MoviePass chief blames fraud for last year’s unlimited plan fail
Cash-strapped MoviePass is back to offering a $9.95-a-month unlimited plan — but this time it promises it won’t crash and burn.
In an interview with The Post, Ted Farnsworth, CEO of the service’s parent company Helios and Matheson, says MoviePass has identified the problem behind its wildly popular $10-a-month movie subscription service breaking down last summer.
Contrary to popular belief, it failed because of fraud — not because paying for people to watch an unlimited number of movies for $10 a month broke the bank, Farnsworth said.
Now, MoviePass is relaunching its popular $10-a-month subscription with new fraud detections in place to stop the 20 percent of users who abused the system, Farnsworth told The Post. He cited the binge-watching of the same films over and over; buying tickets for friends and family not on the plan and, in some cases, buying a movie ticket just “to go to the restroom in Times Square.”
“It definitely would have been a different story if we knew last summer what we know now,” he said. “We never had anything in place so that we could test those systems. Right now, we know so much more, we’re so much smarter.”
Last year’s abuse by 20 percent of users led to “tens of millions” of dollars in losses for the company, Farnsworth said. That triggered the company’s to blackout certain films as it ran out of money to buy tickets, which led to people canceling their subscriptions.
On Wednesday, MoviePass announced it’s selling $10-a-month movie tickets — yet again. But Farnsworth says the company is now armed with new controls to keep the costs down, including using the app to track subscribers to make sure they are actually watching the film MoviePass paid for.
Under its new terms and conditions, MoviePass reserves the right to check a device’s location partway into the run-time of whatever film a user buys a ticket for. This ensures that the person who purchased a ticket is the same person watching the movie.
MoviePass’ systems have also been upgraded to more closely monitor users who engage in suspicious behavior.
“Now, if somebody goes to 15 or 20 movies, they’ll be flagged and then we monitor them to make sure that they are watching the movie,” he explained. “And if they are, that’s fine.”
Farnsworth insists that the economics make sense — once the abuse is gone — because the average user only sees roughly one movie a month.
“Even when stuff is was going bad we were only at 1.7 movies a month, and that’s with everything going wrong,” he said. “ And now that we’ve fixed all those issues, we’re going to be ahead of the game just on subscription alone.”
MoviePass will also abandon its much-loathed practice of blacking out highly-anticipated releases.
The blackouts only led to backlash, such as when subscribers were blocked from watching the latest “Mission: Impossible” opening weekend last year. And it didn’t do anything to stop users from seeing the movies they wanted to see, Farnsworth said.
“We’re going on two years worth of data,” he said. “Even if you [cap the amount of tickets] or took a movie out of opening weekend, the same amount of people went to that movie. You either see it today or you see it next week.”
With the hotly-anticipated “Avengers: Endgame” on the horizon to kick off the summer blockbuster season, Farnsworth said MoviePass is prepared for the high volume of subscribers returning to the service.
The company has seen an 800 percent spike in sign-ups since the announcement of the new plan on Wednesday, Farnsworth said.
“We wouldn’t have gone back to what we had originally if we weren’t prepared for it,” he told The Post. “We would have sat there with our cap plan, kept doing our thing, kept going along.”
Still, Farnsworth recognizes that customers have a right to be wary of MoviePass, and said the service is working hard to regain their trust.
“Do we have to fix the brand? Absolutely. Do we have to win their trust back? Absolutely,” he said. “To me, the thing important is getting the cards in [customers’] hands as soon as possible and letting them go out there and experience it. That’s what you’ll start to see over the next month, when people are going back to saying ‘oh my gosh, it’s back.’”
Helios and Matheson shares were up 5.5 percent Friday, at 1.2 cents.
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