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Did You Cancel Your MoviePass Subscription? Are You Sure?

Rich Duprey, The Motley Fool

Here we go again. Helios and Matheson Analytics (NASDAQ: HMNY) has resurrected the MoviePass "unlimited" movie plan, offering subscribers access to one movie per day for $10 a month. But there's a catch: The plan is only open to moviegoers that had previously subscribed to the unlimited option but didn't choose the new three-movie-a-month plan offered when MoviePass killed off the unlimited one.

But as The Verge reports, there's another unseemly move at issue. MoviePass automatically enrolled qualifying old subscribers into the plan and if they didn't click on an opt-out link sent to them in an email, MoviePass began charging their credit card. Essentially, they canceled their subscription with them -- actually, MoviePass canceled the subscription -- but it is now automatically reactivating their accounts.

People watching movie in theater and reacting as if something scary is on the screen.

It's back! MoviePass brings back unlimited movie viewing but with a sinister catch. Image source: Getty Images.

Better subscription bets

Others services are offering movie subscription plans they believe are more sustainable. Cinemark Holdings is offering one movie per month for $8.99, but gives 20% discounts on concession sales, while the AMC Stubs A-List service from AMC Entertainment lets subscribers see three movies a week at any of its theaters for $20 a month.

Sinemia has an "unlimited" subscription plan that lets moviegoers see one movie a day just like the MoviePass version, but charges $30 a month. It also has other plans for varying numbers of movies at different price points.

While the AMC and Sinemia plans appear unsustainable, since once subscribers see more than three movies the subscriptions start losing money (ignoring the profitable concession stand sales they make from those patrons), they're operating on the basis of what Sinemia calls the "modern moviegoer" who sees on average three movies a month. In general, most moviegoers see four to six movies a year, so the subscriptions should break even at worst, or actually become profitable.

An act of desperation

It seems MoviePass is looking for a quick cash grab. The unlimited movie plan for $9.95 a month proved to be just as unsustainable as everyone knew it would be, since the company pays full price for the tickets. MoviePass began hemorrhaging cash, so it blacked out movie dates for wide-release, first-run films; introduced surge pricing; implemented ticket purchase verification; and then changed the price of a subscription along with the number of movies a subscriber could see.

The Helios and Matheson movie service also suffered outages because it couldn't pay its bills and was forced to borrow $5 million to pay vendors and processors.

The Verge notes the new plan doesn't give subscribers many choices, saying few new releases are available and offering just one movie choice at a particular theater. MoviePass appears to offer a chance to see a movie every day, but doesn't have the inventory available to make it happen. 

Short time to act

By forcing old customers to opt out of a plan they didn't agree to join, MoviePass may be able to see an influx of cash, at least temporarily, but it's not the first time MoviePass has re-enrolled old subscribers without their permission. When it switched to the three-movies-per-month plan, those that had previously canceled their subscriptions before the change took place were automatically opted into the new plan, which the company then blamed on "bugs" in the system.

MoviePass says the current round of re-enrollments is "[b]ecause we really hope you begin enjoying your MoviePass subscription again." The company notes it is the same subscription plan the customers had previously signed up for and it gave people  until Oct. 4 to opt out.

This is clearly an act of desperation on the part of MoviePass and Helios and Matheson. Even if subscribers had enjoyed their previous association with MoviePass, they would do well to take a hard pass on this offer considering how frequently MoviePass changes the terms of the subscription and the dubious ways it handles consumer accounts.

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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.