MoviePass struggles to meet demand after seeing massive subscription boom

New York-based startup MoviePass Inc. announced Thursday that after slashing prices for its subscription movie ticket service in August from as much as $50 per month to a flat rate of $9.99, it has been inundated with new subscribers, adding over 400,000 of them in a month’s time. That number is a far cry from the 20,000 subscribers the company had since launching in 2011.

The only problem is the company is struggling to keep up with all the new demand. MoviePass told its new customers Wednesday that “the response has been overwhelming” and “we’ve tripled the size of our team” in order to meet the new demand. But still complaints from new customers are rolling in as many of them haven’t received their MoviePass issued debit card, which allows them to access movies.

“Recently, the manufacturing queue was shuffled, so some of the cards have been delivered out of order. While we work to ensure that processing is fulfilled according to your registration date, some of our more recent sign-ups may receive their cards before some of our earlier sign-ups. There is currently a 2-3 week delay in card delivery,” MoviePass wrote on its website.

Since the price drop, the demand is only expected to accelerate even more, according Helios and Matheson Analytics Inc. (NASDAQ:HMNY), who has a majority stake in MoviePass. It projects that the company will acquire at least 2.5 million additional paying subscribers over the next twelve months, and retain at least 2.1 million of those at the end of that period.

“We had no idea we would become a “unicorn-status company” in such a short time frame. We are shocked and overwhelmed with our growth. The demand was so high that we’d had a shortage of Mastercards, but now we’re in the process of getting caught up. We’ve tripled our customer service personnel to meet demand. Now, we have the capability to do over 100,000 cards a week, and that number is growing. Over 70% of subscribers have their cards in hand, and all subscribers will be caught up by the week of October 2. After that, all cards will be shipped within 5 business days,” Ted Farnsworth, Chairman and CEO of Helios and Matheson Analytics Inc., told FOX Business.

MoviePass CEO Mitch Lowe, who also served as the former president of RedBox, said in a statement that even though the price cut is expensive for them in the short-term, “it’s a significant benefit and more convenient for customers. With MoviePass, there’s no movie ticket prices to think about -- going to the movies will become an everyday experience rather than an occasional treat.”

However, major movie theaters have already started to push back. Last month, AMC, the world’s largest theater operator released a statement saying it “is consulting with its attorneys to determine if or how AMC can prevent a subscription program offered by MoviePass from being used at AMC Theatres in the United States.”