MoviePass Ticket Site Crashes After Slashing Prices

Movie Theater Interior - H 2012
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Movie Theater Interior - H 2012

MoviePass reduced its subscription rate to $9.95 a month from $50 a month previously, but its website is having a difficult time handling the surge in traffic.

A website selling 30 movie tickets for the price of one crashed from overuse on Tuesday.

MoviePass announced Tuesday that its $50-per-month service for one movie ticket per day has been slashed to $10 a month, causing traffic at to surge beyond its capacity.

At various times, the website failed to work while at other times it was slow, but CEO Mitch Lowe tells The Hollywood Reporter that his tech team is on the case.

Normally, MoviePass traffic is around 10,000 unique users per week, but in the first six hours since it dropped its price, the website drew 500,0000 uniques, Lowe said.

"I don't think my tech team believed me when I told them what to expect," he quipped.

Lowe wouldn't say how many of the visitors are signing up for the service, beyond "quite a lot," but insiders say MoviePass had about 20,000 subscribers paying $50 per month, and they'll be converted to the $10 per month fee at the next billing cycle.

MoviePass is a much misunderstood business, as even Wall Street appeared worried that studios and movie theaters would take a hit with the slashed fee. MoviePass, though, purchases tickets for full price, benefiting the entire ecosystem.

When a user pays $9.95, they can see a movie every day for a month with MoviePass, though not at an Imax, 3D or luxury theater, which means the remaining 91 percent of the theaters in the country participate in the program.

Due to its business model, MoviePass can conceivably be on the hook for about $300 each month for some subscribers who only pay $9.95 a month, but the company intends to earn revenue via marketing and other sorts of relationships with studios and theaters.

MoviePass knows, for example, that when a person subscribes, their monthly visit to a theater doubles, no matter how frequently they had been attending movies. It also knows that the additional movies its subscribers choose are usually small ones that are produced for $20 million or less and don't have much marketing muscle behind them. When MoviePass promotes one of these small films to its users, 10-17 percent of them see the movie.

"We would expect to get a marketing fee for this eventually. We will drive millions in revenue for opening weekend for these smaller films, and we will help sell concessions, where there are 80 percent margins for theater owners," said Lowe.

"The first thing we need to do is get big," he said. "If we're not in the millions, we're not interesting to studios. When we're big, we can help them get butts in the seats, and we will both benefit."