The company is trying to burn less cash so it can stay in business.
MoviePass estimates that 85 percent of its current customer base of more than 3 million users will be unaffected by the shift, as its data shows only 15 percent of existing subscribers see more than four movies per month.
MoviePass CEO Mitch Lowe described the changes in an interview earlier Monday with The Wall Street Journal.
Citing community response, a desire to create a "sustainable business model", and combatting a small number of users viewing "a disproportionately large number of movies" as the reasons for its decision, MoviePass - which now allows customers to see one theatrical release per day for a monthly price - confirmed Monday it will not increase its recurring fee to $14.95 per month.
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Under the previous plan, customers could see one movie per day in theaters.
MoviePass has grown to 3 million subscribers, from about 20,000, since it slashed monthly rates almost a year ago to $10, from as high as $50. Instead, it's switching to a model that will limit customers to just three movies per month.
While these changes brought in a rush of new customers, the cost to keep them proved too much for the company to sustain. "Now I realize no matter how patient investors say they will be, they never are". MoviePass pays full price for each ticket a subscriber uses, meaning that after a subscriber sees a second movie in a month, the company is operating at a loss. Since then it's fallen all the way back to 7 cents.
Two weeks ago, the company also borrowed $5 million in cash to pay its merchant and fulfillment processors after it had a service outage and couldn't afford to pay for movie tickets.