June 28, 2018
Fiscally-challenged theatrical ticket subscription service MoviePass will apparently stop losing money by the end of the year, according to CEO Mitch Lowe.
The former executive at Netflix and Redbox June 27 took to social media (in a Q&A on Reddit.com) to address ongoing concerns about the platform’s financial viability after parent Helios and Matheson Analytics admitted the service is hemorrhaging millions of dollars more monthly than it takes in.
HMNY’s stock closed down at 21 cents per share June 27.
“It takes a lot of investment and significant losses in order to build a multibillion dollar entertainment company,” wrote Lowe. “Look at Spotify, Netflix and Amazon — there are many different companies that lost money for years and are only now turning a profit.”
Lowe said MoviePass would like to break even on subscription revenue, while generating income from advertising, brand partnerships and content licensing.
“The reason we keep our price low is to attract the occasional moviegoer,” Lowe wrote, while avoiding HMNY’s share price and fiscal health. “There are more than 200 million occasional moviegoers in the U.S., who only go to the movies four to five times a year without MoviePass and nine to 10 times a year when they join MoviePass. If we get enough occasional moviegoers to offset the frequent moviegoer, everything will balance out.”
Respondents peppered Lowe with assorted questions, complaints and personal commentary regarding what some characterized as “annoying afterthoughts,” recently imposed by MoviePass, including requiring subscribers to scan ticket stubs to prove they’re not seeing the same movie twice and limiting ticket purchases to same-day viewing.
“Having to buy [a ticket] day-of is a huge issue in areas with assigned seats,” wrote one subscriber. “This is what tipped me over to signing up with [rival subscription service] AMC [Stub A-List].”
Lowe responded, saying MoviePass invested millions building a patented platform that gives subs access to 91% of the theaters across the country – unlike AMC’s subscription service.
In February, MoviePass sued upstart competitor Sinemia for patent infringement.
“We intend to continue to be vigorous about protecting our patents in the future,” Lowe wrote.
He said “utilization” (repeat movie viewing) has dropped “significantly” among subscribers since MoviePass ended repeat viewings, instituted ticket verification and price surcharges during peak moviegoing periods.
“Movies are seasonal, and summer is high point,” wrote Lowe. “When we adjust based on seasonality, it has an impact. The new peak pricing feature is also aimed at helping curb heavy use, or supplement that use with more revenue. The important thing is that we’re building pricing to be flexible. We can tweak it as needed.”