MoviePass Switches from Tiered Pricing to a $9.95 Monthly Subscription

Will this latest business model be the golden ticket?

Subscription News: MoviePass Switches from Tiered Pricing to a $9.95 Monthly Subscription

Source: MoviePass

MoviePass is trying a new business model on for size, reports Business Insider. This time around MoviePass is offering an unlimited subscription plan for $9.95 a month, allowing subscribers to see one movie a day, except IMAX and 3D movies. There are a few caveats though. The theater must be in the United States, it must accept debit cards, and the subscriber must have an iPhone or Android phone to use MoviePass.

Led by Netflix co-founder and former Redbox president Mitch Lowe, MoviePass is available in more than 4,000 theaters and more than 36,000 screens, and there are no blackout dates, including premiers. MoviePass estimates that it can be used in about 91 percent of U.S. theaters, including AMC, Regal and Cinemark theaters.

MoviePass originally launched in 2011, and it has tried several pricing structures since then. According to Engadget, MoviePass’s most recent pricing model offered three tiers, based on the market:

  • Tier 1 markets: $15 for 2 movies; $22 for 3 movies; and $40 for unlimited movies.
  • Tier 2 markets: $18 for 2 movies; $27 for 3 movies; and $45 for unlimited movies.
  • Tier 3 markets: $21 for 2 movies; $31 for 3 movies; and $50 for unlimited movies.

On its blog last week, MoviePass announced the new plan.

‘For the last several years, we have been testing a number of service offers and price points. We have learned a lot during the process and believe that we now have an offer that can’t be beat,’ said MoviePass. ‘We believe that you want to see more movies in theaters. Our $9.99 per month subscriber makes it possible for you to see a movie every day, if you would like.’

There is no contract, so subscribers can cancel at any time. Once signed up, subscribers will get a 12-month price guarantee, but MoviePass said that space is limited. The catch? There is no catch for subscribers, but MoviePass will still pay the full price of every ticket sold to theaters, reports Business Insider. That could add up to hefty losses, but last week IT services and solutions firm Helios and Matheson Analytics Inc. (NASDAQ: HMNY) bought a majority stake in MoviePass, so money may not be an issue.

Here’s how the plan works:

Subscription News: MoviePass Switches from Tiered Pricing to a $9.95 Monthly Subscription

Source: MoviePass

‘MoviePass was founded to make it easier for passionate moviegoers and casual fans to see films the way they’re meant to be seen – in the theater,’ said Lowe, MoviePass CEO. ‘Our vision has always been to make the moviegoing experience more affordable and enjoyable for our subscribers. We are changing the way consumers think about going to the movies by making it possible to experience a broader array of films – from the latest summer blockbuster to a critically acclaimed documentary – through a subscription model.’

‘Today’s acquisition by Helios & Matheson is a huge step towards making our vision a reality by allowing us to introduce a new $9.95 nationwide subscription service that completely disrupts the movie industry in the same way that Netflix and Redbox have done in years past,’ Lowe added.

Current leadership at MoviePass will stay in place, and the company will continue with its plans to expand throughout the U.S. Once the acquisition is complete, MoviePass will apply for a listing on the NASDAQ or New York Stock Exchange by March 31, 2018. HMNY will be the majority shareholder.

What’s in it for Helios and Matheson? CEO Ted Farnsworth told Bloomberg that the company wants to amass a large customer base and collect data on movie viewing behavior. They can use that data to target ads or other marketing and promotions to subscribers.

‘It’s no different that Facebook or Google,’ Farnsworth said. ‘The more we understand our fans, the more we can target them.’

Insider Take:

For subscribers, this is a great deal. If you even see one movie a month, you’ll break even. If you see two, you are ahead of the game. What we don’t quite understand is how this will work for MoviePass. They’ve already changed their business model a couple of times, and now they’ve dramatically reduced their prices – but their cost for tickets is the same, or higher as movie ticket prices naturally rise over time. Helios and Matheson must have big plans for the data they are acquiring in order to make such an investment. On the surface, it seems like a risky move.