MoviePass CEO Mitch Lowe Defends Recent Service Changes

Mitch Lowe

Mitch Lowe | Vivien Killilea/Getty Images for MoviePass

MoviePass has undergone some dramatic changes over the past few months, with subscribers now no longer being able to see the same movie more than once and soon having to pay a surcharge to see popular films on their opening weekends. Now, the company’s CEO is defending all of these alterations to the service.

CEO Mitch Lowe took questions in a Reddit Ask Me Anything on Tuesday, and one of the top ones was about why the company was introducing so many features that seemed intended to actively suppress usage. Here’s what Lowe said:

“It’s important to remember that we’re still a startup. As a startup, we have to make changes to our product and offering in order to find the sweet spot where we’re sustainable and still have a product that offers a great value.

Many of the changes were in order to reduce the amount of fraud and abuse that we identified from customers who were using MoviePass to scalp tickets, buy non-ticket items, and share the card amongst their friends.

I’m sorry if you feel that the product isn’t what it used to be, but my hope is that it’s still better than paying retail!”

When he references preventing fraud and abuse, one of the features he’s talking about is requiring subscribers to take a photo of their ticket. He elaborated on that in another comment by saying, “Ticket verification allows us to make sure people are paying for the ticket they check-in for and we’ve found it actually discourages misuse overall!”

In another comment, though, Lowe suggested that only allowing subscribers to see a movie one time was also introduced in order to counter fraud and abuse. He explained, “One of the problems with [repeat viewings] is that it opens us up to potential scalping and misuse of our service.” He also said there are no plans to bring back the ability to see movies more than once.

In terms of the surge pricing, Lowe basically just seems to be admitting that this was a change that was necessary in order for the business to be sustainable. Speaking of that new system, it sounds like MoviePass is going to rely on an algorithm to determine the additional fees. Lowe said:

“Over the next several weeks, we’ll be rolling out peak pricing. While not revealing the algorithm that generates a small extra charge, it is more likely that peak pricing will apply more often than not to opening weekend big blockbuster hits.”

Thankfully, though, he said that you’ll know before arriving at the theater whether you’re going to be charged an additional fee to see a specific movie, so there will be no surprises.

People watching a movie | LightFieldStudios/iStock/Getty Images

A question about sustainability was another one of the top comments in the Reddit Ask Me Anything, with one user asking about how much longer MoviePass can possibly remain in operation. Well, Lowe said that the company believes it will break even by the end of the year. He explained:

“It takes a lot of investment and significant losses in order to build a multibillion dollar entertainment company. Look at Spotify, Netflix and Amazon – there are many different companies that lost money for years and are only now turning a profit.

In our case, we intend to break even on our subscription model by the end of the year. The reason we keep our price low is to attract the occasional moviegoer. There are more than 200 mil occasional moviegoers in the U.S., who only go to the movies 4-5 times a year without MoviePass and 9-10 times a year when they join MoviePass. If we get enough occasional moviegoers to offset the frequent moviegoer, everything will balance out.

Our intent is not to make money off the subscription – our intent is to break even. In the future, our path to profit will be by selling ads, engaging in brand partnerships and creating our own content”

MoviePass subscribers better hope that the company achieves this goal sooner rather than later. After all, Business Insider recently reported that MoviePass lost $40 million in May and that it needs over $1.2 billion in additional capital. The company also expects its cash deficit to hit $45 million in June.

If MoviePass ends up going under, though, there’s a silver lining in that there will be plenty of other subscription services to replace it. On Tuesday, AMC officially launched its MoviePass competitor, AMC Stubs A-List, which allows subscribers to see three movies a week for $19.99. It’s more expensive, but it does come with a lot of features MoviePass doesn’t offer, such as the ability to see movies in premium formats and the ability to reserve seats in advance.

When asked about this AMC service in the Ask Me Anything, Lowe said that it is a validation of their subscription model idea and that he encourages competition, although he’s disappointed that AMC didn’t get on board with the concept earlier.

However, Lowe also thinks consumers shouldn’t feel they can rely on AMC to keep their price at $19.99. When a Reddit user commented that AMC will raise A-List’s price if MoviePass goes out of business, Lowe responded, “I agree!!”

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