MoviePass, a company that aims to be the Netflix of movie theaters, has sold a majority stake to Helios and Matheson Analytics Inc., a publicly traded data firm. A purchase price was not disclosed.
As part of the deal, MoviePass also announced it is overhauling its pricing model. It will now enable customers to see movie a day in a theater for a $9.95 monthly fee. The company said there will be no blackout dates and no contract is necessary. The new subscription will not include tickets for 3D or IMAX showings). In the past MoviePass offered a tiered pricing model, with plans ranging from $14.95 to nearly $50 a month.
“This is about getting funded in order to launch our new price point,” said Mitch Lowe, the company’s CEO. “After years of studying and analysis we found that people want to go to the movies more often, but the pricing keeps going up, and that prevents them from going more. We’re making it more affordable for people.”
The service is available in over 91% of all theaters in the U.S., including AMC, Regal and Cinemark theaters along with independent theaters. MoviePass does not publicly disclose its subscriber numbers.
MoviePass has struggled to gain traction in the industry and has often been met with ambivalence, even antipathy by theater owners. Established in 2011, it has gone through several iterations and has failed to get Hollywood to buy its sales pitch. The company claims it boosts attendance by 111% and that its customers buy more concessions. But exhibitors have preferred to bolster their own loyalty programs instead of aligning themselves with the service. Despite its ambitions to disrupt the industry, MoviePass remains little known.
Lowe, a Netflix co-founder and former Redbox president, has led the company since June 2016. He will remain in charge along with Stacy Spikes, MoviePass co-founder. They plan to add to their nine-person staff, particularly in the sales and technology areas.
Lowe said the company works by buying movie theater tickets for its subscribers directly from exhibitors at whatever price they offer. MoviePass is operating at a loss and subsidizing its users with the hope that at some point it will successfully demonstrate to studios and theater owners that it is growing their customer base. After demonstrating its value, he hopes MoviePass will be cut in on the profits.
“We’re hoping that if we can drive a meaningful increase in attendance we can share in that success,” said Lowe.
It’s been a bruising summer for the exhibition industry. Ticket sales are down more than 12% year-over-year, and the stock price of AMC and Regal have been battered by declining admissions. Lowe believes that gives MoviePass more leverage. He notes the company is popular among millennials, a demographic weaned on streaming services, and one that has fallen out of the habit of going to cinemas. Seventy five percent of MoviePass’s user base falls in that age range.
“We serve Millennials who have grown up with Netflix and other subscription models,” said Lowe. “They like that model.”