MoviePass' Profit Drain

Tickets & Profit

Nothing is quite like the movie theater – the big screen, sticky floors, and over-priced popcorn are all part of the experience when you head out to see Hollywood’s latest flick. But, in the age of streaming, subscriptions, microwaveable popcorn, and record high ticket prices, many directors, producers, and fans are opting for a couch and remote. What are theaters to do?

In 2017, MoviePass premiered its blockbuster idea – a $9.95 monthly subscription for unlimited movies on the big screen. Within two days, over 150,000 movie goers subscribed to the service, giving parent company Helios and Matheson (HMNY) two thumbs way up, but less than a year later the company had lost nearly all of its value. The plot thickens.

World Wide Movie Domination

With the average movie ticket being roughly $9.00, clearly MoviePass isn’t going to be profitable with an unlimited monthly subscription plan of $9.95, but that was never the plan. MoviePass wants to be invaluable to theaters, distributors, and studios through big data analytics. Or, in other words, it’s tracking your every movie move: the concessions you buy, trailers you watch, movies you see, and when and where you see them. The more subscribers it gets, the more accurate and valuable its data becomes. Looking for a movie to see this weekend? Instead of pushing the latest Hollywood blockbuster you’ve probably already seen, MoviePass promotes the small-budget indie film that you — and millions like you, according to their mountain of data — would probably wait to see on DVD.

Its Amazon-esque strategy to get as many subscribers as fast as possible appeared to be working. In June 2018, MoviePass hit 3 million subscribers, and Hollywood Reporter found that 83% of MoviePass users liked the service more than other subscriptions and saw more movies than without the pass. But, it also found that 63% of subscribers thought that the service was too good to be true.

Too Good to Be True

MoviePass burns through an average of $21.7 million a month paying for the tickets of its customers. Movie goers think it’s a wonderful life, but for HMNY shareholders, it’s been like Nightmare on Elm Street. For the first half of 2018, HMNY lost $191 million while only earning $2.4 million in marketing and promotional revenue. That trend is a total flop, and it’ll need bigger numbers to cover its growing deficit. In an effort to get back to certified fresh, MoviePass’s subscription plans and terms of service have twisted more than the 2017 Oscar for Best Picture. Unlimited movies are gone with the wind. Seeing a movie more than once – hasta la vista, baby. Any movie, any theater, any day? Now your choices are like a box of chocolates. You never know what you’re gonna get. Movie goers are too fast. HMNY shareholders are too furious. HMNY’s stock has bombed at the Wall Street box office, falling as low as two cents a share in August of 2018.

Curtain Close?

On one hand, HMNY reports that 85% of MoviePassers see less than 3 movies a month, film fanatics are now limited, and MoviePass’s CEO is predicting profitability by 2019. But on the other hand, HMNY is trying to raise $1.2 billion to keep the company in the black, and recently a high-profile board member resigned accusing the company of withholding financial data and making crucial decisions without board approval. HMNY predicts more losses in the future, and its reputation and service has been criticized more than Transformers. There’s also growing competition from theater chains introducing their own subscription plans, and don’t forget the Fandangos of the world who have been collecting and selling data for years.

MoviePass could have been — and may still be — a truly disruptive service. With its new emphasis on growth and profitability we’ll have to wait till next summer to see if MoviePass gets a sequel.