*MoviePass has been stirring up a lot buzz since the company lowered its subscription fee last August, and gaining over a million subscribers as a result.
Kareem Abdul-Jabbar recently said that the company can help bring marginalized groups to theaters.
What’s more, the black-owned subscription service has changed the movie-ticketing game, and it’s exhibitors find it infuriating.
Founded by Stacy Spikes and Hamet Watt, MoviePass allows customers to buy one movie ticket a day at over 90% of movie theaters in the United States. The company aims to revive the box office by bringing people back to the theaters, and it appears to be successful.
According to reports, “the service has also brought in the coveted millennial demographic” as well those who do not usually watch movies in theaters.
Currently, MoviePass has over 2 million subscribers and expect to double it by the end of 2018.
“Based on the dramatic increase in the number of MoviePass subscribers over such a short period of time, we believe MoviePass will continue to grow its subscriber base significantly,” MoviePass CEO Mitch Lowe said.
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Spikes and Watt recently raised $60 million for the expansion of MoviePass. Its majority stake has been sold to Helios & Matheson (HMNY), and Lowe, a Netflix co-founder and former Redbox president, has been leading the company.
Helios and Matheson has sunk $160 million into purchasing 92 percent of MoviePass, soon, the company will purchase the remaining 8 percent.
MoviePass has the potential to disrupt the exhibition industry, if not the entire ecosystem of film, notes THR. But, “detractors are perplexed at the business model, which consists of giving subscribers a movie ticket per day for just $9.95 a month, though the only plan available April 22 was one movie a week.”
HMNY CEO Ted Farnsworth tells The Hollywood Reporter that MoviePass is making a profit on 88 percent of those subscribers who are using just one ticket a month. As for the 12 percent of heavy users, “They are evangelists for the service,” he says, noting that as recently as two years ago, when a subscription cost $49 a month, MoviePass was spending $51 to acquire each sub; that cost is now zero.
“In a survey in partnership with THR, the National Research Group found that nearly half of all moviegoers are aware of MoviePass; that it boasts a satisfaction rate of 83 percent, better than Netflix, Spotify, Sling and Hulu; and that it has untapped pricing power, given that only 8 percent would cancel the service should the price rise from $9.95 a month to $15.”
“They have a service people say is too good to be true,” says NRG CEO Jon Penn. “Rotten Tomatoes is a lot less important to MoviePass users,” he says.
One flaw in the model, though, is “when they use MoviePass to see major movies they would have seen anyways. When MoviePass is subsidizing blockbusters, it will cost them a lot of money and they’ll be hurting,” says Penn.
Contends Farnsworth, “MoviePass is the fastest growing company in the history of the Internet, and that includes Netflix and Spotify. Any time you catch lightning in a bottle like that, it can be nerve-wracking for a lot of people.”
For more details about MoviePass, visit www.MoviePass.com