MoviePass, Once Thought To Be A Fierce Competitor To Netflix, Relaunching This Summer

MoviePass was bought out of bankruptcy last year by one of its co-founders Stacey Spikes who plans to relaunch it this summer. Once seen as a potential rival to Netflix, the service used to offer users the chance to go to the movie theater every day for just $10/month. However, the problems it faces with its relaunch will be exacerbated by the coronavirus pandemic, which has many consumers used to streaming blockbuster hits at home.

According to a survey last summer, only 14% of adults said they strongly preferred seeing a movie for the first time in a theater, while 36% said they would much rather stream the movie at home. That compares to 28% of adults saying they strongly preferred seeing a movie for the first time in a theater in 2018 when MoviePass was having severe financial problems (it shut down in 2019).

StatistaTheaters vs. streaming: first time movie viewing preferences in the U.S. 2020 | Statista

For some history, MoviePass launched in 2011 with grand plans to offer consumers a monthly plan where they could watch a movie every day in any theater for a fee of $50/month. MoviePass was banking on theaters offering them a lower wholesale price, allowing it to be profitable with the margin from the discounted tickets supplemented by a small amount of ad revenue. 

Unfortunately, the $50 price point didn’t go over well with consumers and the service re-launched with a $10/month price point after Helios and Matheson Analytics bought a 51% stake in 2017 for $25 million. This was wildly successful with consumers, but theaters balked at giving discounted tickets. This meant the service would lose money on any customer going to the movies more than once a month.

This ill-fated business model caused the company to burn through an incredible amount of cash and ultimately it shut down in 2019 and its parent company Helios and Matheson Analytics filed for bankruptcy in 2020. It reported a loss of $151 million in 2017, primarily due to MoviePass, and was burning through $40 million a month by July of 2018.

MoviePass also lost face with consumers who had a Visa card that they used to purchase the tickets (charged back to MoviePass) but the company started to run out of money to fund the merchant processor that financed the cards. It has also been accused of locking out super users, those who were seeing a film a day, a move of desperation.

Things came to a head after Mission : Impossible Fallout was released at the end of July 2018 and 600K MoviePass users found their app no longer worked when they tried to get tickets to the blockbuster film.

Spikes, who only paid $14K for MoviePass, recently said the company will relaunch as a “co-op” with users having part ownership in the company and its top tier subscribers will have a lifetime subscription.  How long of a lifetime the new MoviePass will have remains to be seen. 

The large theater chains are all pushing their own loyalty clubs and are unlikely to try and drive their customers to the relaunched MoviePass. Rather, they will likely promote their own brand. This is particularly true of theater owner and meme stock AMC, who is giving its many individual shareholders in the company who sign up for their “AMC Investor Connect” perks like free popcorn.