Film lovers are embracing a low-cost movie subscription service called MoviePass, which is filling theater seats in the Bay Area and across the nation. But in recent months the company has begun to confront the price of its popularity, with moves that have alienated fans and raised doubts about its economic viability.
The company introduced its monthly subscription model for moviegoers in August to great fanfare from cinephiles and deep skepticism from movie theater chains and industry insiders. MoviePass allows customers to view up to a movie a day in theaters for a monthly subscription fee, currently as low as $6.95. Subscribers pay the flat monthly fee to use a MoviePass credit card to gain entry to a movie, and MoviePass reimburses the theater for the subscriber’s ticket.
In six months, MoviePass has grown its subscriber base from zero to more than 2 million people in the United States. It has claimed credit for at least 3 percent of all U.S. box office tickets sold during that period. In the Bay Area alone, 70 movie theaters accept MoviePass.
But New York-based MoviePass generated a storm of rage and confusion on social media in February when it canceled what it says were a small percentage of its customer accounts, claiming they violated its terms of service.
Some Bay Area customers who lost their accounts deny the violations. Among them is Brad Kordic, CEO of a San Ramon environmental engineering company, who used his MoviePass three to four times a month before he and his wife had their subscriptions abruptly canceled.
“We told everyone that we knew what a wonderful experience this was and how easy it was,” Kordic said. “But they never gave me a chance (to explain myself). I’ve been accused of something I did not do.”
The Kordics said their subscriptions were terminated for allegedly watching the movie “Jumanji” in 3-D, which the company’s customer service team said is a premium movie not supported by MoviePass. Kordic said their local theater did not even carry “Jumanji” in 3-D.
Although MoviePass does not have a formal appeals process, the company followed up with Kordic after this news organization inquired about his case. Ultimately, MoviePass stood by its original decision to terminate Kordic’s account, saying he had in fact violated the terms of service.
Kordic is hardly alone in his frustration.
Krithic Annalamai, a sales representative who lives in Walnut Creek, said he received his card in December — after filing for one in August.
Reece Webb, a senior solutions architect in San Francisco, said that despite blocking MoviePass from his credit card and filing a complaint with the Better Business Bureau, MoviePass circumvented the block and charged him again.
“They have yet to respond to my support emails, chats, or tweets,” said Webb in an email. “They continued to charge me after we last spoke, yet I’ve never actually been able to use the service.”
MoviePass CEO Mitch Lowe said in an interview in January that the number of frustrated subscribers is “very small” and blown out of proportion due to visibility on social media platforms, such as Twitter. But since the interview with Lowe, MoviePass has bolstered its customer support team, hiring a vice president of customer experience, partnering with the Santa Monica-based customer service solutions firm TaskUs and increasing its customer support hours, according to MoviePass spokesperson Jackson Budinger.
“We have significantly increased our customer support team, increased customer support hours by 1250 percent since October, and are continuing to grow that area of the company to meet the increased volume in inquiries from our members,” said MoviePass in a statement.
For those who haven’t experienced a hitch with MoviePass, the $6.95 monthly deal still seems too good to be true.
In the past few months, Eugene Alfaro of Castro Valley has filled his free time with trips to the theater, as often as seven times a month, thanks to MoviePass.
“I’m watching movies that I normally wouldn’t pay for,” Alfaro said. “It’s making the movie experience like watching a TV in my basement.”
Moviegoers like Alfaro — and Kordic, before his subscription was terminated — have been making waves inside local movie theaters that sustain themselves on razor-thin margins. MoviePass argues it has driven higher attendance rates in theaters, along with higher concession revenues.
Some independent Bay Area movie theaters have seen those ripple effects. Rialto Cinemas Elmwood, an arthouse theater in Berkeley’s Elmwood neighborhood, kept a tally of subscribers visiting the theater since it partnered with MoviePass in January. The theater logged more than 800 MoviePass subscribers for the last two and a half months starting on Jan. 5 for the 176-seat-capacity theater.
“Every Saturday night, we would ask people in the audience who used MoviePass, and a fifth of the audience would raise their hands,” said the theater’s manager Joey Brite. “It’s been a significant boost for our little theater. The people who have been using it are coming from all over the place, from Antioch, Vallejo, South San Francisco, Walnut Creek and Hayward.”
Other theaters also have noticed MoviePass users are more likely to buy popcorn or soda during their visit.
“Psychologically, if people are getting in and not paying in the front kiosk, they are less scared to spend money at the snack stand,” said Allen Michaan, owner of the Grand Lake Theater in Oakland. “We see people willing to go to a film and take a chance outside of their preference because they have this card.”
MoviePass also claims it has had an effect on small, independent movies making a run for Best Picture in this year’s Oscars. MoviePass said it generated $110 million in ticket revenues for last year’s Oscar-nominated films, including Best Picture nominees such as “Lady Bird”, “Call Me by Your Name” and the winner, “The Shape of Water.”
But MoviePass has experienced growing pains as well. Lowe apologized earlier this month to subscribers after revealing during a panel talk in Los Angeles that the MoviePass app tracked users before and after use without their consent. Lowe said it was done to help track customer behavior around the moviegoing experience and one day monetize it.
“At MoviePass, we take customer privacy extremely seriously,” Lowe said. “I would like to eliminate any misconceptions that we’re collecting location-related data.”
With MoviePass’s roaring success, it also has to face a growing number of copycats and similar subscription services.
In December, Cinemark — with 16 theaters in the East Bay and South Bay — launched its own Movie Club Pass, which starts at $8.95 a month. The Movie Club Pass allows one movie viewing per month and a 20 percent discount on concessions and can be carried over from month to month, according to James Meredith, Cinemark’s senior vice president of marketing and communications. Meredith said MoviePass — which is accepted in select Cinemark theaters — played no part in influencing the chain to come up with its own subscription plan. In the United Kingdom, cPass launched this month, offering one movie ticket per day for GBP9.95 a month.
Even as competitors spring up and MoviePass expands, subscribers and industry watchers wonder whether the company’s subscription model is sustainable long-term. Considering the average U.S. movie theater ticket price is $8.97, MoviePass loses money every time a subscriber uses its services.
Lowe told this news organization, however, that MoviePass is working on “moving faster in our route to profitability.”
“It warms my heart when so many people worry about us making money,” said Lowe. “It is a standard way to grow a business that you have to invest. We are doing the same thing as Spotify and Netflix.”
As MoviePass carves out its ambitions of building a lasting movie-going empire, subscribers like Alfaro said they are just enjoying the ride.
“I have a loyalty to my pocketbook,” said Alfaro. “MoviePass is not a brand which customers have loyalty to; it’s a means to an end.”