Since April 13, MoviePass has only been offering a promotional $29.95 three-month plan. That only allowed users the freedom to see four movies a month, but it threw in a free trial of iHeartRadio’s All Access on-demand streaming package. The move set off alarm bells that MoviePass might be running out of money — fears that were amplified after an independent auditor publicly raised questions about the service’s ability to continue operating.
“We never planned to abandon the flagship product that everybody loves,” said MoviePass CEO Mitch Lowe in an interview. “Any time we’ve done a promotional package, we’ve taken the monthly plan off our site.”
That seems to be a different position than the one Lowe espoused last week. In an interview with the Hollywood Reporter, Lowe said he didn’t know if MoviePass would go back to offering a movie a day. But the MoviePass head said he didn’t want to limit interest in the iHeartRadio promotional package by tipping his hand.
“It’s marketing 101,” he said. “We wanted to focus everybody on this partnership promotion. If people knew the [movie-a-day] plan was coming back, they might not be interested in the iHeartRadio deal.”
MoviePass’ business model has left some scratching their heads. The company pays movie theaters full price for the tickets its customers buy, so it is essentially subsidizing their movie-going at a loss to its own bottom line. MoviePass claims that it will eventually be able to monetize its more than two million subscribers by running ads, partnering with theater chains, or figuring out a way to make a profit on the data it collects on its users.
Despite the auditor’s negative report, Lowe said he isn’t worried and downplayed the conclusions.
“That’s just really relative to how much cash we have at any one time in the bank,” Lowe said. “We have a constantly evolving business model. We’re getting more and more occasional moviegoers and cutting back on fraud and abuse. I feel very confident about our trend lines and I know we’re going to continue as a going concern and continue to be popular.”
Lowe recently came back from CinemaCon, the annual exhibition industry trade show that took place last week in Las Vegas. When theater owners expressed skepticism about his ability to stay in business, he said he had a simple message for them: “See you in 2019.”
The changing plans weren’t the only thing that upset some users. MoviePass announced this month that it will not allow users to see the same movie twice. Lowe said the company is changing its rules to prevent fraud. He said the company believes that some families are using one card among each family members, and speculated that some users are buying tickets to popular movies with their MoviePass cards and then turning around and scalping the tickets to make money.
“A small percentage of people are abusing the system,” he said. “By doing this we can continue to provide a great service.”
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