seeing three movies a month, according to a company press release. This change will take effect Aug. 15.
Currently, MoviePass subscribers can see one movie a day for $9.95 per month. However, 85 percent of these customers see three of fewer movies a month, MoviePass CEO Mitch Lowe said in the release, and his company is now focusing on those customers.
"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," Lowe said. "As is true with any new company, we’ve evolved to accommodate what has become an unprecedented phenomenon."
The release also announced that MoviePass will not be raising its prices to $14.95 per month and will not limit users' access to new releases – two things the company said it would do last week.
For example, if a MoviePass user wants to see the "Aquaman" movie this winter they should be able to see it at MoviePass-compliant theaters on opening weekend, with none of the issues that plagued the service during the opening of the latest "Mission: Impossible" film.
Additionally, peak pricing and ticket verification will also be suspended.
Current MoviePass subscribers will be moved to the new plan once their current subscription renews. One new perk: subscribers will be able to get "up to a $5.00 discount for any additional movie tickets" they buy, allowing MoviePass users to see their fourth or fifth movies of the month at a lower price.
Launched in 2011, MoviePass didn’t catch major traction until it lowered its monthly fee to $9.95 in 2017. The impact was immediate: the subscriber base has jumped from 20,000 then to over three million today.
Though the company gained more customers, it struggled to keep up financially, as it has to pay the full price of a ticket at most theaters. In a Securities Exchange Commission filing in April, Helios and Matheson Analytics (HMNY), MoviePass’s parent company, disclosed that it estimated its average cash deficit was over $20 million a month for the seven months through April. Last month the MoviePass app crashed after running out of money, forcing the company to take out a $5 million emergency loan.
The outage is just the latest struggle for the company. HMNY’s stock has lost virtually all of its value in recent months and is now a so-called "penny stock." The stock rose 3 cents to 10 cents per share in early trading Monday, soaring over 45 percent on the new plan news.
The company’s most recent announcement will help create "long-term stability," according to the release. Lowe said in an interview with the Wall Street Journal that the move will reduce the company’s cash burn rate by more than 60 percent and make it “more manageable” to become profitable.
