MoviePass took another step toward the abyss Monday, announcing that some of the biggest summer movies won’t be available on the service as the company continues to suffer a massive cash crunch.
The company’s 3 million subscribers won’t be able to see shark thriller “The Meg” and Winnie-the-Pooh fantasy “Christopher Robin” - two of the most anticipated movies of the summer - with their MoviePass card in the coming weeks. The news follows a hiccup for many MoviePass users this weekend over the Tom Cruise hit “Mission: Impossible - Fallout. “
MoviePass chief executive Mitch Lowe made the announcement at a company meeting Monday, amplifying a letter he wrote to subscribers on Friday.
“As we continue to evolve the service, certain movies may not always be available in every theater on our platform,” he wrote.
On Tuesday the company went a step further in outlining how these plans would work. Wide releases will now be “limited in their availability” during the first two weeks of their run unless they were part of a promotion--that is, subsidized by a studio. The company will also raise the price of a subscription by 50 percent to $14.95 per month.
“Through these new steps, the company believes it will be able to compress its timeline to reach profitability,” it said in a statement.
Reducing its admissions for customers - and thus payouts to movie theaters - is key for MoviePass as the full bill for a $5 million loan comes due next week. MoviePass parent company Helios and Matheson took out the loan last week, according to SEC filings, so it could keep its app running properly. The app had failed on Thursday.
The news of reduced admissions could be a potentially fatal blow for MoviePass. Its cash woes and stock declines - the Helios and Matheson share price closed under a dollar Monday just days after a reverse stock split artificially boosted its price over $10 - have already been deep reason for analyst concern. But the decision to pull movies squanders the company’s one ace in the hole: bottomless customer love.
In the letter, Lowe also explained the service’s new practice of peak pricing - charging an additional fee for hot new releases. Subscribers have balked at what they see as a bait-and-switch, but MoviePass explains it as preferable to the alternative, which would be to raise subscription prices across the board.
Lowe also made another analogy to explain the moves. “This is no different than other in-home streaming options that often don’t carry the latest shows or movies that may be available on other services. For example, you can’t ever find ‘Game of Thrones’ on Netflix. “
What effect a reduced-admission policy -- or a MoviePass disappearance entirely -- could have on the box office remain to be seen. Since MoviePass slashed its prices a year ago, economists have debated whether the service spurs people to theaters or simply reduces the cost of movies they were going to see anyway.
If MoviePass does go under, it will join the short, illustrious list of digitally minded companies that seized the public’s imagination only to be outdone by their own ambition. Twitter users on Monday were already paying homage.
“We’re all working through some very difficult MoviePass emotions right now. The scars from Kozmo.com never fully healed,” wrote the pundit Mark Lisanti, referring to the dot-com bubble’s ill-fated delivery service.
“Pulled out my MoviePass card and it turned into a Circuit City gift certificate in my hand,” posted the commentator Louis Virtel.
The comedian Josh Gondelman had perhaps the m
ost pithy reference. “ ‘It’s better to burn out than to fade away'--MoviePass,” he wrote.