MoviePass, a service that shot to fame because it let you unlimited movies for $9.95 a month, is rolling out some fundamental changes. Starting sometime next month, the price will be going up to $14.95, and limitations will be introduced on seeing big movies in their first two weeks of release.
The changes are supposed to help MoviePass parent company Helios and Matheson reduce the amount of cash flowing out of its doors every day, since the losses are posing an existential threat to the company. MoviePass lost $40 million in the month of May, and the company predicted losses would be even higher in June and July.
According to Helios and Matheson’s press release earlier today, the company has already reduced its cash burn by 60 percent, and raising the price to $14.95 per month will help it increase revenues. Of course, that assumes that people are going to continue to subscribe to MoviePass despite the price increase and new limitations.
I suspect the new restriction on seeing big-name movies when they come out is going to prove to be more of a problem for MoviePass than the price increase. At $14.95 a month, it’s still cheaper than AMC’s new subscription service, and for anyone who goes to the movies frequently it’s still cheaper than rival services like Sinemia. However, MoviePass says that “First Run Movies opening on 1,000+ Screens” will be “limited in their availability during the first two weeks, unless made available on a promotional basis.” In practice, that likely means that MoviePass users will be broadly unable to use their subscription to see big-name movies right when they come out. That restriction doesn’t apply to other services like Sinemia, so it’s quite possible that subscribers will jump ship.
From some perspectives, MoviePass is like any other early-stage Silicon Valley startup: it’s losing money but driving extreme subscriber growth, and undercutting the existing market while doing so. But since MoviePass doesn’t get any kind of deal from movie theaters — it buys tickets for its users at standard box-office prices — the more subscribers it adds, the more money it will lose. There’s some kind of vague plan in the future to monetize data about its users or to use its subscriber base to negotiate deals with movie chains, but the business plan will have to be particularly excellent to turn MoviePass’s dire financials around.