MoviePass will reduce the number of movies its subscribers can see by 90 percent, with subscribers in the $9.95 monthly fee tier seeing their movie allowance decrease from one per day to three per month. The change will be rolled out starting Aug. 15, the latest in a series of changes to the company's customer experiences as it struggles to stay afloat.
The company said in a statement that the new limit, which is supposed to reduce the amount of cash MoviePass burns through, will only affect the 15 percent of its subscribers who see more than three movies per month using the service.
MoviePass also announced Monday morning that it has reversed its decision, announced less than a week ago to hike its monthly subscription fee to $14.95 per month. The reversal comes after a customer outcry; the $9.95 monthly fee will remain in place.
In multiple statements issued over the past week, the company attributes its recent turbulence to growing pains that are expected when a so-called "disruptor" start-up company enters the marketplace. The company brought in Netflix co-founder Mitch Lowe to run the service, and he promptly lowered the monthly subscription rate and increased the number of movies users could see.
While these changes brought in a rush of new customers, the cost to keep them proved too much for the company to sustain. MoviePass pays full price for each ticket a subscriber uses, meaning that after a subscriber sees a second movie in a month, the company is operating at a loss. It didn't take long for the company to burn through all its cash reserves, and the company had to take out a $6 million emergency loan two weeks ago to pay for subscribers' tickets.
Two law firms announced on Monday that they have begun seeking defendants for class action litigation against MoviePass parent company Helios and Matheson Analytics, claiming that the company over-inflated MoviePass’s profitability when presenting information to investors, who then lost money.
