MoviePass starts surge pricing amid cash crunch and competition
Under fire on multiple fronts, MoviePass on Thursday starting charging its more than 3 million subscribers extra for particularly crowd-pleasing movies and showtimes as the service struggles to stop hemorrhaging cash.
The company has had a difficult run of late, with troubles including a slew of customer complaints about its service, along with technology glitches and an auditor's report expressing doubt about its future.
The introduction of peak pricing means the company will be tacking on additional fees to a service that starting off costing only 10 bucks a month for a ticket a day. The increased cost depends on movie and popularity. An example distributed to users lists a 7 p.m. showing of "Avengers: Infinity War" at a theater in "Everytown USA" accompanied by a red lightning bolt icon and an alert showing a $3.43 extra charge.
It says it will begin offering a peak pass that lets users waive one peak-pricing fee each month. Customers with an annual pass will not be subject to the peak pricing until their subscription renews.
The company's subscription model faces competition from AMC Entertainment, with the global theater chain offering its own plan called the AMC Stubs A-List, starting last week. Another theater chain, Drafthouse Cinema, is also testing its own service, starting later this month in Yonkers, New York.
MoviePass and AMC have been at odds ever since the former dramatically lowered its pricing in 2017 and the latter followed earlier this year by temporarily blocking MoviePass access to big-city film venues. Last month, MoviePass responded to AMC's foray into subscription offerings by lashing out on social media.
Shares of MoviePass parent Helios & Matheson Analytics declined nearly 6 percent on Thursday, furthering a drop that had the stock slumping by double digits last week amid concerns the movie customers' business model is not sustainable.
With its shares trading significantly below a buck, Helios & Matheson said it received notice from the Nasdaq Stock Market that it no longer meets listing requirements, and has until Dec. 18 to regain its standing.
In a recent regulatory filing, Helios & Matheson reported the company had a cash deficit of $40 million in May and expected to be short at least $45 million in June. Saying it would "require a significant amount of additional capital" to continue as a growing entity, the company reported plans to issue convertible notes worth $164 million and issue 20,500 shares of preferred stock.
MoviePass started in 2011 and expects 5 million customers by the end of the year. It pays theaters full price for every admission, making its business model reliant upon more people paying for its service than actually going to theaters.
