MoviePass, a movie subscription service which allows moviegoers to watch a film every day at cinemas, for $10 has been chewed over in Hollywood. The speed at which the company reached the million subscriber milestone is a clear indication of MoviePass’s value. The company announced it has reached the one million subscriber mark on December 20, barely four months after cutting its subscription fee.
It took over three years for Netflix, of which Mitch Lowe, the MoviePass Chief Executive was a founding executive to hit the milestone that MoviePass has hit within just months. At the price of the price cut, MoviePass had around 20,000 subscribers but since then, the demand for movies has been on the rise. As Chief Executive Mitch Lowe says, the demand for movies has been beyond earlier projections.
However, industry experts as well as those keenly following the business are concerned that MoviePass spontaneous raise may be unsustainable.
According to Helios and Matheson Analytics Inc (NASDAQ:HMNY) chief executive Ted Farnsworth “It’s about the data,”. Helios and Matheson Analytics Inc is the majority shareholder in MoviePass. Shares of Helios & Matheson have been on a tear since the company acquired majority stake in August. The shares went up around 102% since that’s time. The stock has shown a lot of volatility to reaching a high of $38.86 per share in October.
In October, Short seller Andrew Left issued a warning to investors that the shares of Helios & Matheson would go down by 20% and added that MoviePass would never become a $1 billion company.
Critics of MoviePass business are worried that the company may not be in a position to make money and may soon be out of business. This will further hurt the already limping theatre chains. Alternatively, the company may be forced to raise the subscription fee, a move that will drive users away.
When MoviePass was acquired by Helios & Matheson, the company decided to reduce prices from 50 a month to $9.95. The company is still charging the full price of tickets to movie theaters and studios.