Until another service offers a better deal, it’s hard be angry when MoviePass pulls some bullshit changes to its plan. But we’re going to go ahead say you should be pissed about the new surge pricing that will reportedly be introduced in July. Surge pricing is a tactic cooked up by the devil and Travis Kalanick in a contest to see who could be the most diabolically evil.
A day after AMC announced its own theatre subscription service, and on the same day that his company is making a desperate move to raise more cash, MoviePass CEO Mitch Lowe told Business Insider that a number of changes are coming to the movie-a-day for $9.99 a month plan.
The most notable change is the introduction of surge pricing or, as Lowe calls, it “high demand” pricing. “At certain times for certain films—on opening weekend—there could be an additional charge for films,” he said. That extra fee is expected to start at $2 and will apply to films that are especially popular on MoviePass. Lowe said that MoviePass hopes this will help theaters bring in more mid-week business for blockbuster films. But of course its also to help chip away at the tremendous losses the company is incurring as it pays theaters full price for tickets for every ticket. Surge pricing will be coming sometime in July.
The other changes will be mostly welcome. As we previously mentioned, the highly-requested “bring-a-friend” option will roll out in August. The feature will allow you to add on another ticket, making it easier to select seating where that option is available and ensure that you aren’t purchasing a showing that will be sold out by the time your friend purchases their ticket separately. Lowe told Business Insider the extra ticket will cost “somewhere near the retail price of the ticket.” That could mean it could less than full price or it could mean that MoviePass will start trying out collecting a little fee like Fandango does.
Also coming in August will be the ability to purchase tickets for Imax or Real 3D screenings. Personally, I hoped that MoviePass’s rise would help kill off 3D, but I know there are people who still love it. Those two options will cost somewhere between $2 and $6 each time.
We reached out to MoviePass to confirm Lowe’s comments and the statement we were sent in reply framed the surge pricing change as a feature not an inconvenience. It reads in part:
We intend to keep the $9.95 model live and running. At the same time, we are launching new, on-demand options that members can add to their baseline subscription. The new optional add-ons will allow members to invite a friend to the theaters, upgrade to premium 3D and IMAX showings, or order tickets specifically for certain high-demand showings for a small additional fee.
Theoretically, you could consider it a way to weed out the people who really don’t care that much about seeing the latest hot movie on opening night, but it’s hard to see it as anything other than changing the relatively egalitarian process of buying movie tickets to a model in which they only go to the highest bidder.
The addition of Imax and 3D screenings was a necessary change now that AMC is offering those options with its new $20 monthly subscription plan and Sinemia is gaining popularity. Both of those services have stricter limits on the number of films a user can see in a month, but they’re beginning to look like they have a more sustainable business model.
Since MoviePass launched, AMC has been its biggest critic—complaining that it wouldn’t last and would only serve to drive down the value of a ticket in the minds of customers. Lowe was quick to point this out in his interview with Business Insider, saying, “It’s been tough when you have the president of AMC essentially for eight or nine months telling everybody that our subscription was not sustainable, and then he comes out with a program that essentially could cost him $60 or $80 a month to pay the studios their minimums and collecting $19.95.”
If anyone knows about the difficulties of navigating this new approach to moviegoing, its Lowe. MoviePass is trying out all kinds of ways to prove its approach is workable, but above all it wants studios to pay it to help promote films by leveraging its user data and customer channels. To get there, it’s blowing through cash. In April it was spending $21.7 million a month to keep afloat and it’s been relying on a $300 million line of credit that was projected to last about 17 months. Expenses rose to $40 million a month in May. And its parent company’s stock price has plunged by 99 percent from its high last October. On Thursday, it announced a $164 million bond sale in which it issued 20,500 shares of preferred stock to institutional investors.
So yeah, you’re perfectly allowed to get mad at surge pricing, but we could also end up going back to paying $15 for every ticket. I write about MoviePass a lot and no subject generates more reader mail. People genuinely love it, even if they get frustrated by confusing changes and its lack of customer service. Even if competitors are emerging, they’re not offering the same kind of “unlimited” service and MoviePass has been great for independent and arthouse theaters where people are willing to take a risk on an unknown property just because it’s “free.” An AMC subscription wouldn’t help in that regard at all. I guess if you want to help keep it alive, you should buy a lot of concessions whenever you use it and help prove out that it really is good for business.