MoviePass has been experiencing serious growing pains for a while now, mostly because the service was way too good to be true. For a $9.95 monthly fee, users could see one film per day at almost any theater, which has obviously been very costly for the company. Just recently, parent company Helios and Matheson had to raise $1.2 billion just to keep the subscription service running. Now MoviePass is severely limiting use of the service in order to stay afloat.
Speaking with The Wall Street Journal, MoviePass CEO Mitch Lowe explained the new policy, which limits users to just three films a month and that the $9.95 rate will stay in place, not, as the company announced just one week ago, rise to $14.95. The significant change will go into effect on Aug. 15, and is expected to reduce the company's cash burn rate by over 60 percent. It'll reportedly make their eventual transition to profitability "more manageable," which is good news for investors as MoviePass' monthly cash deficit was $45 million in June.
Of course, this isn't good news for subscribers. “We’ve been whipsawing people back and forth,” explained Lowe. “I think we’ve got it now. I should have accelerated the process of reducing the burn faster in hindsight. Now I realize no matter how patient investors say they will be, they never are.”
With over 3 million members, Lowe added that 85 percent of current users only see three or fewer films a month anyway, and that base will be their focus going forward. “They will not be affected at all by this program, and even better, they’ll stop hearing MoviePass is going out of business,” said Lowe. “Ultimately, I believe this is a 20 million subscriber business over the next three to four years."
MoviePass crashed multiple times the weekend of July 27, coinciding with—and nixing the availability of—Mission: Impossible – Fallout. The following Monday, the company revealed new releases would be limit or excluded for their first two weeks of release.
