The inside story of MoviePass’ plan for a comeback

By Herb Scribner

Don’t call it a comeback. MoviePass is still in business. It never truly went away.

But for the last six months, the company has put its head down and worked. Shying away from media and the press, MoviePass has worked to reshape itself after its wild ride from movie-goers’ darling to tweeted-about foe.

As you might recall, MoviePass was a subscription service that allowed people to see unlimited movies for $9.99 per month. When it first announced the price drop in Aug. 2017, it sounded too good to be true.

“That day we sold 50,000 subscriptions,” MoviePass founder and CEO Mitch Lowe told The Ringer. “It was 150,000 in three or four days. By the end of the (first) week, it was like, ‘Holy cow, what have we got here?’ And all of that, in my mind, was incredibly positive.”

And, lo and behold, it was too good to be true.

The company experienced a fall from virality. Complaints flooded social media. People unsubscribed from the company. Questions arose about what the future looked like.

I spent the last few months reporting on the subscription plan. I decided to look into what the company plans to do next, and what exactly went wrong.

MoviePass declined to comment for this story.

What happened

The story of how MoviePass went from viral status to barely a second thought in the movie theater industry is actually rather short — MoviePass slowly started experiencing issues with its app, which angered customers and handed the company some bad press.

In July 2018, customers complained that they couldn’t see certain movies in theaters. A few weeks later, they couldn’t see any movies at all as the company cut back its offered films. By mid-August, stockholders were losing interest, so much so that there were rumors of a buyout. MoviePass tried to rebrand several times — raising its prices, lowering its prices, raising prices again, creating new plans. You get it.

At the same time, AMC and Cinemark launched their own subscription plans to compete with MoviePass. AMC’s is still in full swing, and the company said it’s reached far beyond its goals in its first year of service.

And, as an almost-final nail in the coffin of what was, MoviePass’ parent company, Helios and Matheson Analytics in New York (HMNY), decided to part ways with MoviePass — sort of.

During the company’s viral run, MoviePass started investing in movie productions. The idea was simple — invest in movies that MoviePass subscribers will pay to see, funneling money back into the company.

Now, that plan will become fully realized as MoviePass will become its own publicly traded company, MoviePass Entertainment. It will “hold the company’s subscription-service and film-production arm and be spun off (from Helios and Matheson) as a separate publicly traded company,” according to MarketWatch.

MoviePass Entertainment will still have its own subscription plans. MoviePass is a simple subscription service that allows pass holders to view movies in theaters for a monthly rate.

MoviePass Entertainment offers three full plans:

  • Select — People can see three specific 2D movies per month, depending on what’s available.
  • All access — People can see all 2D movies in the theater’s network.
  • Red carpet — People can see all movies in the network, including one IMAX 2D and IMAX 3D movie, or even a REAL 3D movie per month.

Helios and Matheson will still hold a majority stake in MoviePass.

And that’s one reason why Ted Farnsworth, the CEO of HMNY, isn’t worried that the company isn’t viral anymore.

An inside look

Farnsworth told me that it was a shock to see MoviePass’ quick climb up the charts. He was surprised to learn how much MoviePass infiltrated the American culture.

“Look, you learn you learn a lot,” he said. “I mean, it’s the fastest-growing subscription company in the history of the internet. Faster than Spotify or Netflix — any one of them.”

He cited a New York Times article which pointed out how MoviePass became the main focus of date nights or how people would have MoviePass get-togethers.

“It was pretty interesting because … it became like almost a cultural phenomenon where people would have MoviePass date nights and they had their own, you know, hashtags and things like that,” he said. “And they really became a part of the culture of the moviegoer, especially the millennial side.

“The majority of our subscribers (are) millennials so it really became a part of that whole social fabric … of day-to-day life with people dating with it, or people having MoviePass clubs and going to different movies,” he continued. “It was interesting to be a part of the whole thing, obviously, from the beginning and just watch it evolve.”

He said that while MoviePass isn’t praised among many critics any more, it has become the standard for film subscription plans, even if no one thought its initial plan would work.

“Everybody said we wouldn’t survive from Aug. 15 a year and a half ago — that it wouldn’t last a month. We’re still here. I’m still the biggest supporter and continue to be,” he said.

MoviePass 2.0

Farnsworth said there is still a bright future for MoviePass as the company plans its next move.

That next move is already in motion. Farnsworth told me that MoviePass is setting the stage for “MoviePass 2.0,” which will bring an all-new experience for moviegoers.

He said MoviePass will release new content, much in the same way it did when it produced the 2018 John Travolta film “Gotti” (which lost the company money) or when it signed Bruce Willis to a three-film deal. In fact, the Oscar-nominated “Border” is a MoviePass film. More of those movies will be hitting theaters soon enough, he said.

