UPDATE–May 6, 2018–The day after we reported MoviePass’s latest change, limiting subscribers to four movies per month instead of one per day, Variety reported that MoviePass has changed its mind yet again, bringing back the movie-a-day plan. MoviePass CEO Mitch Lowe commented on the change in an interview.

‘We never planned to abandon the flagship product that everybody loves,’ Lowe said. “Any time we’ve done a promotional package, we’ve taken the monthly plan off our site.’

This is contrary to what Lowe said the previous week in an interview with the Hollywood Reporter in which he said he didn’t know if the company would return to the movie-a-day plan. As we commented in our Insider Take last week, MoviePass doesn’t seem to have a good grip on where it is headed. They change their plan regularly, whether it is pricing or the plan itself. Who knows what changes are coming next. We’re not even sure if MoviePass can answer that question.

With just over 2 million subscribers, MoviePass has changed its subscription offer…again. New subscribers can sign up for $9.95 a month, but they will only be able to see a movie a week, or four 2D movies a month, instead of the movie-a-day plan previously offered. This news comes two weeks after announcing a special subscription promotion with iHeartRadio, limiting new subscribers to four movies per month. It is not clear how this change impacts current subscribers.

Changing its offer seems to be more of a rule than an exception with the company. In fact, MoviePass regularly changes its pricing, with its most recent pricing change in December when the company lowered the price to $6.95 a month. Prior to that a MoviePass subscription was priced at $9.95, and before that, the company switched from a tiered pricing model.

Under that model, there were three tiers: Tier 1 markets ($15 for 2 movies, $22 for 3 movies and $40 for unlimited movies), Tier 2 markets ( $18 for 2 movies; $27 for 3 movies; and $45 for unlimited movies), and Tier 3 markets ($21 for 2 movies; $31 for 3 movies; and $50 for unlimited movies).

In past columns, we’ve questioned the company’s business model. While subscribers are paying between $6.95 and $9.95 a month, MoviePass is paying movie theaters full price for each ticket. If a subscriber goes to see more than one movie in a month’s time, MoviePass loses money. In the past, MoviePass has explained that it makes money on the data it gleans from moviegoer habits.

In the company’s latest 10-K filing with the SEC, dated April 17, 2018, parent company Helios and Matheson Analytics Inc. said its goal is to encourage increased attendance at movie theaters, targeting movie goers who see a movie less than once a month which they believe represents 82 percent of the total movie going market. The company also said that its buying power is about 6.1 percent of the U.S. box office market, with one in 17 tickets being purchased via MoviePass.

‘Through its continued efforts at targeting and improving the consumer experience, MoviePass aims to maintain its strong subscriber growth and to leverage such growth with its key constituents to improve operational efficiencies, create cross-platform synergies and create multiple growing revenue streams,’ said MoviePass in the 10-K filing.

The company plans to use additional strategies to support its growth, including:

• Family and friends offers
• VIP lines
• Promotions
• Incentives for specific films
• Revenue agreements with film distributors
• Extensive social media marketing campaigns
• Premium title placement within the MoviePass app

A particularly concerning note in the 10-K indicators the ‘substantial doubt’ expressed by independent auditors that the company is sustainable as it is currently operating.

‘Our independent auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

The report of our independent auditors on our consolidated financial statements for the year ended December 31, 2017 included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. Our auditors’ doubts are based on our incurring significant net losses and our working capital position. Our ability to continue as a going concern will be determined by our ability to obtain additional funding in the short term to enable us to continue the development and integration of our MoviePass business.’

Insider Take:

With new revenue streams in the works, MoviePass is no longer relying on just subscription income for its livelihood. This could help MoviePass get to a place of sustainability, but the company has been so volatile, changing its pricing and/or business model every few months, that it is hard to envision long-term sustainability. The company’s independent auditors even expressed ‘substantial doubt’ that the company can keep going at this rate.

The company has grown its subscriber base quickly, but unless those subscribers are buying subscriptions and not going to the movies, MoviePass will lose money. How that model can work is a mystery. It is also possible that MoviePass’s ever-changing offers will put subscribers off. Instead of continuing to better the offer, MoviePass subscriptions are like a moving target.