If you’ve never heard of MoviePass that might be because the company does not advertise. It is doing quite well, thank you, by word of mouth.
MoviePass offers subscribers one movie a day in a theater for a monthly subscription price of $9.95. A pretty good deal when you consider that the average U.S. movie ticket price in 2016 was $8.65.
On Wednesday, the company announced on Facebook that it now has reached 1 million subscribers. That’s pretty impressive when you learn that just last August only 20,000 people had signed up for the service.
The burst in subscriptions followed the company’s decision to lower its monthly subscription rate from $50 to $10. MoviePass still pays the theater the full ticket price for every subscriber visit to a theater. The company claims that the pass is good at more than 4,000 theaters and upward of 36,000 screens.
MoviePass was founded by a former Netflix executive and sold a controlling stake to Helios & Matheson Analytics Inc. (NASDAQ: HMNY) shortly before the price cut was announced. Helios just closed a $60 million capital raise and owns about 70% of MoviePass. An initial public offering for MoviePass early next year also has been discussed.
Early adopters of MoviePass are likely to be costing the company a lot of cash because they are avid moviegoers. If the firm can hold on long enough to begin attracting only occasional moviegoers in large enough numbers to offset the hard-core fans, it has a chance to be a big winner.
Working against its success is an entrenched habit among younger movie fans (millennials) who are used to watching movies whenever they want on large-screen TVs without having to leave their living rooms. A subscription model is popular among that group, however, and that may just be the key for MoviePass.