Beyond producing films, MoviePass Entertianment also hopes to bring its subscribers into the film, or at least the celebrity world. Farnsworth said that under the new subscription plan, pass holders can attend red carpet events, and even possibly meet the celebrities who attend MoviePass Entertainment premieres.

Pass holders could even end up in a film.

“We cast (subscribers) — cast members to be in our movies, have a talking part or speaking part or whatever it is,” he said. “So I think it’s more inclusive … where it’s just not only subscription.”

The idea is still the same — drive subscribers into the theaters. Under MoviePass 2.0, MoviePass Entertainment also creates the content that pass holders go to see in the theaters.

Your subscribers will see your movies, which drives the revenue, Farnsworth said.

“People have to look at it like the past subscription is the engine of the company,” he said. “That’s what’s pushing everything. It just makes it so we’re going to make more money for entertainment because you’re pushing your own content.”

But Farnsworth said few people he talks to think the new business model makes sense. And there’s a reason for that. As The Verge notes, thus far, MoviePass subscribers haven’t been going to see the company’s films — for example, “Gotti” earned $1.67 million opening weekend with a $10 million budget.

Farnsworth still sounded pretty confident about the company’s plan.

“I think it’s good. I think the MoviePass 2.0 is going to be interesting to see this year what really comes of it,” he said.

Khalid Itum, the executive vice president of MoviePass, told The Ringer it’ll be a more humble version of the company.

“Moving forward, we’re not looking for a discount and we’re not looking for a revenue share on concessions. … We’ve learned lessons about how to go about making our business model work with regards to pricing the products correctly and doing business in the industry the right way. It’s on us to accept it.”

What does this mean for the industry?

Glenn Williamson, an associate professor at the UCLA School of Theater, Film and Television, said MoviePass “came out of the gate like a horse out of the barn.”

“It was exciting,” he told the Deseret News. “It tapped into the convenience factor people have with subscription services, whether it’s Netflix or podcasts. That’s just what the younger generation likes.”

But, he said, “it’s clear that it wasn’t sustainable.”

Williamson — who heads Back Lot Pictures and has produced films such as “Hollywoodland,” “Sunshine Cleaning” and “Push” — remembers the moment MoviePass became less convenient for him. He wanted to see “Crazy Rich Asians” last fall, but the app wouldn’t allow him to see it.

But before MoviePass imposed restrictions that annoyed customers like him, Williamson said people enjoyed their subscriptions because they could sample a movie that they might not have seen otherwise — it encouraged people to visit theaters and to see movies in a more convenient way.

“I think the way people consume these subscription media (companies) will be popular. But what’s the right model?” he asked. “It’s just not enough to be convenient about a subscription plan. It has to be convenient to see movies when you want to see them,” he said.

But the road to finding that model won’t be easy.

Numbers game

MoviePass arrived at a time when domestic theater attendance in the U.S. and Canada was falling. In fact, in 2017, attendance dropped to its lowest point since 1992, according to Bloomberg.

Box Office Mojo reported that in 2017, theaters sold about 1.23 billion tickets, down roughly 6.2 percent from the previous year.

According to The Hollywood Reporter, at the time that MoviePass dropped its monthly subscription price, North America was experiencing a 27-year low for domestic attendance, although it should be noted that the 2017 global box office numbers hit a record $40 billion, a 3 percent increase globally. Box office revenue was up 7.4 percent in 2018.

MoviePass had hopes of helping those stuggling 2017 numbers out, according to Forbes. “Moviepass has said their customers will double movie attendance and increase concession spending by 123 percent,” they wrote, although those hopes have yet to be realized.

For MoviePass 2.0 to succeed, it will have to bring people into theaters, helping to raise ticket sales, Williamson pointed out. If MoviePass contributes to people going to the theater on Wednesday nights, for example, then it would be well worth it for theaters to embrace the model.

“I think it comes down to profitability and dollars and cents,” Williamson said.

When told about the potential for MoviePass’ future — MoviePass producing movies and encouraging its subscribers to see those movies — Williamson said it will be a challenge to consistently make good movies that will keep people coming back to the theaters.

“It’s hard to put together a slate of really good movies every year. It’s really hard,” he said. “It’s competitive. And who’s going to release them because they’re not a distribution company? It’s good to have a viable financier making movies — that’s a good thing. There’s a lot of questions about what they’re doing that makes you wonder what their strategy is for producing these things.”

So, will MoviePass be as popular as it was before? Will MoviePass earn a second chance in the sun?

“I don’t have a crystal ball. It seems like the product just got less good and that people (said) ‘this just isn’t worth it,’” Williamson said. “If they could find a sweet spot of price and accessibility to movies that you want (to see), it could work. I think people are inclined to spend less for movies and go more.”