MoviePass, once seen as a fierce competitor to Netflix, is relaunching this summer

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MoviePass was bought out of bankruptcy last year by one of its co-founders Stacey Spikes who plans to relaunch it this summer. Once seen as a potential rival to Netflix, the service offered users the ability to go to the movies every day for just $10/month. However, the issues it faces with its relaunch will be exacerbated by the coronavirus pandemic, which has many consumers used to streaming blockbuster hits at home.

According to a survey conducted last summer, only 14% of adults said they strongly prefer seeing a movie for the first time in a movie theatre, while 36% say they would much rather watch the movie at home. That compares to 28% of adults saying they would strongly prefer seeing a movie for the first time in a theater in 2018 when MoviePass was in serious financial trouble (it closed in 2019).

StatisticalCinemas vs Streaming: First Time Movie Viewing Preferences in the US 2020 | Statistical

For a bit of history, MoviePass launched in 2011 with big plans to give consumers a monthly plan where they could watch a movie every day at any theater for a $50/month fee. MoviePass was banking on theaters offering them a lower wholesale price, allowing it to be profitable with the margin of discounted tickets supplemented by a small amount of ad revenue.

Unfortunately, the $50 price tag was not well received by consumers and the service was relaunched with a $10/month price tag after Helios and Matheson Analytics bought a 51% stake in 2017 for $25 million. of dollars. It was a huge hit with consumers, but theaters were hesitant to offer discounted tickets. This meant that the service would lose money on any customer going to the movies more than once a month.

This unfortunate business model caused the company to burn an incredible amount of cash and eventually shut down in 2019 and its parent company Helios and Matheson Analytics filed for bankruptcy in 2020. It reported a loss of $151 million in 2017, mostly due to MoviePass, and was burning $40 million per month in July 2018.

MoviePass also lost face with consumers who had a Visa card they used to purchase the tickets (rebilled to MoviePass), but the company began to run out of money to fund the merchant processor that funded the cards. He was also accused of locking out super users, those who saw a movie a day, a gesture of desperation.

Things took a turn for the worse after Mission: Impossible Fallout was released in late July 2018 and 600,000 MoviePass users found their app stopped working when trying to get tickets to the hit movie.

Spikes, who only paid $14,000 for MoviePass, recently said the company would relaunch as a “co-op” with users holding some ownership of the company and its first-tier subscribers would get a lifetime subscription. How long the new MoviePass will last remains to be seen.

The big movie chains are all pushing their own loyalty clubs, and they’re unlikely to try to drive their customers to the revived MoviePass. On the contrary, they will probably promote their own brand. This is especially true of theater owner and meme stock AMC, which offers its many individual shareholders in the company who sign up for their “AMC Investor Connect” benefits like free popcorn.

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