A subscription service where a habitual movie goer can pay one low rate a month and see a movie everyday almost sounds too good to be true, and it just might be. MoviePass, founded in 2011 by Stacy Spikes and Hamet Watt, has had a turbulent run for the last seven years. The service had a location-tracking controversy as well as dozens of price structure changes, but now the company is facing questions regarding its financial feasibility.
Helios and Matheson, the IT service management company that owns MoviePass, has been hemorrhaging money for a while now. Even though the service has millions of subscribers and active users, they just can’t seem to turn a profit. The low cost of $10 to see a movie everyday piqued the interest of consumers but since MoviePass has to buy those tickets from the theaters, the lose out on every transaction.
A rudimentary grasp on math would prove this business model to be unsustainable and that is one of the reasons why MoviePass is attempting diversify their company and try to get into the supply-side of the movie industry. In January of 2018, the company announced MoviePass Ventures, a subsidiary that would co-acquire films with traditional distributors. The company has seen, to put it nicely, mixed reactions to this venture.
The first acquisition MoviePass Ventures made was in partnership with The Orchard for the Bart Layton film, American Animals. The film opened to mild critical and financial success and it looked like the company was making some solid creative decisions. That was until Gotti happened. Gotti, a crime drama with John Travolta playing the titular mobster, tanked at the theaters with critics lambasting the film and moviegoers shunning it at the box office. But even with the small amount of money the films did make, not all of it was from customers. According to Deadline, MoviePass accounted for 40% of the weekend grosses, essentially meaning that almost half of the film’s box office was the company buying tickets to its own movie.
Things have not gotten better for MoviePass. Their parent company, Helios and Matheson, have seen their stock go from around $9 per share at the beginning of 2018, to around $0.22 per share today. MoviePass is quickly running out of runway and hemorrhaging cash with their parent company telling regulators that they need to raise $1.2B in order to stay afloat. All of this coupled with the fact that AMC Theaters, America’s largest movie theater chain, has announced their own subscription based movie ticket plan. With the company bleeding cash, their movie ventures bombing, and a rise of new competition, it could mean the end of the MoviePass experiment.