MoviePass, a service that allowed consumers to see unlimited movies at cheap prices was on everyone’s gift list this time last year – now, it’s on the naughty list. Within the last few months the app’s owners faced multiple issues like in June it was reported that the company lacked enough funds to keep it afloat and just last month the New York Attorney General launched an investigation into a potential securities fraud scheme with MoviePass.
The company’s basic model and source of its revenue remain the same: consumers pay the cost of only one ticket per month and movie pass foots the rest of the bill. Thus, leaving MoviePass on the line for millions of dollars in bills with no profit in sight. Looking at the company’s history, it seems silly that consumers didn’t see it as too good to be true.
Helios and Matheson, a data analytics organization, bought the service in 2011. The initial monthly subscription cost before the buyout was $34-50. By 2017, the company dropped the monthly cost to $7 per month, and by 2018 the service reached 5 million subscribers.
The major trouble began in March 2018 when consumers discovered that data was collected about their whereabouts outside of the movie theater. Yet in this internet age, big data collection of this magnitude should be no surprise. The company’s financial issues began in June 2018 when the stock price dropped from $32.90 to just 2.50 within a few weeks. After the stock revenue loss, MoviePass disclosed that they only had $15.5 million in the bank – not near enough to support their business model.
Out of necessity, the Helios and Matheson took out an emergency loan to keep them afloat. Recently, consumers began to find that as a result of the poor business model, their monthly cost for the service rose to $9.95 and that they could only see three movies per month.
Not only have financials troubled the company but the history of the MoviePass app is one riddled with glitches. During the 2017 holiday season, the company saw a surge in subscribers that overloaded their app interface causing it to crash. Consumers screens were again filled with error messages in June of 2018, after the company’s revenue troubles.
In a desperate attempt to keep the company from falling apart Helios and Matheson began to change their model by reopening old user accounts to “beta test” their new idea.
The beta-testing came under fire from consumers who felt backed into a corner of either opting-out from the new model or being charged. The penalty for those who chose to opt-out is severe as they are not able to re-subscribe for up to nine months.
Because of app glitches, financial problems and an ongoing investigation, it is a safe bet to say that MoviePass lacks trustworthy consumer service. The trend seems that it is best to unsubscribe now and save yourself trouble later.
For those who want a comparable service, AMC and Cinemark offer their own branded apps so that frequent moviegoers aren’t left astray. These apps provide a more reliable service to consumers and a relatively sound business model.