Unlimited movie-theater deal could be too good to survive

MoviePass is trying to bring to movie theaters what Netflix did for DVDs and online streaming: Let subscribers watch as many movies as they want for USD 10 a month.
In doing so, MoviePass has struck a chord with moviegoers and a nerve with the movie industry.
For many people, going to the movies is worth it only a few times a year. Ticket prices keep rising, and moviegoers have plenty of cheaper alternatives, including Netflix.
MoviePass believes it can get people to theaters more often. Major theater chains and movie studios aren't so sure, putting MoviePass' business plan at risk.

Subscribers with MoviePass can watch a movie a day, be it a splashy blockbuster or an indie movie contending for the Oscars.
Though MoviePass works at most theaters, it has key restrictions: It excludes pricier 3-D and Imax showings and most advance online sales.

And even if everyone in a group has a subscription, tickets must be purchased individually. Subscribers also complain that MoviePass responds too slowly, or not at all, when there's a problem.
Nonetheless, the thrill of the bargain has sparked interest.
"I've seen a little over a dozen movies, which is way more than what I would have without it," said Cassie Langdon, a 28-year-old Indianapolis woman who works in sports communications and joined MoviePass in October.

Langdon said she's taking chances on smaller releases instead of sticking with blockbusters and their sequels.
Success could ultimately bring MoviePass' demise.
Although subscribers pay just USD 10 a month, MoviePass is paying most theaters the full price of the ticket. The US average is about USD 9, though USD 15 and up is common in big cities, putting MoviePass in the red with just one movie. By contrast, MoviePass competitor Sinemia offers just two or three movies a month for higher fees.
Plus, with an unlimited plan, MoviePass has to eat some unnecessary costs, such as when a subscriber buys a ticket just to use the theater's restroom.

MoviePass' parent company, Helios & Matheson, warns in a financial report that MoviePass' future is in "substantial doubt" because it "has incurred losses since its inception and has a present need for additional funding."
The service is ultimately counting on a "gym membership" effect: Subscribers might binge at first, but slow down once the novelty wears off. Although subscribers can cancel anytime, they wouldn't be able to sign up again for another nine months to discourage short-term memberships.
MoviePass wants to work out ticket discounts and revenue-sharing deals on the premise that it's driving more people to theaters. The company is also eyeing a share of concession sales, saying moviegoers are more willing to buy popcorn and soda when scoring a "free" movie.

And MoviePass believes it can help promote movies because it knows what subscribers see, when and where. Promotions could even extend to sending alerts to buy a soundtrack or movie poster as subscribers leave the theater.
But several industry experts say MoviePass doesn't add much to the marketing data from theater chains, online ticketing services and other sources.
MoviePass will have leverage once it has "millions and millions of subscribers," said MoviePass CEO Mitch Lowe, a Netflix co-founder who left while it was still a DVD-by-mail business.