MoviePass reboot faces new challengers to prove subscription model can profit

Over the past three years, movie subscription services have become one of the most disruptive — and controversial — iterations of the app-based economy. The film industry was taken by storm following the sudden rise and near collapse of MoviePass, a service that let consumers watch unlimited first-run movies in theaters nationwide.

However, after losing millions of dollars and watching its stock price collapse to the point that its parent firm Helios & Matheson Analytics Inc. was delisted from the Nasdaq, MoviePass is taking a second bite at the apple. Meanwhile, rival services have emerged to create a highly anticipated faceoff that will determine whether this new model merging entertainment with the new economy can translate into financial success.

Helios & Matheson CEO Ted Farnsworth told Mobile Payments Today that the round of new competing movie subscription services actually validates his company’s business model and reinforces the desire of consumers for an affordable and accessible way to go back to movie theaters.

“What sets MoviePass apart from some of our competitors is [that] we are not a theater company, we are not limited by our franchise locations,” he said via email. “Instead our members can use our service in theaters nationwide to view films on more than 30,000 screens.”

MoviePass is relaunching its unlimited plan for a limited time at a price of $9.95 per month for subscribers who pay for an entire year up front and $14.95 for customers who pay by the month. The unlimited plan will increase to $19.95 per month after the current promotional period expires.

Farnsworth says MoviePass has implemented “a number of technological measures” to prevent the types of abuses by subscribers that contributed to the company’s earlier, well documented financial issues.

The company has been able to convince some investors that its new model can succeed. The firm last month said it raised $6 million in new financing, which it will use to roll out the new service, fine tune the technology and boost investment in original productions through MoviePass Films.

Billy Nayden, an analyst at Parks Associates, said the steps taken by MoviePass should allow it to operate more profitably than it did during the original launch. He said when the platform first launched, the company did not have live data showing adoption levels, the impact on movie attendance and profitability. However now that it has seen the impact of the subscription service, the company has restructured its mobile platform to track customer behavior.

“The new model should be more successful from a sustainability standpoint,” he said via email. “MoviePass has a higher subscription cost to cover the actual cost of tickets and the company’s operations. MoviePass has also added provisions to restrict excessive use.”

Rival services

In the weeks since MoviePass relaunched its restructured unlimited plan, rival services have emerged, including a platform called Atom Ticket Access that allows exhibitors to create their own customized subscription plans.

Chris Bruscia, head of product at Atom Tickets, told Mobile Payments Today that the company has been watching the market evolve for quite a while and has been researching the preferences of movie fans.

“From what we’ve learned, subscription plans are appealing for some, but not all moviegoers,” he said via email. “Creating the ability for exhibitors to offer their own subscription plans that can co-exist with à la carte ticketing, as well as the unique features of Atom — like social invites and preordering concessions — felt like the most organic and addictive way to work with our exhibitor partners.”

He said that subscription plans need to offer value not only for consumers, but also for theaters and studios. A plan that works for a movie theater in Los Angeles might not work for a theater in another part of the country, he said.

Last month, Influx Worldwide, a technology provider for movie theaters around the world, announced a planned rollout of a new service, called Infinity, later this year. This service will use a mobile app or the Infinity website to sell a monthly service for individuals, couples and families, and will feature perks like the rollover of unused movie credits, food and beverage discounts and add-on tickets.

Risky business

Alistair Taylor, video and data analyst at Midia Research, warns that any company operating outside of what he calls the Big Four content and tech providers — Amazon, Netflix, Disney and Apple — should proceed with extreme caution when considering a movie-centric subscription service due to recent changes in consumer habits.

“Audiences are increasingly relying upon streaming services for first-run new film viewing,” he said via email. “The video subscription landscape is already saturated, with Netflix set to release 80 original feature films this year. And with Disney Plus, Apple TV Plus and Warner Media’s subscription services due to launch later this year, there just is not enough room for a subscription service to become mainstream, let alone run profitably.”

For example, Taylor said, Netflix, the leading video subscription service, is set to spend $10 billion on content in 2019, but has seen a dip in user engagement and ran a low profit margin of only 7.7% for the fourth-quarter of 2018, showing how difficult it is to make money in this business.