MoviePass is struggling to meet the demand of its $10-a-month movie-ticket deal

Since MoviePass slashed the price of its monthly subscription from $30 to $10 a week ago, the movie-theater subscription service has seen such an influx of new members that it has struggled to keep up with demand.

A few days after rolling out its new, absurdly cheap, price point, MoviePass majority owner Helios and Matheson Analytics Inc. HMNY, -2.67%  said in a filing with the Securities and Exchange Commission that the company had more than 150,000 subscribers.

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MoviePass Chief Executive, and former Netflix Inc. NFLX, -0.17%  founding executive, Mitch Lowe told MarketWatch the company’s subscriber base is well above that now. Lowe said MoviePass likely won’t give specifics on subscriber numbers until a planned initial public offering either later this year or within the first couple of months of 2018.



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Part of MoviePass’s $27 million deal with Helios and Matheson Analytics included an additional payment if MoviePass hit 150,000 subscribers in a 15-month time span. The company passed 150,000 within days.

“We blew through that,” Lowe said. “Maybe I’m jaded, but I initially thought it would be 12 to 15 months before we reached 150,000 subscribers, so we’re overwhelmed.”

After the price cut, MoviePass’s website and mobile app both crashed due to the volume of people looking for information and trying to sign up. Lowe said the servers didn’t have the capacity to handle the millions of visitors.

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He said the company is a couple of weeks behind on delivering MoviePass cards to new members, which were promised to arrive within five to seven business days of ordering. Lowe expects all the cards to be delivered by the end of next week.

As of Tuesday, the company only had nine employees, with four working in customer service. Lowe said he’s in the process of adding employees and is building a marketing and sales team.

“We’re essentially building a whole new company,” he said.

MoviePass’s $10-a-month deal generated more than its fair share of fanfare and skepticism alike.

AMC Entertainment Holdings Inc. AMC, -2.33%  said MoviePass wouldn’t be welcome at its theaters, and that it was working with its lawyers “to determine if or how AMC can prevent a subscription program offered by MoviePass from being used at AMC theaters in the U.S.”

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It may be difficult for AMC to block the use of MoviePass cards, which the company says can be used at any theater accepting debit and credit cards, or roughly 91% of all U.S. theaters.

MoviePass’s card is powered by Mastercard Inc., and essentially operates like a credit card where MoviePass pays the bill. According to Mastercard’s rules, merchants are obligated to honor all cards. The rule states that merchants that choose to accept debit or other Mastercard cards “must honor all valid Mastercard Cards without discrimination when properly presented for payment.”

AMC declined to comment beyond its statement from a week ago.


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“They’re not in a position to stop our customers from using MoviePass cards,” Lowe told MarketWatch. “The big guys are always trying to stifle innovation.”

Conversely, Lowe said that just about all the independent film exhibitors have reached out to MoviePass to ensure the service could be used at their cinemas. Texas-based Studio Movie Grill, which operates 24 theaters in nine states, said MoviePass was a win-win for everyone.

“If MoviePass subscriptions enable more frequent movie-going and exploration of movie content, then we’re all for it,” said Studio Movie Grill Founder and Chief Executive Brian Schultz in a statement.

Some of the bigger cinema chains, such as Cinemark Holdings Inc. CNK, -4.22%  and Regal Entertainment Group RGC, -5.73%  , have told Lowe that they’re not all-in yet, nor are they opposed to MoviePass, but rather are taking a wait-and-see approach.

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Cinema-chain stocks have been beaten up so far in 2017, as box-office results have slumped due to a weaker slate of films, and concerns around further digital disruption and premium video-on-demand offerings have run rampant through the industry.

Cinemas have invested heavily in improving the in-theater and movie-going experience with features like reclined seating and updated concessions.

Movie-ticket prices have continued to rise. Last year the average ticket price in the U.S. was $8.65, and though the past two years have garnered record box-office revenue, movie-theater attendance has remained relatively stagnant. The coveted 18-to-35-year-old demographic has been slumping in attendance.

“If you look at the [Motion Picture Association of America] reports, over the last five years millennials have declined going to the movies by 20%,” Lowe said. He believes MoviePass can be a step toward helping improve theater attendance. “Our subscriber base is more than 75% millennial.”