MoviePass may have found a way to stop losing money on every subscriber, but it could lead to the company’s demise

Hollis Johnson/Business Insider
  • MoviePass said its subscribers’ average monthly usage fell to below one movie (0.77) in September.
  • In March, when the company was touting its nearly 3 million subscribers, subscribers were averaging just over two movies (2.23) a month.
  • But the lack of usage may be the only thing keeping the business afloat.

The dirty little secret about movie-ticket subscription services, like MoviePass, is that the less that people use the service, the better it is for the company. And it seems that lack of usage may be the only thing keeping MoviePass afloat.

Along with filing its third-quarter financials in mid-November, in which it revealed it had lost $130 million in the quarter, MoviePass’ parent company, Helios & Matheson Analytics, disclosed a drop in MoviePass’ subscribers’ average monthly usage from March to September.

In March, the average monthly usage per subscriber was just over two movies (2.23). By September, it had dropped to below one movie (0.77).

The graphic below shows the decline over the six months:

MoviePass Shayanne Gal Business Insider

MoviePass/Shayanne Gal, Business Insider

A lot happened to MoviePass in those six months.

Though MoviePass was touting its millions of subscribers after lowering its monthly price to $9.95 to watch one movie a day, the first sign of concern came in April, when Helios & Matheson’s independent auditor said in a filing with the Securities and Exchange Commission that it had “substantial doubt” about the company’s ability to stay in business.

Since then, its changes to the monthly plan that have made it harder for subscribers to see movies – as well as& complaints of bad customer service, the app sporadically going offline, and the rise of competing services like AMC Stubs A-List and Sinemia – have led to the dramatic drop in usage.

Read more: MoviePass competitor Sinemia is being sued by angry customers who say it ripped them off with new fees

A source inside MoviePass also told Business Insider that the company disclosed to its staff that in October alone tens of thousands of subscribers canceled the service.

But it’s a good thing for MoviePass if subscribers aren’t actually going to see movies – as long as they don’t cancel the service.

If no one is using the service, MoviePass doesn’t have to pay fees to Mastercard, the provider of the MoviePass debit card, or pay theaters for the tickets its subscribers buy.

The average movie ticket price in the US in the third quarter was $8.83, according to the National Association of Theatre Owners. Combined with MoviePass’ September figure of 0.77 movies per subscriber, that would come out to $6.80 per subscriber that MoviePass could be paying per month (though its user base is likely skewed toward higher-cost areas like New York City). With its $9.95-a-month subscription price, the company could conceivably not be losing money per ticket, or at least be close.

But the company needs more help than that.

With little money coming in besides subscriptions (the company has a handful of deals with distributors to market titles on the MoviePass app) and Helios & Matheson’s stock trading at about $0.02, it’s tough to see how MoviePass could continue to stay in business as subscribers increasingly realize they aren’t getting much value out of it.