MoviePass, the struggling theater subscription service owned by Helios and Matheson Analytics, announced on Tuesday (July 31) several new measures aimed at achieving profitability, including raising the price of its subscription plan.
In a press release, MoviePass said it plans to implement several new cost reduction and subscription revenue increase measures, including slashing monthly burn by 60 percent, raising the standard pricing plan to $14.95 from $9.95 a month within the next 30 days, and limiting access to first-run movies during the first two weeks of debut unless made available on a promotional basis. The company will also implement new tactics to prevent abuse of the MoviePass service.
“Over the past year, we challenged an entrenched industry while maintaining the financially transparent records of a publicly traded company. We believe that the measures we began rolling out last week will immediately reduce cash burn by 60 percent and will continue to generate lower funding needs in the future,” said Ted Farnsworth, chairman and CEO of Helios, in the press release.
MoviePass also said it would limit availability to blockbuster films with the change, starting with "Mission: Impossible 6." The company said it's a strategic move to limit cash burn and remain with its original plan to empower smaller artistic film communities. The company noted that major studios will continue to be partners of MoviePass to promote first-run films.
“These changes are meant to protect the longevity of our company and prevent abuse of the service. While no one likes change, these are essential steps to continue providing the most attractive subscription service in the industry," said Mitch Lowe, MoviePass CEO. "Our community has shown an immense amount of enthusiasm over the past year, and we trust that they will continue to share our vision to reinvigorate the movie industry."
The announcement comes as MoviePass parent Helios and Matheson Analytics arranged a short-term loan after halting operations due to failure to pay business partners. Bloomberg, citing a regulatory filing, reported that Helios and Matheson will use $5 million of a $6 million loan from Hudson Bay Capital Management to pay its processors.
According to the report, the service went down on Thursday (July 26) after processors halted clearing payments for MoviePass. On Friday (July 27), it said service in New York was restored. Under the terms of the loan from Hudson Bay, the lender can demand repayment of more than $3 million on Aug. 1 and the remainder on Aug. 5. Proceeds from a stock sale must be used to pay back the loan, reported Bloomberg. If the borrower does not pay it back, it faces a 15 percent annualized penalty until it is paid. If the payment is 48 hours late, the interest could jump to 130 percent.