In what appears to be a desperate gambit to stay afloat, MoviePass, the popular yet controversial cinema subscription service, is making dramatic changes that represent a stunning retreat for the once high-flying start-up.
MoviePass' parent company, data firm Helios and Matheson, on Tuesday announced a series of changes aimed at keeping the service in business, including a 50 percent price hike and blocking access to popular new films.
Calling its about-face a "cost-reduction" plan, Helios said the monthly price for MoviePass would increase to $14.95 from $9.95. The company also said new wide releases, films released in 1,000 locations or more, would not be available on the app for their first two weeks in theaters.
That represents an extraordinary change from the original service, which drew 3 million subscribers by promising users up to one regular-priced movie ticket a day for $9.95 a month. The moves, the company said, are aimed at cutting its cash-burn rate by 60 percent.
"Through these new steps, the company believes it will be able to compress its timeline to reach profitability," Helios and Matheson said in a news release.
The move follows growing signs of trouble for MoviePass.
Shares of New York-data company Helios and Matheson Analytics Inc. fell dramatically this week amid signals that its cash supply has run dry. Its stock has lost almost 100 percent of its value this year, collapsing to less than $1 a share.
The changes came after what appeared to represent a breaking point for MoviePass' fans, who have remained loyal despite sudden changes to its offering.
Customers trying to reserve tickets on the company's mobile app this week found that showtimes for major new movies 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, who posted screenshots of his MoviePass app on Monday. "All theaters here in Brooklyn have been locked out. The end is here."
MoviePass' bargain had long seemed too good to be true because of its unorthodox business model of paying theater chains the full price for every ticket.
Still, supporters saw MoviePass as a desperately-needed response to long-term trends in the movie business, including deteriorating attendance and rising prices. The average ticket price hit another record in the second quarter of 2018, reaching $9.27, according to the National Assn. of Theatre Owners.
MoviePass' popularity grew rapidly after it reduced its monthly fee to $9.95 about a year ago, when Helios and Matheson acquired it for $27 million. MoviePass, founded seven years ago, previously cost $30 to $50 a month for subscribers, a price point that only managed to attract about 20,000 people.
Though the extreme discount drew millions of customers, analysts, theater owners and studio executives long predicted the speedy demise of the company because of the amount of cash it would have to spend on tickets.
And while the service quickly gained a passionate following, it has angered customers by frequently changing its terms without explanation.
In April, it quietly eliminated its movie-a-day offering, allowing new users to watch four movies a month. The service returned to normal after a burst of online outrage. Attempts at "surge pricing" for popular screenings, and a ticket verification system to combat scalping, have only provoked more angst.
"It was all over the map, pretty much from the get-go," said analyst Jeff Bock, of Exhibitor relations, in an interview. "There never seemed to be a real game plan."
