MoviePass was once the fastest rising star in Hollywood.
The New York-based service promised to revolutionize the cinema business by offering something multiplexes have long resisted: steep discounts on the price of movie tickets.
Consumers could watch a movie a day for about $10 a month — less than the average price of a movie ticket in Los Angeles.
But there are growing signs that the end is near for the popular movie ticket service that billed itself as the Netflix for cinema.
MoviePass bet on what many view as a wildly flawed business model: it pays the full price for each ticket its customers buy. But major theater chains blasted the plan as unrealistic and refused to share lucrative concession revenue. And the goal of selling consumer data to major studios and distributors never panned out.
Those challenges came to roost on Tuesday when MoviePass’ parent company, data firm Helios and Matheson Analytics Inc., announced a series of major changes to keep the service afloat. The firm said the monthly subscription fee for MoviePass would increase to $14.95 from $9.95 in the next 30 days, representing a 50 percent price hike.
The company also said it would cut access to popular new films. New wide releases — those released in 1,000 locations or more — will no longer be available on the MoviePass app for their first two weeks in theaters, Helios said. The company said the moves were aimed at cutting its cash-burn rate by 60 percent.
“These changes are meant to protect the longevity of our company and prevent abuse of the service,” said MoviePass Chief Executive Mitch Lowe, in a statement. “While no one likes change, these are essential steps to continue providing the most attractive subscription service in the industry.”
In reality, the changes signify a stunning retreat, analysts said.
“Clearly this is not the service that consumers signed up for over the last year,” said Eric Wold, an analyst with B. Riley FBR.
‘Melting down in real time’
The changes announced Tuesday follow mounting troubles for MoviePass.
Customers receive a red debit card in the mail. When close to a theater, they use an app to select a showtime, and the company loads the full price of the ticket onto the card for the customer to swipe at the box office.
But customers who tried to reserve tickets on the company’s mobile app this week found that showtimes were suddenly unavailable for their local theaters. Those who tried to use the app were greeted with a message saying there were “no more screenings” available.
“Well it appears MoviePass is melting down in real time as we speak,” wrote New York-based podcast host Greg Young on his Twitter account Monday, posting screenshots of the MoviePass app. “All theaters here in Brooklyn have been locked out. The end is here.”
The struggles have unnerved investors. Helios and Matheson’s stock fell 75 percent in the last two days as the company faced a cash crunch, ending Tuesday trading at 50 cents a share. The stock has lost nearly 100 percent of its value this year.
“It’s been a wild ride, albeit a short one,” said Jeff Bock, an analyst with Exhibitor Relations. “The only question for customers is, do they pull out now or risk paying the $10 dollars to cover August?”
MoviePass and Helios declined to comment beyond their press release.
Supporters see MoviePass as a badly needed response to long-term trends in an industry experiencing deteriorating attendance and rising prices. The average ticket price hit another record in the second quarter of 2018, reaching $9.38, according to the National Association of Theatre Owners.
Founded in 2011, MoviePass previously cost $30 to $50 a month, a deal that only attracted 20,000 users. Its customer count quickly ballooned to 3 million people after Helios bought the company a year ago for $27 million and slashed the fee. Executives predicted it would surpass 5 million users by the end of this year.