MoviePass' longterm sustainability seemed questionable ever since it introduced its low-cost unlimited subscription plan last summer, so its parent company now has plans to save it - and it'll need roughly $1.2 billion to make it happen. With the introduction of surge-pricing, competition from other companies, and difficulty breaking even on account of their low costs, the movie ticket subscription service is entering a new wave of keeping itself afloat.
Founded in 2011, MoviePass is a movie ticket subscription service that offers customers a monthly fee for unlimited movies in roughly 91 percent of theaters nationwide in the US. Originally functioning as a printable voucher system for moviegoers with subscription plans that ranged between $20 and $99 per month, the company eventually made a dramatic change to its subscription format once it was sold to analytics firm Helios + Matheson. MoviePass drastically decreased their monthly subscription fee to $9.95/month for one movie per day. Now that the company has over two million subscribers, Helios + Matheson are hoping to raise $1.2 billion to save MoviePass from potential monetary losses too great for their company to return from.
With plummeting stocks and monetary losses that include $150 million in 2017, and $45 million so far in 2018, MoviePass' parent company has some tricks up its sleeves to keep the company from digging its own grave, according to The Wrap. The company plans on raising $164 million through bond insurance, a reverse stock split, and a move to quadruple their stock shares from 500 million to two billion. Along with the upcoming surge pricing update for high-demand movies, MoviePass has a chance at keeping itself from hemorrhaging, but only time will tell how successfully their new approach will ultimately work out.
Unfortunately, the high-investment/low-return matter isn't the only hurdle MoviePass needs to climb in order to sustain itself. Following its own success, the competition is growing. Movie chains like AMC, Cinemark, and Alama Drafthouse have introduced brand new subscription services to compete with MoviePass, and companies like Sinemia have more or less copied MoviePass' general design, with minor differences (namely in their more self-sustaining pricing options, like $22.99 for two movies per month).
There were bound to be problems with sustainability when MoviePass announced their drastic price-drop last summer, but it's not something the company didn't prepare themselves for. The most important part of their change was to gain attention and win over potential subscribers - and it's fair to say that they were mostly successful. Now, they're in the second tier of their game plan; one that isn't quite as attractive as the first, but inevitable all the same. So long as they don't scare away customers with pricing changes - and as long as they can acquire those extra funds - MoviePass could be well on its way to proving their critics wrong.
Source: The Wrap