Moviepass killed the hogs today. They should have done it sooner, but, better late than never. Peak Pricing dies, and ticket stub verification also dies.
The company is fighting to survive, and I think this will probably seal the deal for survival.
Essentially what MoviePass did was spend about $400 Million Dollars to buy about that much press to build their brand. The question now is was it all worth it? Time will tell if the new more sustainable plan is attractive to a large set of consumers and if MoviePass will continue to grow, or if it will just fizzle out into a smaller set of customers who are interested in a few movies a month. It is still a good deal for consumers, but it certainly is no longer the “no-brainer” offer that gripped consumers imagination.
I do believe the tarnished brand of Moviepass can recover. Moviepass is working to make going to the theater more affordable, the core of that brand remains. IMO this is not a situation where the brand has taken irreversible damage. They did not kill anybody, (many big brands have), they did not purposefully set out to defraud consumers, they did offer a fantastic deal while it lasted. I think consumers can largely accept that. I also think consumers can understand that some people simply abuse a system, and a few bad apples can ruin the entire bunch – or program in this case.
Will this new plan finally bring sustainability to Moviepass?
Utilization is now guaranteed to drop down to a much more reasonable number. I will be updating a new model later today. Moviepass states that 85% of customers were already below the 3 movies a month mark. This move is going to ensure a utilization factor of somewhere under 1.5 I believe.
Readers here know that I have always said that MoviePass holds all the levers in their plan, and their Terms of Service was always set up to allow them to control costs and “do what they have to do” to avoid BK.
I do believe that these changes will provide a path of MoviePass to get to sustainability. The question I don’t have an answer to yet is how much demand there will be for the new program, and if it will end up being a much smaller niche business for a very long time, or if it will be able to continue to grow and become a major player in the entertainment space. Time will tell.
I actually think Moviepass becomes a compelling stock at these low levels, and with these changes. Again, less than 2% of your portfolio, and DO NOT bet your life savings on this thing. That would be really stupid.