MoviePass, the beleaguered subscription service that once had ambitions to revolutionize moviegoing, is instead making a Hail Mary pass as it struggles to survive.
The company is strapped for cash and has introduced a series of measures that it hopes will keep itself solvent. They include jacking up the prices from $9.99 to $14.95 per month over the next 30 days, as well as limiting access to nearly all Hollywood blockbusters within their first two weeks of release. The company’s parent company, Helios and Matheson, said these steps will reduce its cash burn rate by 60%.
But the company still faces major questions about its sustainability. On Friday, MoviePass borrowed $6.2 million, including $5 million in cash, in order to stay afloat and meet its financial obligations. Beginning on Wednesday, its creditor can ask MoviePass to pay up to $3.1 million of the money it borrowed.
Since slashing its prices last August from as much as $50 to just under $10, MoviePass has enjoyed a surge of interest. Its subscriber rolls at the time were roughly 20,000, but by December that number had increased to nearly one million. Currently, the company says it has 3 million customers.
MoviePass’ business model has raised eyebrows. The company subsidizes movie-going, paying full price for many of the tickets its customers purchase using a MasterCard-enabled device. That means it is operating at a substantial loss. MoviePass has maintained that it can make money by exploiting the data it collects on users and can sell advertising. It has also signed deals with some exhibitors, which has enabled them to get better deals on tickets in return for promoting their screenings.
As MoviePass has struggled to keep the lights on, customers have complained about outages that have prevented them from buying tickets to popular films such as “Mission: Impossible – Fallout.”
Helios and Matheson’s stock fell 1.41% to 79 cents. shortly after the pricing changes were announced. In October, shares of the company reached a high of $32.90.