The Life, Death, and Potential Rebirth of MoviePass

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MoviePass tested its service for the first time in June 2011 in San Francisco, offering subscribers the opportunity to see one movie each day for a monthly fee. The service required subscribers to print out vouchers for each movie ticket at home, but subscribers complained that the system was too complicated to use. The company launched nationally in October 2012, with the service costing between $29 and $34 each month, based on the user’s city. The new system employed a mobile app attached to a MoviePass debit card, with funds made available for use at the ticket kiosk when the user selected a movie and screening time. Members were told the card would work at all major theaters, but theater chains like AMC and others opted out of using the service.

MoviePass pitched the idea to join forces with AMC by saying the partnership was the theater industry’s future, similar to Netflix-style subscription services. AMC agreed to a partnership with MoviePass in December 2014 after a decrease in movie ticket sales that year. AMC Theaters, which is the No. 2 chain in North America behind Regal Entertainment, agreed to allow people to attend a movie a day for a monthly fee as part of a trial run. “It frankly wouldn’t be smart to ignore the success of subscription in other areas of media,” senior vice president for corporate strategy at AMC Christina Sternberg said at the time. AMC theaters in Boston and Denver began offering MoviePass monthly subscription packages for $45 and $35 and planned to add more cities in time. “The data will determine how fast we go,” Sternberg also said. “Sometimes you first expand the test, sometimes you accelerate the deployment.”

Former Netflix and Redbox executive Mitch Lowe joined MoviePass as the new CEO in 2016. Lowe brought on changes to the service, including testing different subscription plans based on how many movies users planned to watch per month. The higher the price, the more movies users could watch. After an investment from Studio Movie Grill, MoviePass launched a promotion that allowed users to watch 30 movies a month for just $10. For a limited time, theaters owned by Movie Grill offered their customers a MoviePass subscription for $9.95, which got them a movie ticket a day. The service would usually cost $50 a month, and the MoviePass CEO anticipated the financial strain it would put on the company. “It will be expensive for us, but it’s part of our subscriber acquisition costs,” said Lowe at the time. “We bear the risk of over-usage and get the benefit of under-usage.” At the time, the service had 20,000 subscribers and almost $10 million in yearly revenue.

Analytics firm Helios and Matheson purchased a majority stake in the company in 2017. That August, the company announced they would be dropping the MoviePass membership prices to just $9.95. The new subscription plan offered users a movie ticket a day in any theater and market. That meant the company began spending more on its users than they would pay to use the service. The company planned to find profit for the service by increasing its number of members and then selling targeted advertising based on its members’ interests, the way Google and Facebook do to keep their services free. 

With the new price, the company saw a surge in subscribers, reaching 400,000 subscribers. The company wasn’t prepared to keep up with its new users. The demand was so high that it caused the MoviePass website to crash, and that’s when AMC announced that the “unsustainable” MoviePass and its subscribers were no longer “welcome” at its theaters. MoviePass card shipments were delayed, and customer service was overflooded. While the company relied on users to not take advantage of their membership, some subscribers were watching multiple movies a day, which created an increase in spending and a loss in revenue. By the end of 2017, MoviePass announced that it had more than one million subscribers.

After reaching two million subscribers, the company began reducing its prices from $10, down to $8, and then to $7. The company’s financial statements then showed it was losing $20 million each month due to the low subscription costs and outsized subscriber base. MoviePass began cutting back and adding restrictions for its services. The unlimited plan for $10 per month was no longer an option for new subscribers, and the new plan limited users to just three movies each month. Subscribers were also restricted from buying multiple tickets to high-demand films, with the company saying its members were misusing the service. After losing over $40 million in May, the company began raising ticket prices for popular movies and showtimes. Subscribers began complaining about website outages in July while they attempted to buy tickets for popular movies. The MoviePass website crashed during weekends in July and August, so the company began limiting subscribers to choosing between just two films a day as it went into a “transition period.” The service later announced an end to its controversial surge pricing. 

A Securities and Exchange Commission report was filed following the technology issues and revealed that MoviePass secured an emergency $6.2 million loan to its merchant and fulfillment processors. The filing showed that if the company cannot pay these merchant and fulfillment processors, they “may cease processing payments for MoviePass, which would cause a MoviePass service interruption.” The document confirmed that “such a service interruption occurred on July 26, 2018.” A day before the release of one of the biggest films that year, Tom Cruise’s Mission: Impossible – Fallout. 

Many subscribers who attempted to cancel the service after the incidents had trouble doing so. They were also automatically re-enrolled in the new MoviePass service announced later that month. Complaints from users began circulating, saying the company signed them up for the new service with little notice and just a few weeks to opt-out of the new subscription. 

Before the service shut down, TechCrunch reported in August 2019 that a researcher at cybersecurity firm SpiderSilk found a massive encrypted database that exposed tens of thousands of MoviePass customers’ credit card information because a critical server was not password protected. Mossab Hussein, a security researcher at the cybersecurity firm, found an exposed database containing 161 million records, including sensitive user information, such as MoviePass customer card numbers and personal credit card numbers.

Law360 reported in December 2020 that former executives of the app and its parent company agreed to pay $8.25 million to end investors’ New York federal court claims that they misled the public on the moviegoing subscription service’s profitability. MoviePass subscribers also went after the company legally, filing class-action lawsuits alleging that they could not use the service as promised due to the company blacking out certain movies and locations. One lawsuit in New York claimed the company used a “deceptive and unfair bait-and-switch scheme,” deceptive advertising, and breach of contract. The case was seeking to represent all customers who subscribed between February 2013 and August 2018.