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MoviePass to Experiment With New Pricing Models, CEO Says

When MoviePass launched in 2011, it promised to revolutionize the theater-going experience much as Netflix had upended the home entertainment business. But five years later, the company, which offers unlimited monthly access to theaters, remains little known, its ambitions stymied by exhibitors who see it as a threat, not an ally.

Raising Moviepass’ national profile and changing theater chains’ minds about the service is now the task of Mitch Lowe. The co-founder of Netflix will take the reins at the movie theater subscription service this month. He hopes to grow MoviePass’ user base by offering different price plans and streamlining its service. It will also fall to the newly minted CEO to try to convince the exhibition industry that MoviePass can help bolster ticket sales and concession revenues at a time when consumers are losing interest in cinemas.

“People are going to the movies less often because there are these other great entertainment options available,” Lowe told Variety. “They’ve been losing interest in going to theaters. But at the same time, theaters have done a good job of upgrading the experience. They’ve put in new seating and better sound. We can help get people back into theaters so they can be reminded of how great it is to see a movie on the big screen.”

The company has already commissioned a study that shows its service boosts attendance by 111% and that its customers buy more concessions. That’s good news for an industry that has seen ticket sales flatline in recent years. In 2015, the number of frequent moviegoers, defined as people who go to the cinema at least once a month, decreased by 3.7 million or 10%, according to the Motion Picture Association of America.

Bruce Nash, founder of the box office tracking service The Numbers, said that theaters might be intrigued by what MoviePass is selling, provided it doesn’t conflict with their own in-house loyalty programs.

“It’s a very seasonal business and it could help stabilize their revenue streams,” Nash said.

MoviePass’ service, which costs between $30 to $40 per month to see an unlimited number of movies, has failed to firmly establish itself. It remains more of a niche offering than a national phenomenon. Lowe believes that the price point could be a stumbling block. He plans to experiment with a tiered system of packages, starting as low as $20 a month for access to a smaller collection of movies and extending to roughly $100 for unlimited films in 2D, 3D and Imax formats.

“We need to experiment,” Lowe said. “Not every package will meet all the people’s needs.”

This week, MoviePass began sending members in certain locations billing information for new services, some of which amounted to a price increase. Users in Los Angeles, for instance, were told that new monthly plans included a $50 package for six 2D or 3D movies and a $99 package for unlimited movies in any format.

Peter Duckler, a consultant in Los Angeles, has used the service since 2014, often seeing between two to three movies a week. He was upset by the pricing changes.

“They’ll lose a lot of early adopters like me,” he said. “What they’re trying to do is eliminate the unprofitable people. The people who use the service all the time.”

For his first six months at the helm, Lowe plans to go deep into the weeds, looking at ways to improve and streamline the service, which currently operates by having customers buy tickets using a phone app and a debit card. After that point, he will focus on growing the subscriber base, potentially through marketing. He’s open to eventually expanding the service in foreign markets such as Mexico, Canada and parts of Europe, and said he is busy raising money to fund operations. MoviePass’ investors include True Ventures, AOL Ventures, NALA Investments, WME and former Facebook chief privacy officer Chris Kelly. Lowe is also backing the company with an investment in the “healthy six figure range.”

Lowe, who also had a stint as Redbox’s COO and president, said MoviePass founder and the previous CEO Stacy Spikes will remain involved in the company as its co-chairman. He was hired to bring more seasoned executive experience to the fold.

“They just needed a new perspective and an objective person to come in and take the company to the next level,” Lowe said.

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